Our Long Term Plan 2018 Tō Mātou Mahere Roa 2028

Transcription

1 Our Long Term Plan 2018 Tō Mātou Mahere Roa 2028

2 Table of contents Section Introduction and overview 1 Message from the Mayor 1a Overview 1b What our auditors think 1c Our district 2 District profile 2a Our financial and other general assumptions 2b Strategic direction 3 Our direction 3a Our financial strategy 3b Our infrastructure strategy 3c A summary of our significance and engagement policy 3d Our services 4 An introduction to our services 4a Governance and leadership 4b Land transport 4c Water supply 4d Wastewater 4e Stormwater 4f Land drainage 4g Solid waste 4h Community services 4i Community development 4j Regulatory Services 4k Significant negative effects 4l Capital projects 4m Our service providers 4n

3 Section Dollars and cents 5 Revenue and financing policy 5a Financial statements 5b Funding impact statement rating implications 5c Rating changes 5d Balanced budget statement 5e Financial reporting and prudence regulations disclosure statement 5f

4 Section 1 Introduction and overview section Message from the Mayor 1a Overview 1b What our auditors think 1c

5 A message from the Mayor Reflections on an epic road trip We hit the road earlier this year with a rough map of the next ten years and a boot-load of tough decisions to make. Things had changed a lot since you helped us write our last long term plan three years ago, and we really needed to talk. Our population is now blossoming, business is booming, visitors are flocking - which is all great news, but it raises some important questions too. How will we manage our infrastructure to cope with these extra demands? What about the effects of climate change? How will we cover the cost of upgrading our treatment plants to meet tougher government legislation around things like wastewater? We know rates are already unaffordable for some of you; how can we balance things so we continue to grow as a district while making sure everyone can afford to pay? It s been a big two months. We ve travelled to almost every corner of the district, picked up a trailer full of feedback, and enjoyed your great company every step of the way. Unfortunately, as they say, all good road trips must come to an end. The good news is, now we ve considered all your feedback, we re embarking on a whole new adventure. This is our plan. The one we ve written together. It isn t perfect. It won t please everyone. But in our view it represents the best bits of all of us and the best possible way forward for the Hauraki District - our home, our future. A message from the Mayor 1a-1

6 Overview Every three years we must prepare a long term plan. It s our key strategic planning document that sets out our priorities, what we intend to do, and how much it will cost, for the next ten year period (or 30 years for our infrastructure assets). However, most of the detail is for the first three years of the plan. Looking back When we last talked with you about our planned route in 2015, the financial challenges we were facing were quite different to what they are now. In 2015 our population was expected to stay the same so we weren t having to meet the needs of more customers. We d nearly finished upgrading all our water treatment plants to meet new national requirements and not many other upgrades were needed. The rest was mostly business as usual. We had a plan in place to reduce the debt we borrowed to pay for our water upgrades and other services and we were in a good financial position. Since then, things have changed quite significantly and we are facing some major speed bumps over the next ten years and beyond. A summary of our challenges Over the next ten years (and beyond) we are facing a major increase in the cost of delivering our services. We aren t able to fund this without finding more money and this will affect the amount of rates and user fees that you pay. A lot of the costs are for things we must do either to keep our infrastructure working or to upgrade our services to meet new government standards. In the longer term we can expect a greater number of high spend items that, while we know will come our way, we don t know when or how much it will cost. We want to ensure that our communities can afford to pay to use our services and their rates bill, but we also need to be in a good financial position to cope with the likely twists and turns ahead. The amount that we spend and borrow in the short to medium term will shape how much flexibility we have to respond to these speed bumps we may come across in the future. Our budgets are made up of what it costs to: 1. service what we ve already got to keep delivering what we already deliver 2. change the level of service we provide 3. to provide for more people and changes in land use (additional capacity) 4. be prepared in case of an emergency. Many of these costs are fixed that is, we don t have much control over them or the ability to make changes. Just like oil when you service your car, the cost of that oil is set by many others along the way; such as, the mechanic, the freight company, and the oil manufacturer to name a few. While we re facing a major increase in costs, we re also reluctant to postpone some of the nice to have projects that help keep our communities the vibrant places they are that s things like main street upgrades and great community library spaces. This means that rates (excluding water rates) will go up an average of 4.4% per year over the next ten years, but it will be higher in the earlier years. The increase in the first year will be 6.4%. Some of our user fees have increased and we ll need to keep borrowing to pay for infrastructure and community assets. Infrastructure costs ahead Over the last 20 years we have been investing a lot in upgrading our water and wastewater treatment plants. Accelerate to today, and the condition of some of our other water pipes, wastewater pipes and roading infrastructure needs attention. Also as a result of central government direction to clean up our waterways, we are facing some major upgrades of our seven wastewater plants over the next 15 years and we ll have to look at treating our stormwater before its discharged. Overview 1b-1

7 You may have heard about a recent national enquiry into Havelock North s drinking water. The enquiry resulted in some recommendations that councils improve the way they treat their drinking water supplies. We already use a number of these treatment methods and we don t anticipate that we ll need to do any more major works as a result. Over the next ten years, 59% of our capital spend will be on maintaining our assets. 41% will be spent on improving assets or providing new ones. Growth and infrastructure Our population is growing and putting increased demands on some of our infrastructure. New environmental regulations requiring upgrades to our wastewater plants will mean we have no extra capacity available in some of our schemes, and therefore won t be able to give new properties the green light to connect. We need to make sure our infrastructure can cater for this growth and make sure we have the right amount of land to welcome it; add to this the need to prepare for potential hazards in the future, and we have some challenging conversations down the road. We ll need to ensure we are in a good financial position to deal with changes as they cross our path. Natural hazards and climate change We need to consider how climate change and other natural hazards could affect our communities. More recent climate change forecasts anticipate the effects will be felt much earlier than we previously thought. Over the next three years, we ll be looking at how vulnerable our communities are and how effective our infrastructure will be. Some of our services will be negatively affected by the forecasted sea level rise and will need to be upgraded or will have increased operating costs. Other natural events like storms, earthquakes and tsunami also pose risks. We don t know how big a problem some of these hazards are yet but we think it s responsible to ensure we are in a good financial position to deal with any new spend required once we know more. Affordability Recent indicators of local deprivation of our communities suggest that it may be more difficult for some of our customers to pay for our services (via rates or user fees) compared to New Zealanders in general. Our residents income levels have been much lower than the national average. The experts tell us that rates can become unaffordable where they exceed 5% of a household s income. Our research suggests that at least 28% of our home owners meet this threshold. We ve looked at what we can do to help to relieve the pressure on those customers and have made some changes to who pays what through our revenue and financing policy. There s more Of course the world around us continues to change in a range of ways, from more use of new technologies like selfdriving and electric vehicles to new governance arrangements coming out of the settlement of Te Tiriti o Waitangi (the Treaty of Waitangi). In this age of rapid change, we ll need to keep an eye on new developments that affect what we deliver and be ready to adapt. We also need to be ready for unforeseen natural events like earthquakes and storms that require us to spend on recovery work. Our plan in a nutshell We ve considered what we must deliver and what we d like to deliver. Our plan is a bit of a balancing act. Unfortunately, we can t give everything the green light. We ve prioritised the essential items, but will also continue to investing in some discretionary projects that help make our communities great places to be. While often thought of as nice to have, these projects are what make our communities the great places they are. We ve increased the emergency roading works budget that we will accrue to help us pay for road repairs resulting from damage of unforeseen natural events. We ll also be looking seriously at what climate change forecasts mean for our communities and our services. Overview 1b-2

8 Our debt levels will be much higher than we previously planned. Instead of being well on their way to being paid off over the next few years, they will stay constant for a period beyond the life of this plan. This is driven by the need to borrow $16 million more over the next ten years for wastewater upgrades alone. This all means rates will go up more than we previously planned by an average of 4.4% per year over the next ten years. It will be higher in the earlier years. We don t expect the increase in costs we are facing to reduce in the decades ahead so in the long term we accept that rates will continue to go up. We also think it s important to provide some room to move to pay for new and unexpected bills, so we ve also raised the amount of rates we can charge and debt we can borrow if we need to (these are like our bottom lines). We ve changed the way we fund some activities through rates, to better reflect our ratepayers ability to pay. We ve also increased some of our user fees to reflect the increased cost of our services. So in a nutshell: rates will go up the share of rates everyone pays will change some user fees and charges will increase we ll need to keep borrowing to pay for work on our infrastructure and community assets. Your feedback Before adopting this plan, we sought feedback from our local communities during March, April and up to May 2018 on our proposed approach. Our we need to talk campaign provided a wide range of opportunities for you to let us know what you thought about our plans; either by dropping in to an event, having a Facebook conversation, telling us or writing to us about what you thought, or online feedback via our rates calculator and interactive we need to talk website. The key issues we wanted to talk to you about included: how well we should maintain our roads, projects in your patch (prioritisation of local projects), and changes to the way we fund some of our services to help keep rates affordable. We received written feedback from 288 people or organisations, and even more shared through face to face conversations. Over 2,000 points were raised. The council considered all feedback received and in summary, some of the key decisions made were: the investment in roading will be increased to get our maintenance programme back on track as we proposed. we will further investigate an upgrade to the library services provided in Ngatea, which would include partnering with the Haurakian Trust, or a newly formed Trust, to deliver a joint community space including library service, and other community based activities and services. we will do a partial upgrade of Ngatea main street, following further consultation with the community on what it would look like. we will complete a streetscape development in Wharf Street, Paeroa. we will shift about 5% of our general rate funding from uniform annual charges to capital value based rates. we will only mow berms in Waihi in streets wider than 20 metres, and berms adjacent to council land and reserves. we will reduce the amount of funding provided to town promotional organisations by 25%. As a result of all feedback received we have updated our plans including our financial strategy and infrastructure strategy to reflect the decisions made. Our long term plan was adopted on 27 June 2018, and became effective as of 1 July That means that our work programme for the next three years is largely set. However, each year following the adoption of the long term plan (years two and three) we produce an annual plan. The annual plan is an opportunity to check in, and make any minor amendments that may be required. If we need to make a significant change from the direction of our long term plan, we will seek feedback from the community, or those affected, regarding that matter. Overview 1b-3

9 What our auditors think What our auditors think 1c - 1

10 What our auditors think 1c - 2

11 What our auditors think 1c - 3

12 Section 2 Our district District profile Our financial and other general assumptions section 2a 2b

13 District Profile The Hauraki District contains a diversity of land, communities and economies. Our location puts us in the golden triangle between Auckland, Tauranga and Hamilton, and provides for a number of potential business opportunities to settle within our district. Due to the flow on effects of the growth pressures facing Auckland, Hamilton and Tauranga, in the past year we have seen more people living in our district than we anticipated, and added demand for new houses. With our active support of economic development initiatives, we are expecting our local economy to continue to perform well and our local population to keep growing. Our Home Our land Our district sits at the south of Te Tara o te Ika o Maui the barb of the fish of Maui. It is geographically diverse and stretches from the shelly beaches of Kaiaua and Pūkorokoro / Miranda along the Firth of Thames in Tῑkapa Moana (the Hauraki Gulf) to the white sandy beaches of the Pacific Ocean at Whiritoa. Between lies the rich reclaimed dairy lands of the Hauraki Plains, the rugged beauty of the Karangahake Gorge and Kaimai/Coromandel ranges, and the rolling farmlands of the Golden Valley. We sit within the rohe of the iwi of Hauraki which stretches from Matakana in the north to Matakana Island in the south. The Hauraki District Council was formed in 1989 when the Hauraki Plains County, Ohinemuri County, Paeroa Borough and Waihi Borough Councils were combined as part of a major restructuring of local government within New Zealand. Kaiaua and the wider Seabird Coast became part of the Hauraki District in 2010 when the Auckland Council was formed We are part of the Waikato region and are located within New Zealand s economic golden triangle being only an hour drive from the cities of Auckland, Hamilton and Tauranga. Our total area is 1,269 square kilometres, and our estimated population at June 2017 was 19, We may have less than 1% of New Zealand s population, but we have a lot of natural, cultural and historic taonga to look after. The Kopuatai Peat Dome and the Pūkorokoro / Miranda area on the Firth of Thames are recognised by the Ramsar Convention as wetlands of international importance. Another area of natural beauty, the Karangahake Gorge, is visited by over 130,000 people a year who wish to experience the significant natural, cultural and historic features of the area and ride the historic Goldfields Railway. The iconic Hauraki Rail Trail traverses our district from Kaiaua through the Karangahake Gorge to Waihi, and connects us to our neighbours and the towns of Thames and Te Aroha. The clear waters of the rugged Ohinemuri River flow through the Karangahake Gorge until Paeroa where it joins with the Waihou River. The Waihou River originates from the Mamaku Ranges (close to Rotorua) and flows past the towns of Putaruru, Te Aroha and Paeroa before draining into the Firth of Thames. The Piako River originates in the ranges west of Matamata and flows through the Hauraki Plains, also draining into the Firth of Thames. Our total area is 1,269 square kilometres Estimated population 19,850 At June 2017 The Karangahake Gorge, is visited by over 130,000 people a year 1 Statistics New Zealand, Hauraki District Council estimated usually resident population as at 30 June District Profile 2a - 1

14 Wards Our district is divided into three wards; Waihi, Paeroa, the Plains, with each ward made up of geographical areas called census area units. 2 These ward areas and census area units are shown on the maps. Our three most populated towns are Paeroa, Ngatea and Waihi. Waihi the town with a heart of gold features a large open cast gold mine and adjacent walking track right in the middle of town and the historic Cornish Pump House overlooks the main street where the annual Beach Hop warm-up party is held. The beach village of Whiritoa sits on the eastern coast of the Coromandel Peninsula. Paeroa is world famous in New Zealand as the home of the L&P soft drink and is also renowned as a great place to seek out antiques with many antique and op-shops lining the main street. Annual events such as the Highland Tattoo and Battle of the Streets motorcycle race attract thousands of visitors each year. The Ohinemuri river flows through the Paeroa ward and joins to the Waihou river north of the town. The Hauraki Plains also have a unique recent history as the area was drained and cleared of swamp lands through a huge land drainage programme which started in the early 1900 s. Ngatea is the centre of hockey in the Thames Valley and is packed with people once a year for the Ngatea garage sale. The Pūkorokoro / Miranda and Kaiaua coastline is on the western side of Tikapa Moana. A map of the Hauraki District 2 Census area units are geographic areas that Statistics New Zealand use when grouping data. District Profile 2a - 2

15 Our people At the 2013 Census people were able to note all ethnicities they identified with. 17 out of 20 people in our population identified as European and around 20% of people said they identified as Māori, compared with 15% for New Zealand. Te Reo Māori was spoken by nearly 5% of our population which is slightly higher than the national average of 3.7%. Our district has a higher than national average percentage of European and Māori population with less Pacific, Asian and other ethnicities however we are becoming more diverse as our population grows. The Hauraki Iwi including Ngāti Hako, Ngāi Tai ki Tāmaki, Ngāti Hei, Ngāti Maru, Ngāti Paoa, Ngāati Porou ki Hauraki, Ngāti Pūkenga, Ngāti Rāhiri Tumutumu, Ngāti Tamaterā, Ngāti Tara Tokanui, Ngaati Whanaunga and Te Patukirikiri have mana whenua status in our district and surrounding districts. They are collectively and individually in the process of negotiating treaty settlements with the Crown. When the settlement has been agreed and proposed as law, we will know more about the greater role our iwi will have in governance and conservation in their rohe (area). We ll continue to work with Hauraki Iwi into the future for the benefit of our district. From 2015 to 2016 the average annual income in our district was $48,970, which was an increase of 2.7% from the previous year. Our residents annual income is lower compared to the national average, however it has been growing slightly higher than the national average over the past ten years. We have a focus on improving the economic and social wellbeing of the community where we re able to so our residents have jobs, liveable income levels, and the resources needed to achieve a better standard of living. This is important to us because at the last Census it was identified that parts of our district are more deprived 3 compared to other parts of New Zealand. Waihi and Paeroa census area units have a deprivation value of 10 on a scale of 1-10, which means they are in the most 10 per cent of socio-economically deprived areas in New Zealand. We are considered a more affordable place to live when compared to the New Zealand average, taking into consideration our earnings and house prices. 17 out of 20 people in our population identified as European 20% of people in Hauraki said they identified as Māori and nearly 5% of our population speak Te Reo Maori 65+ Almost a quarter of our population is over 65 years $48,970 the average annual income (2016) 2.7 % Average annual income from 2015 to NZDep2006 and NZDep2013 Index of socio-economic deprivation, University of Otago. District Profile 2a - 3

16 Our economy The New Zealand economy grew by 2.5% from 2015 to 2016, and our district s economy was down 2.6%, while our total employment was up by 1.1%. We have more people employed in our district that are self-employed (27%) than the New Zealand average (18%). At the last Census, just over half of the district population were in paid employment and 38.5% of the population were not in the labour force, which is reflective of our large percentage of primary and secondary school aged children and retirees. Gross domestic product 4 (GDP) in our district measured $882 million between 2015 and 2016 and accounted for 0.4% of national GDP in We have advantages against the national economy in mining, dairy cattle farming, and meat and meat product manufacturing. Our industry Primary industries account for the largest proportion of gross domestic product in our district (45%), which is higher than in the national economy (7%). Among broad industries mining was the largest in our district in 2016, accounting for 26% of total GDP, with agriculture, forestry and fishing coming in second (19%), followed by manufacturing (6%). Among detailed industries 5, after mining, dairy cattle farming was the second largest contributor to GDP (15%), followed by health care and social assistance (5.6%). Although a broad industry may be growing rapidly, if it is small relative to a region's total economy its contribution to overall GDP growth may also be small. Taking into account their relative sizes, the broad industries that contributed the largest to the overall growth of our district s economy to March 2016 were retail trade which grew by 11% between 2015 and 2016 and construction which grew by 0.22%. Growth in the number of business units gives us an indication of entrepreneurial activity. It shows we have an environment in which entrepreneurs are prepared to take risks to start new ventures. 2,772 business units were recorded in our district in 2016, up 2.7% from a year earlier. Tourism has grown rapidly in New Zealand since Not only has the number of overseas tourist arrivals increased substantially, but the level of domestic tourism has also expanded rapidly as spending on leisure by New Zealand residents increased. Since the opening of stage one of the Hauraki Rail Trail cycleway in 2013 our district has seen an increase in total tourism spend. 1,411 people employed in primary industries which is 19.6% of our district 860 employed in health care and social assistance 633 employed in retail and trade jobs for Retail trade up 43 jobs construction sector up 41 jobs accommodation and food services up 39 jobs Average current house value in our District was $278,397 in 2016 Growth in house price was 15% between 2015 / ,527 cows in 2016 (down 1.9% on previous year) 4 GDP is the total value of goods produced and services provided by all people and companies in the country during one year. In this profile Gross Domestic Product for our District is estimated in constant 2010 prices by Infometrics. 5 There are 54 specific industry groups, which are grouped into 21 broad industry groups. District Profile 2a - 4

17 Industry proportion of GDP (by broad industry type) All others 18% Mining 26% Education and Training 3% Construction 4% Owner-Occupied Property Operation 5% Rental, Hiring and Real Estate Services 5% Agriculture, Forestry and Fishing 19% Health Care and Social Assistance 6% Manufacturing 6% Unallocated 8% District Profile 2a - 5

18 Our Future Our population 6 With almost a quarter of our population over 65 years, we have an aging population when compared to the national average of 15%. We will continue to have a greater number of older people living in our district for the next 30 years, despite the national projection that by 2045 the grandchildren of the baby boomer generation will outnumber the baby boomers themselves. With an older population it is common that the number of people living in each household decreases. In 2006 there was an average of 2.5 people living in each home in our district but this is expected to decrease to 2.05 people by Our Long Term Plan was prepared on an assumption that our population would remain relatively stable. This is no longer the case, as our local population has grown faster than anticipated in the last three years; in 2013 our population was 17,808 people and at June 2017 it was estimated to be 19,850. This growth has mainly been driven by more people moving into our district than those moving out, as opposed to a natural increase (more births than deaths) rate. The increase is likely to have occurred in part because of high national migration, inflated property prices in nearby cities, and our active economic development programme. The population projections show a steady increase in our population over the next thirty years. It is estimated that at 1 June 2018 our population was 20,650 and will reach 22,300 by That s an increase of 7.4% over the ten-year period of the Long Term Plan. By 2048 it is projected that our population will reach 23,695, an increase of 3,045 people from the estimated June 2018 population. Our population growth will start to slow after 2028, but is not projected to stop over the next thirty years. Aging population by 2048 it s estimated that around 39% of our population will be over people on average living in each home in our district in 2006, expected to decrease to 2.05 by 2048 Estimated 7.4 % increase in population in ten years. 1 June ,650 by ,300 by ,695 Our dwellings Due to our population growth we ve seen an increase in the number of building consents for new homes and more interest in our district s housing market. Growth in dwelling numbers can be driven by an increase in population and/or a demand for holiday homes. It can also occur if more homes are needed to house less people per dwelling e.g. because of an ageing population or higher couple separation rates. Over the thirty years the Paeroa Ward is projected to have 945 additional dwellings, the Plains Ward 765 and the Waihi Ward 995. The proportion of occupied dwellings (that means dwellings that are usually lived in and not for example holiday homes) remains relatively stable, reducing from 88% in 2013 to around 85% in Additional dwellings over thirty years Plains ward Paeroa ward Waihi ward Occupied dwellings to reduce from 88% in 2013 to 85% in The projection data in this section was produced by Rationale Limited for the Council. District Profile 2a - 6

19 Our rating units Our district has various types of rating units; residential, residential lifestyle, rural industry, commercial and industrial, mineral related and other. Rating unit growth is driven by the economy, population growth and other changes in demographics and lifestyle patterns. The majority of the projected increase in rating units over the next 30 years is in the residential and residential lifestyle rating unit categories. This is because the district s growth in rating units closely follows the growth trend in the number of dwellings in the district. In 2018/19 residential and residential lifestyle properties are projected to account for 77% of the district rating units. In 2048/49 80% of the district s rating units are projected to be residential and residential lifestyle properties. However, the flow-on effect from the high population and dwellings growth scenario also results in an increase in commercial and industrial rating units of approximately 11 units or 1.4% per year. 77% of the rating units are residential and residential lifestyle properties in % of the rating units are residential and residential lifestyle properties in 2048 District Profile 2a - 7

20 Our future at a glance For further information on our district please see the Statistics New Zealand website or our Infometrics Community and Economic Profiles on our Business Hauraki web page District Profile 2a - 8

21 Our financial and other general assumptions In developing this plan, we make assumptions about the future of the activities we provide, assets we hold, issues that affect us, cost forecasts and our ability to deliver our services. This section sets out the significant forecasting assumptions we ve made and associated risks that apply to Council-wide decisions. We ve made these assumptions after considering known information and reasonably foreseeable trends and directions for the period. We haven t and cannot take into account the effects of international geopolitical developments that may occur during the life of this plan. Any assumptions that need to be revised/updated as a result of such developments will be addressed in future annual plans or long term plans. We ve noted the level of uncertainty we have with each assumption; either low, medium or high. If the level of uncertainty is low this means the assumption is almost certain to occur during the life of this plan. A medium level of uncertainty means the assumption may occur during the life of this plan and a high level of uncertainty means it is not likely to occur during the life of this plan. Our financial and other general assumptions 2b - 1

22 Topic Forecasting Assumption 1. Inflation Our forecast financial information includes provision for inflation. We have used forecasts of price level changes prepared specifically for the local government sector by Business and Economic Research Limited (BERL) to calculate the inflation rate for each year of this plan. The BERL forecast inflation rates were set in September 2017 and are listed in Figure 1 below. In year one of this plan there has been no inflation applied to operational costs (with the exception of salaries). This is considered appropriate given that the first year budget has been prepared within six months of commencement of spend. Level of Uncertainty Medium Potential effects of that uncertainty on the financial estimates provided Inflation is affected by external economic factors. Our costs and the income required to fund those costs will change by the difference between the actual rate of inflation and the rate of inflation used in the forecast. We have relied on the current parameters the Reserve Bank is required to operate under in terms of inflation being held within the range of 1% to 3%. A 1% increase in inflation would increase annual expenditure by approximately $380,000 and capital expenditure in 2018/19 by approximately $120,000. Risk That inflation will be significantly higher or lower than forecast. The inflation rates used for years in the 30-year infrastructure strategy are the average of the rate used in this plan for that activity over the next 10 years. 2. Interest Interest on term debt is calculated at 5% over the ten years. This is our expected cost of borrowing and is based on market interest rate expectations taking into account the proportion of our debt that is covered by fixed interest rate instruments. Medium Interest rates are influenced by international economic factors. We will manage this through interest rate risk management instruments authorised in our liability management policy for external debt, and by using internal borrowing as much as possible. That the interest rates will be significantly different from those in the calculations. 3. New Zealand Transport Agency (NZTA) The Funding Assistance Rate (FAR) government roading subsidy is forecast to be 60% in 2018/2019 and is forecast to remain at this level for the following nine years of this plan. This is based in projections supplied by NZTA (the government funder of roading). Medium A 1% reduction in the FAR subsidy rate would amount to a reduction in subsidy income of approximately $60,000. That the rate of subsidy will be lower than the rates budgeted for. Our financial and other general assumptions 2b-2

23 Topic 4. Carbon credits and liabilities Forecasting Assumption It is assumed that we will not have to purchase carbon emission units (NZUs) under the New Zealand Emissions Trading Scheme. No budget for the purchase of NZUs has been provided. Level of Uncertainty Medium Potential effects of that uncertainty on the financial estimates provided The Government s future direction with regard to carbon tax and/or carbon credits is unclear. Given that during the life of this plan there are several election cycles, it can be assumed that the Government s approach to carbon emissions may change. Risk That we will have to purchase NZUs. Furthermore, we assume that we will continue to replant its forestry lots which currently earn NZUs. As there has been no provision for such expenditure, the requirement to purchase NZUs would likely result in additional cost to us. 5. Revaluation of assets It is assumed that the value of our assets will be consistent with the valuations conducted. Medium We periodically re-value our assets. This is set out in more detail in our accounting policies and Infrastructure Strategy. Land was last re-valued as at 30 June Buildings and utility assets were last re-valued as at 1 July Roading assets were last re-valued as at 30 June The projections provide for changes in asset valuations every three years based on capital works, retired assets and the amount of inflation over that period of time. That the cost of construction/replacing assets will be significantly higher or lower than forecast by the valuations. The value of our assets and subsequent depreciation expense may change as a result of changes in valuation methodologies or cost changes being significantly different to those projected. This could lead to an increase in rates. 6. Vested assets, being the assets the Council receives and becomes responsible for. We have forecast that we will receive a minimal, but certain level of vested assets. We also assume that the impact of vested assets will be neutral, in that the costs associated with the additional assets will be offset by a proportionate increase in rates revenue. 7. Funding sources Sources of funds will be obtained as detailed in our revenue and financing policy. The policy also includes the sources of funds for future replacement of significant assets, and both operational and capital expenditure (the Low Low Vested assets can fluctuate considerably from year to year but the impact is ordinarily offset by a proportionate increase in rates revenue. It is highly unusual that we would enter into an arrangement with a developer where the ongoing costs associated with the vested assets are disproportionate to the increase in rates revenue. There is little risk that sources of funds will not be achieved given our ability to levy rates. The main risk concerns capital expenditure, as that is primarily funded through borrowing. If we aren t able to borrow to the levels forecast than this could affect the timing or viability of our capital works programme. That we will have more assets vested thereby increasing the depreciation expense in subsequent years that is not offset by a proportionate increase in rates revenue. That we will not be able to fund our planned work programme. Our financial and other general assumptions 2b-3

24 Topic Forecasting Assumption latter of which is primarily through borrowing). The Local Government Funding Agency will continue to be able to raise funds from capital markets providing us access to more favourable loan funding. Level of Uncertainty Low Potential effects of that uncertainty on the financial estimates provided A significant amount of the capital funding is sourced from overseas capital markets. There is a risk that access to these markets may become restricted. The financial effect of the Local Government Funding Agency not being able to access capital markets would be less favourable loan options being available to us. Risk That the Local Government Funding Agency no longer has access to capital markets. 8. Capital expenditure On average, costs of major capital works will not vary significantly from costs estimated at the concept stage, subject to general inflation trends. Medium in years one to three of this plan but higher further out. We have a higher level of confidence regarding the costs of capital projects in the short-term but less certainty in the longer term. This is due to possible fluctuations in the economy, growth patterns, regulatory requirements, etc. That some capital project costs are greater or lesser than estimated resulting in increased or reduced debt levels from those forecast. 9. Asset Life It is assumed the useful lives of our assets as recorded in our asset management plans approximate reality. Medium If an asset were to fail or wear out significantly earlier than its estimated life capital projects could be brought forward which would affect interest costs. Depreciation expense may also increase. Asset life is based upon estimates by actual performance, industry standards and valuers and is considered reasonably accurate. However, we are in the process of improving our level and accuracy of asset data for core infrastructure recognising the current information could be improved. 10. Development contribution and/or financial contribution revenue 11. Infrastructure insurance We will implement either our financial contributions policy or introduce a new development contribution policy in the life of this Plan. We have sufficient insurance to replace our infrastructure assets in the event of a disaster. Low Medium Revenue from financial contributions will be considered on a case by case basis. Revenue from development contributions has not been included as part of this long term planning process. This would change if we decide to introduce the development contributions policy within the next three years. We manage the financial risk associated with natural disasters through the provision of insurance up to the current replacement value. Central government currently covers anything above this amount. Over the next three years our District experiences considerable growth and we do not have a financial policy that allows for the funding of infrastructure caused by growth. The level of financial assistance that the Government provides to local authorities after a natural disaster is currently being reviewed. A discussion paper is on hold until after the national elections but more Our financial and other general assumptions 2b-4

25 Topic Forecasting Assumption Level of Uncertainty Potential effects of that uncertainty on the financial estimates provided Risk certainty is expected to be provided while this plan is developed. 12. Population growth Population growth has been higher than anticipated in the previous three years driven predominantly by higher than expected net migration (more people moving into our district than leaving). At 1 June 2018, it is projected the usually resident population of the Hauraki District will be 20,650. It is projected our population will reach 22,300 by That is an increase of 1,650 people, or a population increase of 7.4% over the ten-year period of this plan. The average annual increase is 165 people or 0.7% growth per annum. Medium Should the population be less than expected this may have an effect on our income if this trend is coupled with less rating units than projected. The financial effect would likely mean a rise in rates due to a smaller number of rateable properties. There is a chance the population growth projected in this plan may be lower than anticipated. This could occur due to lower than forecast net migration or a lower than anticipated birth rate and higher death rate. There is less risk that we will experience more growth than projected because the net migration underpinning the population projections is already optimistic when compared to historic trends. By 2048 (the thirty-year period of the Infrastructure Strategy), it is projected that the usually resident population will reach 23,695, which is an increase of 3,045 people from the estimated June 2018 population. In years of our infrastructure strategy, the population increases by an average of 70 people per year, or 0.3% per annum. 13. Household size The average household size (number of people living in a house) has decreased from 2.5 persons in 2006 to 2.29 persons in This trend is projected to continue and further decrease to 2.24 persons by The average household size is projected to continue to decline to 2.05 persons per household by Low If the rate of household size declines faster than anticipated, this could result in more infrastructure costs if additional dwellings are required. However, the extra costs would likely be off-set by additional rating units. With less people living in each dwelling rates affordability could become an issue. The decrease in household size occurs sooner than expected or is greater than expected. This would be driven predominantly by an aging population where it is more likely elderly people will be living in single person households. An increase in single parent families can also contribute to a declining household size. Our financial and other general assumptions 2b-5

26 Topic 14. Demographic age distribution for our District Forecasting Assumption By 2018 it is estimated that 24% of the population of our district will be aged 65+ years. Our district is likely to have an increasingly ageing population with 30% of the population aged 65+ by 2028 and 38% aged 65+ by The table below shows previous and projected age-distribution: Age % 19% 19% 17% % 25% 22% 18% Level of Uncertainty Low Potential effects of that uncertainty on the financial estimates provided The main financial effect would likely be on rates affordability. Risk Aging population trends continue to be forecast by Statistics New Zealand for the provinces of New Zealand. There is a risk the age distribution of our district could be older than projected if a greater number of people aged 65+, and fewer families with children, move here than anticipated. There is less risk the age distribution will be younger than anticipated as the net migration underpinning the population projections is already optimistic when compared to historic trends % 32% 29% 27% % 24% 30% 38% 15. Rating Unit Growth In 2016/17 our district had 10,895 rating units and it is estimated to have 11,452 rating units by 2018/19. Over the ten-year period of this plan it is projected that the number of rateable units will increase by an average of 112 per annum, reaching 12,576 by 2028/29. The total number of rating units has been forecast for each year of this plan as follows: 2018/19 11, /24 12, /20 11, /25 12, /21 11, /26 12, /22 11, /27 12, /23 11, /29 12,576 Medium The main financial impacts are increased/decreased rate funding from rating units. If rating unit growth is less than that projected there may be a period where the costs associated with certain infrastructure capital expenditure needs to be meet by less projected rateable units. Higher than projected rateable units could put pressure on the provision of certain infrastructure. Rating unit growth is driven by the economy, population growth and other changes in demographics and lifestyle patterns. There is a risk that the growth in the number of rating units will be less than what is forecast, particularly if our district experiences less population growth than expected. This is because the growth in rating units closely follows the growth trend in the number of dwellings in our district. In 2018/19 residential and residential lifestyle properties account for 77% rating units in our district. In 2048/49 80% of the rating units are projected to be Our financial and other general assumptions 2b-6

27 Topic 16. Dwelling forecasts Forecasting Assumption By 2048 it is projected that the number of rating units in our district will reach 14,492. This is an average annual increase of 96 rating units per year in years of our infrastructure strategy. A growth in dwelling numbers can be driven by an increase in population and/or a demand for holiday homes. It can also occur if more homes are needed to house less people per dwelling e.g. because of an aging population or higher couple separation rates. By June 2016 the Hauraki District had 9,715 dwellings. It is projected to have 10,320 dwellings by 2018/19. Over the ten-year period of this plan it is projected that the number of dwellings will increase by an average of 114 dwellings per annum, reaching 11,457 by 2028/29. It is projected that our district will have 13,024 dwellings by 2048/49. That is an average increase of 78 dwellings per year in years of the Infrastructure Strategy. Level of Uncertainty Medium Potential effects of that uncertainty on the financial estimates provided If growth in dwelling numbers is less than projected there may be a period where there are less connections to our services and less properties paying for the costs associated with providing those services and associated infrastructure. Higher than projected dwelling numbers could put pressure on the provision of certain infrastructure. Risk residential and residential lifestyle properties. The growth in the number of dwellings will be less than projected, particularly if our district experiences less population growth than expected. There is less risk that we will experience higher growth in dwelling numbers than projected when compared with our historical trends. From our district had on average 85 new residential dwellings per year. 17. Costs associated with provision of services Services will continue to be delivered at the forecast costs in this plan. Medium External influences may impact on the forecast costs of the service levels in this plan. For example, inflation, legislative changes, a skilled labour shortage. Alternatively, a more efficient method of delivering the same level of service may be implemented. If the cost to provide the forecast levels of service was to change significantly then we would review the timing and amount of work programmed and undertaken. The financial effect is difficult to predict. That the service may not be able to be delivered in the same manner, which could impact the cost of providing the same level of service. That costs are increased significantly by commodity prices or economic conditions putting costs above the forecast level of inflation. 18. Range and nature of services Our current range and nature of services will remain unchanged from those detailed in this plan and other assumptions. Medium Since the 1989 reforms, councils have been required to undertake additional services, some of which had previously been the responsibility of central government. In recent times central government has been handing more social responsibility issues to That central government will allocate responsibility for additional services to local government, and/or the Waikato Regional Council will allocate responsibility for additional services or Our financial and other general assumptions 2b-7

28 Topic Forecasting Assumption Level of Uncertainty Potential effects of that uncertainty on the financial estimates provided councils; for example; gambling, psychoactive substances, and alcohol policies. This is expected to be a trend that continues. The financial effect of these types of central government requirements are hard to determine in advance, but could be significant in terms of affecting our capacity to deliver our services. Risk standards to local government in the Waikato Region that requires immediate addressing and affects our capacity to deliver. We usually have some lead in time to implement new services in which case the implications for financial estimates and our capacity to continue delivering services can be identified and considered through an annual planning, long term planning or long term plan amendment process. We also use that process to consider and respond to community-driven demand for changes to services. 19. Resource Management Act reform Changes to the Resource Management Act and central government policy will continue, requiring changes to our own policy including the district plan. Medium There would be time and cost implications for having to carry out reviews of the district plan in terms of staff time/cost, public consultation, and administration support. The time and cost will depend on the number and complexity of changes required. More/less changes could be required to our resource management planning documents and processes than budgeted for. 20. Resource consents for water discharges and takes That the conditions of infrastructure resource consents held by us will be altered over time due to increasing water discharge quality standards and also because of possible increased competition for the allocation of water. The Waikato Regional Council has advised that water bodies in our district are already close to over allocation and that it will be more difficult to obtain new resource consents required for water takes to allow for future growth. The potential implications Low (discharges) This low level of uncertainty means that we have confidence in the need to allocate financial resources for meeting new consent conditions. Changes to wastewater discharge consent standards will result in the need for the upgrading of our wastewater treatment plants, other requirements may result in the need for more of our infrastructure to be upgraded to meet higher standards. Upgrades to stormwater treatment before discharge may also be required. The increase in financial resources needed will impact on the Council s ability to continue providing services within existing budget levels. There remains a level of uncertainty of the quantum and timing of some infrastructure spent. Additional new or revised legislation, national policy statements, national environmental standards and regional plan changes (the development of the healthy rivers plan change programme) will require changes to activities and service levels not provided for in this plan. Unless otherwise noted, we do not know what changes will be initiated, and of those that we do, what the changes will involve. That conditions of resource consents require higher compliance standards Our financial and other general assumptions 2b-8

29 Topic Forecasting Assumption resulting from changes to allocation of water to our district could include: the amount of water we can take, our ability to accommodate population and industrial growth, additional requirements for monitoring and management of water allocations. Level of Uncertainty Medium (Takes) Potential effects of that uncertainty on the financial estimates provided The financial effects of over allocation of water bodies may be significant and require upgrades and/or new water treatment facilities, however the potential costs cannot be forecast. Additional affects could be the potential to restrict development due to the inability to gain additional water allocation. Risk requiring the development of additional infrastructure. That new water take resource consents will be more difficult to obtain. 21. Operating environment There will be no significant changes to our operating environment which have not already been planned for. Medium Due to climatic variation and unforeseen natural disasters there is an increased chance of events changing the operating environment in our district. However, we have faced unexpected events in the past, and coped adequately. There are risk management plans in place for some activities and an operative emergency management plan. That there will be event(s), e.g. natural disasters and/or legislative reform that significantly affect our ability to operate or change the operating environment. Legislative reform is covered in a separate assumption but can potentially cause significant changes to our operating environment and budgets. Medium Assets are unlikely to be lost other than through planned end of life renewal. Therefore, the financial effect is difficult to predict, but we do carry comprehensive insurance cover on infrastructural and community assets (refer also to insurance assumption). That there will be significant asset losses. 22. Waihou and Piako River catchments post- Treaty settlement cogovernance entity The Hauraki Collective Treaty Settlement Deed will include provision for a cogovernance entity responsible for developing a strategic vision and direction for natural resource issues in the Waihou and Piako River catchments and the Coromandel catchments. Low Medium We will need to make additional funding commitments to allow us to work with post settlement governance bodies and shared responsibilities. We may need to make additional funding commitments to meet additional policy/service delivery costs over time. That the Settlement Deed does not provide for these entities. That the Treaty Settlement provides for a more wide ranging role for this cogovernance entity. 23. Hauraki collective and individual Hauraki Iwi These settlements will identify areas of land that have particular cultural, spiritual, historical and traditional association for iwi Low We will need to note and map these areas of land, include the reasons for the associations and update That the Treaty settlements provide for more specific requirements. Our financial and other general assumptions 2b-9

30 Topic Treaty settlements Forecasting Assumption and that the settlement legislation will require policy makers and consent authorities to acknowledge these associations and provide input from those affected iwi. Level of Uncertainty Potential effects of that uncertainty on the financial estimates provided policy protocols and consenting processes and procedures. Risk 24. Asset information Performance data for assets is assumed to be accurate. Medium The forecast financial information is based on current asset management plan information. When any new information comes to hand, forecast financial information will be changed. The net effect overall may not be significant. Asset data results over-estimate or under-estimate the need for renewal or replacement and its cost. 25. Land use There is land zoned to cater for the forecasted residential property growth in our district, however that land is not being made available now to meet the demand. Further residential areas are being investigated in Paeroa and Waihi to support sufficient land being made available. Medium If projected residential growth does not eventuate due to shortage in zoned land availability and uptake, we will have less connections to our services and less revenue in the short term. We are not yet certain on when uptake of land zoned for development will occur and therefore when infrastructure investment will be needed. Our financial forecasts would change if we do not have adequate financial or development contributions to fund this investment. If we experience more population growth in certain areas than planned for, there may not be sufficient land zoned in that particular area. In some areas of the district there is insufficient land zoned to accommodate industrial and/or commercial growth. Further work is required to ascertain viable options to cater for growth into the future. Low If projected industrial and commercial growth does not eventuate due to shortage in zoned land availability and uptake, we will have less connections to our services and less revenue in the short term. Economic growth and industrial growth slows, resulting in less or delayed demand for industrial and commercial land. Alternatively, private land is zoned as industrial or commercial use but the owner/s do not want to subdivide and sell it meaning we do not have capacity for future growth. 26. Natural disaster events There are no significant local natural disasters during the term of this plan. Medium It is likely any significant natural disaster would have impacts on the current planned expenditure within this plan. It is difficult to predict the likely financial impact of a significant natural disaster; however, we are a member That a natural disaster occurs that has significant impact on our infrastructure and our ability to deliver services. There are adverse effects on the population Our financial and other general assumptions 2b-10

31 Topic Forecasting Assumption The district is classified as a medium risk area for earthquakes, as outlined in the Building Act Therefore, there is a medium risk of an earthquake affecting our district. In extreme weather events there is also a risk that rainfall events and stopbank overtopping will result in flooding and inundation of land/property and our infrastructure. Currently it is believed there is a low risk that a tsunami event/tidal surge will directly affect the coastline around the Firth of Thames and/or Whiritoa. New tsunami modelling is being undertaken for the Firth of Thames. Level of Uncertainty Potential effects of that uncertainty on the financial estimates provided of the Local Authority Protection Programme Disaster Fund (LAPP) which is a cash accumulation mutual pool created by local authorities to cater for the replacement of underground infrastructure following catastrophic damage by natural disaster. We also receive a large subsidy on our road and bridges. Risk and/or local economy from the adverse effects of a natural disaster. 27. Climate Change Climate change will affect our district over the medium to long term in line with projections provided by the Ministry for the Environment (MfE). These projections include: 1. An increase in the frequency and intensity of storm events. 2. Higher temperatures. 3. Rising sea level for planning purposes the Waikato Regional Council (WRC) has recommended a 0.8m rise over the next 100 years relative to the average. The final estimate from MfE is awaited. 4. A change in rainfall patterns producing more extreme weather events and an increase in drought events. We are required to factor these forecasts into decision-making and will need to do so on a continuing basis as forecasts change. Medium MfE bases its climate predictions on the latest climatic projections from the IPCC. In turn, the Waikato Regional Council has applied these predictions to their own calculations. The Waikato Regional Policy Statement requires our district plan to give effect to them. We are increasingly design our infrastructure taking into account climate change projections and the risk of increased climate change related weather events. Where the impacts of climate change have a potential implication for our services, options for adaptation will be identified and a planned programme will be prepared. More expenditure may be required to maintain current levels of service as a result. At this stage the financial implications of adapting to the effects of climate change are uncertain they will be refined in subsequent plans as investigations are progressed. That predictions on climate change as provided by the International Panel on Climate Change, the MfE and the WRC are over or under estimated. That the impacts of climate change for Council activities will be more significant than planned for. Our financial and other general assumptions 2b-11

32 Figure 1: BERL Forecast Inflation Adjustors % per annum change Year Ending Planning & Regulation Roading Transport Community Activities PPI Inputs Local Government administration PPI Inputs Arts and recreation services PPI Inputs water, sewer, drainage, and waste services CGI Earthmoving and site work CGI - Pipelines LCI All salary and wage rates Local government sector June June June June June June June June June Private Sector Wages June Our financial and other general assumptions 2b-12

33 Section 3 Strategic direction Our direction Our financial strategy Our infrastructure strategy A summary of our significance and engagement policy section 3a 3b 3c 3d

34 Our direction Our vision / Tō Mātou Tauākī Moemoeā Our home, our future Our vision captures our reason for getting out of the bed in the morning. It s our team s purpose. To us our home, our future means that we re proud to live here and we want our future generations to be proud to live here too. We want to work with you to help shape our future rather than waiting for things to happen. That means creating opportunities for the now and also for future generations. We are ready to push boundaries to make things happen. This plan sets out what we will do to create that future. Tō tātou rohe kāinga, Tō tatou ao tūroa Ka hopukina tō mātou tauākī moemoeā te tino pūtake ka ara ake i te moenga ia ata. Ko tēnei tō mātou pūtake mō te tima. Ki a mātou Tō tātou rohe kāinga, Tō tatou ao tūroa ka noho whakahī tahi tatou i tēnei wā, a tērā wā hoki o ā tātou uri whakatupu. Ko tō mātou hiahia kia mahi ngātahi tātou ka whakaritea tō mātou ao ki mua, ka tatari kē kia tutuki. Ka whakaritehia ngā āheinga ināianei, āpōpō hoki mō ngā uri whakatupu. Kua reri mātou kia panahia ngā ripa tauārai ēnei āhuatanga. Ka whakatauria te LTP ngā ritenga kia hanga taua ao tūroa. Our community outcomes express in more detail what we d like to see happen. These outcomes continue to stay at the forefront of the decisions we make. Our mission Our mission sets out what we do. It is our mission to: actively provide leadership to, and advocate for, our communities provide good quality infrastructure, services and regulatory functions foster open-minded and two-way communication with our communities ensure the sustainable use and management of resources for the benefit of all who live in, work in and visit our district. Our direction 3a - 1

35 Community Outcomes Prepared Hauraki We provide a range of services and facilities to meet our district s needs and expectations for a safe environment. We provide ongoing safe, well-managed and maintained core infrastructure. Our waste is collected, reduced, reused and recycled responsibly. We are organised and prepared to deal with natural hazards Progress Hauraki We are a proactive council that provides leadership and communicates effectively with all sectors of our district. We advocate for the benefit of our district. We keep our district well-informed and ensure information is available. We consider our district s views when making decisions. Kotahitanga Hauraki Interactive Hauraki We take a collaborative approach with both Mana Whenua and Tangata Whenua in our district. We advocate for forums which ensure involvement and consultation in decision-making processes. We ensure appropriate regard is made to taonga and culturally significant matters. We encourage the development of partnerships for the delivery of services and programmes. We have a positive climate that encourages balanced and sustained economic growth throughout our district Our infrastructural services and facilities are planned and developed to meet future demand. We actively encourage new economic development opportunities while continuing to support existing ventures and service providers. We encourage further development of tourism opportunities and facilities focusing on our heritage and eco-tourism. Lifestyle Hauraki Sustainable Hauraki We provide an environment that encourages vibrant communities and an enhanced quality of life. Our unique communities are protected while balancing the needs of alternative lifestyles. We are advocates for the provision of quality social, educational, health and training services. We encourage partnerships within the district for the delivery of services. We plan for the wise use and management of all land and resources for the continued benefit of our district. Our natural and physical environments are sustainably managed. We have a shared respect for both economic growth and environmental protection. We support the protection of the district s significant natural habitats and ecosystems. We talk about how we intended to deliver on these outcomes in each of our service areas in the Our Services section of this document. Our direction 3a - 2

36 Our financial strategy Local councils deliver a huge range of services every day. Just like any household or business, what we deliver comes down to how much we want to and can afford to pay. We have to make trade-offs between a number of things. We want to provide the services that our communities need and want but at the lowest possible cost. We need to operate within the limits of what we can afford to pay for and in financial speak - what is financially prudent. That has an impact on how much rates we charge, how much money we borrow and how we balance our budget. Our financial strategy sets out how we ll manage our finances over the next ten years. This strategy is about being ready for the future challenges coming our way. Where we started When we prepared our strategy in 2015, the financial challenges we faced were quite different to what they are now. In 2015 our population was expected to the stay the same so we weren t having to meet the needs of more customers. We d nearly finished upgrading all our water treatment plants to meet new national requirements and not many other upgrades were needed. The rest of our business was planned to mostly continue as usual. In 2015 about 80% of our revenue came from rates. The borrowing and interest costs of our water and wastewater upgrades put pressure on rates. We were gradually increasing them to repay debt and recover deficits predicting fairly steady rate increases of between 3.4 and 4.2% each year (excluding water rates). Our water rates were forecast to increase by 2% each year. We had a plan in place to reduce our debt by 62% and run surpluses by We were in a good financial position. Our financial strategy 3b-2

37 Things have changed Since then, things have changed quite significantly and we are facing some major new challenges. We need to invest more to keep our infrastructure up to scratch We are facing a number of new infrastructure challenges that are affecting our ability to keep providing our services at a reasonable cost. We own and manage a wide range of assets from footpaths and bridges to pipes and water treatment plants. Like most assets such as a house or garden, they need to be maintained. We used to replace a lot of our infrastructure when they failed to work and this impacted on the service that our users received. This approach created a lot of reactive costs. We have changed tack and will be more proactively working to keep our infrastructure in good condition and preventing it from failing. We are continuing to work on getting a better understanding of the condition of some of our infrastructure like ageing bridges and where we are losing water from our water supply network, so that we can plan ahead for replacement work needed. In the meantime, there is a lot of other work we need to get started on. Some of our older water supply pipes are not performing the way they should and need to be replaced. We have problems with our wastewater network overflowing in places because stormwater gets into it and we need to address that too. In addition to that, our sealed roads also need more attention. We had reduced the amount of resurfacing of our roads in recent years to see whether we can get them lasting longer and save money as a result. Now the maintenance costs have increased and we are receiving more complaints than our performance targets allow for. We need to invest more in resurfacing and other renewal work if we are to meet the level of service our users expect, but this would result in an increase in rates. We re asking for your feedback on this proposal in particular. The price of increased environmental standards We ve been hearing a lot about the Government s policy on freshwater quality targets revised in early The new policy aims to get 90% of lakes and rivers reaching swimmable water quality standards by Regional councils have the task of setting standards for the wastewater and stormwater that flows from our pipes into these waterways. Since 2015, the standards have increased significantly. While the wastewater we release is already treated to a high quality, we ll have to show that we will improve it. This will require further upgrades to all of our wastewater treatment plants at an estimated cost of around $38 million in capital spend over 15 years. We are already having to start treating some of the stormwater that we release and we expect that this standard of treatment will also be required for existing systems in future. We agree that the waterways running through or bordering our District need to be improved but we are not convinced that improving the quality of the treated wastewater we release is the most effective option. In some circumstances improvements to the quality of the water we are releasing will not have any significant beneficial effect on the water ways that it enters. We have budgeted for these upgrades, but will continue to look at whether we can find more cost-effective ways of doing our bit to improve water quality without having to carry out the upgrades. A recent inquiry into the Havelock North drinking water situation has recommended increased treatment standards be applied to drinking water supply across the country, including chlorination of supply. We will be assessing what changes may be required to our treatment processes. However, as we have recently upgraded our water treatment to meet drinking water standards including having multiple barriers and chlorinate our supplies the cost may not be as significant for us as for other areas of New Zealand. We have not provided for any upgrades in this plan as a result of the inquiry. Recent infrastructure upgrades When we recently upgraded our water supply treatment plants, it increased the value of these assets and the costs of operating them went up - things like electricity, chemicals and running costs. We ve also been spending more to address taste and odour issues with the Waihi and Paeroa water supply. The result of these increases is now seen in our forecast expenditure. Our financial strategy 3b-3

38 Changes to our communities As a result of our economic development programme and the flow on effects of the growth pressures facing Auckland, Hamilton and Tauranga, we have seen more people living here than we anticipated and added demand for new houses. With our active support of economic development initiatives, we are expecting our local economy to continuing perform well and our local population to keep growing. We will continue to have a greater number of older people living in our district for some time. Often our older residents are on fixed income which might affect their ability or willingness to pay for our services. Eventually the grandchildren of the baby boomer generation will outnumber the baby boomers themselves. While most of our services can cater for more people, some of our infrastructure has little to no capacity left and we don t have a lot of land available for more houses or business space. To keep our communities thriving we ll need to look at how we can ensure we have enough land available for development to occur in the short term and assess how well our infrastructure can cope with more demand in future. We ll require extensions to our infrastructure which will come at a cost, and we ll need to have a conversation with you about how these costs will be met in the next three years. Getting real about natural hazards and climate change We ll need to seriously look at what climate change and other natural hazards mean for our communities. More recent climate change forecasts anticipate the effects will be felt much earlier than previously thought. Over the next three years, we ll be looking at how vulnerable our communities will be and how effective our infrastructure will be. This will involve conversations with our communities about these topics. Some of our services will be negatively affected by the forecasted sea level rise and will need to be upgraded or will have increased operating costs. Other natural events like earthquakes and tsunami also pose risks. We don t know how big a problem these hazards are yet but we think it s responsible to ensure we are in a good financial position to deal with any new spend required once we know more. The affordability of our rates - pressures on household budgets Our residents income levels have been much lower than the national average so their ability to pay for our services was front of mind when preparing the last financial strategy. This hasn t changed. Recent indicators of local deprivation of our communities suggest that it is more difficult for a larger proportion of our customers to pay for our services (via rates or user fees) compared to New Zealanders in general. Rates can become unaffordable where they exceed 5% of a household s income. Our research suggests that at least 28% of our home owners meet this threshold. We ve looked at what we can do to help and have considered some options to relieve the pressure on those customers. But wait, there s more And of course the world around us continues to change from more use of new technologies like self-driving and electric vehicles to new governance arrangements coming out of the settlement of Te Tiriti o Waitangi (the Treaty of Waitangi). In this age of rapid change, we ll need to keep an eye on new developments that affect what we deliver and be ready to adapt. We also need to be ready for unforeseen natural events like earthquakes and storms that require us to spend on recovery work. Our financial strategy 3b-4

39 Our challenge in a nutshell We are facing some significant challenges over the next ten years and beyond. The cost of delivering our services is forecast to increase significantly. The rates and fees we currently charge aren t enough to cover these costs, and our self-set caps (or limits) on the rates we can expect to charge would be breached. In the longer term we can expect a greater number of high spend items that, while we know will come our way, we can t quantify yet. We want to ensure that our communities can afford to pay to use our services and their rates bill, but we also need to be in a good financial position to cope with the likely changes ahead. The amount that we spend and borrow in the short to medium term will shape how much flexibility we have to respond to these new challenges ahead. Our response We have weighed up these issues and prepared a pathway forward. We ve considered what we must deliver and what we d like to deliver and prioritised the essential items. We ve also decided that it s important to keep investing in the discretionary projects that help make our communities great places to be. We re raising our forecast rates income to cover the extra must do expenses as well as some of the discretionary initiatives. We re increasing our caps on rates and rate increases to cover those rates as well as providing enough head room to cover necessary new expenses in future. We don t expect the increase in costs we are facing to reduce in the decades ahead. We ve increased our user fees to reflect the increased cost of our services. We re changing the way we fund some activities through rates, to better reflect our ratepayer s ability to pay. We will be assessing what we need to do to provide enough infrastructure for our growing population. We ve extended our forecast debt levels out to year ten and beyond. We ll be paying our way over time by running a deficit for the next two years before running overall surpluses. Over the next few pages we talk about what our forecast spend is, how its funded and what it means for borrowing and debt. Our financial strategy 3b-5

40 2017/ / / / / / / / / / /28 $ millions The dollars and cents As a result of the increased investment required and some discretionary items, we are now forecasting a total of $416 million of total operating expenditure over the life of the plan or an average of $42 million per annum. This average is an increase of approximately $5.6 million from that forecasted in the 2015 long term plan. Forecast annual expenditure Additional capacity (growth) Improved level of service Replace existing assets (renewal) Operating Over the ten years, our highest areas of planned operating spend are forecast to continue to be in our water, land transport and community services activity. These account for 58% of our total planned operating spend. Increases can be seen in most activities 1 and we re seeing the highest increased in our regulatory, community, leadership and water services. Corporate Regulatory Community Development Community Services Leadership Solid Waste Stormwater Land Drainage & Flooding Wastewater Water Land Transport Forecast 10 year expenditure by activity group $7.6 million $43.1 million $23.4 million $68.7 million $38.3 million $6.6 million $8.6 million $12.0 million $37.7 million $75.8 million LTP LTP $94.1 million 1 There was no expenditure allocated to our corporate functions in the LTP. Our financial strategy 3b-6

41 We look at each of these components over the next few pages. Our financial strategy 3b-7

42 2017/18 Annual plan 2018/ / / / / / / / / /28 $ millions 1. Looking after what we ve got We need to invest in looking after our assets so that we can continue to provide you with the same levels of service. We have forecast a significant increase in the amount we need to spend in upgrading our assets to keep them working to a total of $115 million of capital expenditure over ten years that s an increase of $45 million or 64% on what we forecast in $98 million or 85% of this spend is on our network infrastructure alone. Most of this increase is as a result of more renewal spend in our land transport, water supply and to a lesser extent, our community recreation activities. The reasons for these increases are outlined in our infrastructure strategy and our services documents. The increase is due to programmes that will: increase the rate of road resealing and reconstruction to improve the condition of our roads replace a good proportion of our water supply pipes investigate the condition of a range of our assets and replace them as needed including wastewater pipes and water infiltration, water supply leakage, water pressure for firefighting and bridges so that we can assess what we need to invest in future to keep them working renew the Ngatea main street in 2018/19 improve some of our public toilets upgrade our playgrounds to keep them safe to use replace swimming pool covers and toys enable various park and reserve projects upgrade our corporate system improve our CCTV network. Most of these are must do programmes. We need to budget for them but we have a funding shortfall if we are to maintain our services across all our activities. Without increasing rates, we wouldn t be able to pay to keep all our services going. 8 What we'll spend on replacing our assets (renewals) Land transport Water supply Wastewater Stormwater Land drainage Community services On top of that we have budgeted for our other services that don t require capital spend to continue as usual. Our financial strategy 3b-8

43 2. Changing what we deliver Because of the significant extra costs we re facing to look after our infrastructure, we are constrained in how much we can increase our levels of service or how many new initiatives we can offer. We want to carry on with some projects that help make our communities great places to be but we re also aware that not everyone can afford to pay for gold plated services. We ve had to prioritise and not only look at which services we retain and increase but also those we might reduce. Many of the levels of service we are increasing are must dos and it is either not sensible or legally compliant to keep them at the current level. Other increases are discretionary and we have the choice whether to fund them or not. We think that it is important to include some new discretionary items and feedback received on these proposals indicated that many in our communities are willing to pay for these extras. Of our capital spend forecast to improve service levels, we are forecasting $38.8 million over the next ten years. This covers our network infrastructure as well as community and corporate facilities. This compares to $25.1 million over the life of the LTP. Going up We re increasing our levels of service and these have been reflected in the draft budgets. Some of the initiatives are not new they ve been on the cards for a while. New must dos upgrade all of our wastewater treatment plants to meet the higher discharge requirements (new capital spend of $23 million in the first ten years) new work to look at how we can adapt to natural hazards including climate change effects greater focus on Iwi relationships in line with the potential Hauraki Iwi Treaty settlement dealing with new Government requirements around regulating earthquake prone buildings. New items we think are important investing more in planning the shape of our local communities in future a new library in Ngatea as well as a range of new library programmes across our district putting funding aside to support the construction of new road extensions investigating some local roading projects like widening Willoughby Street in Paeroa and sealing North Road in Mangatarata. Other increases we d already planned for and have retained improvement of Waitakaruru water supply to meet drinking water standards local initiatives including a streetscape of Wharf Street, Paeroa, road improvements like widening and new or improved walkways and domain and reserve improvements. Going down We ve reduced the amount of funding we ll give to our local town promotion organisations. A year ago we withdrew from delivering rural fire services as the responsibility for this has shifted to Fire and Emergency New Zealand. We ve also temporarily withdrawn our commitment to meeting firefighting requirements for hydrants in our network. We re not able to provide the level of water pressure required for firefighting services when they access water from some of our hydrants. We ll be investigating this over the next few years and identifying what we can do to fix it and what the cost would be. Our financial strategy 3b-9

44 2017/18 Annual plan 2018/ / / / / / / / / /28 $ millions 10 What we'll spend on increasing service levels (capital) Land transport Water supply Wastewater Stormwater Land drainage Community services 3. Providing for changes in population and land use In the last couple of years, our district has seen unexpected moderate population growth. We are forecasting that this will continue to come our way. This combined with increasing environmental standards is putting some pressure on some of our infrastructure, especially our water supply and wastewater services. The economic growth we welcome can also change the way land is used and demand for our services. We want to make sure we have the right amount of land available in the right areas to provide for this growth, but we ll also need to make sure our infrastructure can cater for it. Over the next three years we ll be focussing on working with our communities on getting our plans right. We intend that this will include making more land available for development through a series of district plan changes. We ll also be looking at what work we could do to increase the capacity of our infrastructure where its currently limited and reviewing our arrangements for funding that work. The budgets include $4.3 million of capital expenditure over the next ten years to provide more capacity in our water supply, wastewater and roading services. A new policy on when and how much we ll charge for development contributions will be prepared in the next year. In the meantime, we ll continue to deal with new demands on a case by case basis and consider charging financial contributions as per our current policy. We ve updated our budgeted expenditure for other non-infrastructure services where we ve experienced increased demand - like building and resource consenting - to match those experienced in the last two years. Our forecast income from user fees also reflects the recent demand. Our financial strategy 3b-10

45 4. In case of emergency We manage our budgets in a way that ensures we have access to cash in the event of an emergency. This also helps us manage fluctuations in our cash flow. We have to have access to funds equivalent to at least 10% of our debt. At the time of writing, as well as the balance in our bank account, we have another $7 million that can be drawn down. We can also access central government subsidies for emergency repairs to our roading network, up to 80% of the cost. We also have insurance cover for our major assets. Our financial strategy 3b-11

46 How we fund our services Most of our operating funding comes from: rates fees and charges in the case of some activities like land transport, a significant amount from subsidies, or grants from special funds. We make use of borrowing, subsidies and grants and at times, financial contributions to fund our capital expenditure. Our Revenue and Financing Policy sets out our funding arrangements in more detail. How our services will be funded (operating) Regulatory services Community development Community services Solid waste Stormwater Land drainage Wastewater Water supply Land transport Governance and Leadership 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Rates Fees and charges Subsidies Paying our way over time We ll run deficits for the next two years and then after that to run overall surpluses. A deficit is when our expenses are more than our income, and a surplus is when our income is more than our expenses. We believe running at a deficit over the next two years is the most prudent and appropriate way to balance our budgets given the challenges we re facing. The rates increases forecast for the first three years of the plan will help to bring our income up to the level of our operating expenses and bring us into surplus. The operating surpluses that we are forecasting in the later years of the plan are mostly in our land transport and wastewater activities. The land transport surpluses are needed to pay for safety improvements which aren t included as part of our operating expenses. The wastewater surpluses are needed to help contribute to the major wastewater upgrades that are planned in the last few years of the plan. Our financial strategy 3b-12

47 What our plan means for rates To date our strategy has been to limit rate increases to the local government inflation measure (the LGCI or local government cost index) plus 2.5% in 2015/16 to 2018/19 then reduced to 2% until In 2015 that meant a forecasted rate cap of between 4.7 to 5.5% per year. Our income from rates was forecast to stay within these caps, with the gap between rates and the limit widening as the years progressed. This is no longer sustainable and we have revised these caps. We ve relooked at what the realistic cost is to deliver what we need to over the next ten years. The costs have gone up a lot and we don t anticipate this to reduce in the years beyond, and have forecast our infrastructure operating costs are likely to more than double over the next 30 years. What is LGCI? We use the LGCI as it reflects the non-household type costs that councils have to meet including energy, earthmoving, oil and petroleum type products used in roads. These can increase at a different rate than the consumer price index (CPI) that we often hear about The result of all the changes we are proposing, is a rates increase (excluding water rates) of an average 4.4% per year over the next ten years, compared to a forecasted average rate increase of 3.7% per annum over the period. In the first year it will increase by 6.5%. This doesn t include our water rates, which we present separately. Options for reducing rate increases To reduce the amount that rates rise, more cuts to our services or initiatives would be needed than we have already proposed. We asked for feedback on some options for reducing spend before we adopted this strategy. Overall people told us that they were happy to pay a bit more for most of the initiatives on the table. Our total forecast spend usually fluctuates each year, however in the past we ve spread any large increases over several years. That means you can expect your rates bill to increase about the same amount every year and it helps provide certainty on what you can expect your rates bill to be. It also means we run temporary surpluses and deficits in the budgets year on year. Why are water rates shown separately? Combining the water rates cap with other rates would have distorted the picture for the rest of our activities. The high level of capital upgrades required in the water supply activity was forecast to drive water rates increases that were higher than those forecast for non-water rates. We felt that the cap for water rates needed to be isolated. We also believe that ratepayers see water rates as separate to other rates as they are billed separately as well We have tried to spread the increases but there are higher increases in the first three years of this LTP. Deferring rate increases to the latter part of the LTP period would mean not leaving enough capacity to deal with the unexpected (like a major weather event) or on the big spend items we expect will come. Having higher increases in the short term is important for getting our budgets in balance. Capping our income from rates We have revised our rates caps to allow some leeway to increase the rates we collect for unexpected events or new requirements. Our rates cap is approximately 2% on top of actual forecast rate increases needed to fund our forecasted spend. We don t anticipate that rates will need to be increased to the level of the rates cap, but the flexibility is there in case it becomes absolutely necessary. The amount rates can increase each year (excluding water) will be capped at the forecast LGCI plus 5.5% in the first three years of the Long Term Plan, and the forecast LGCI plus 3.5% in the remaining years of the Long Term Plan. Our financial strategy 3b-13

48 2015/ / / / / / / / / / / / /28 $ million 2015/ / / / / / / / / / / / /28 % change each year Forecast average rate increases excluding water rates 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% % change each year % increase cap The increases for each year are specified in Appendix A. We have also capped the total income we expect from rates (excluding water). The income corresponds to the percentage that rates will change presented above. The graph below shows the total income compared to our cap. Forecast income from rates excluding water rates forecast rates (excluding water) rates cap (excluding water) The annual amounts are specified in Appendix A. Our water rates Our water rates increases have been set at 4.5% for year one, then 6% for years two and three, and 2% in the following seven. This allows for increases needed to get the water activity to a balanced budget within three years. To recover the additional cost the Council faces to treat taste and odour issues in Paeroa and Waihi and to remove unsightly manganese from the Plains water supply, the Council is proposing to increase water rates by 4.5% for the first year, then 6% per annum, for two years. We are forecasting that water rate increases will continue at 2% each year after that to cover inflation increases and to continue to spend on replacing water supply infrastructure like ageing pipes. Our financial strategy 3b-14

49 2015/ / / / / / / / / / / / /28 $ million 2015/ / / / / / / / / / / / /28 % change each year We will cap our rates increases for the water activity at the forecast LGCI plus 6% in the first three years of the Long Term Plan, and the forecast LGCI plus 1.5% in the remaining years of the Long Term Plan. Forecast average water rate increases 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 0% % change each year Cap Water rates are based in part on consumption. The rate that users consume water will vary year by year based on things like changes in weather which can drive demand. Because of this variability and uncertainty, we acknowledge that the water rates cap may be breached in some years. We view the rates caps as more useful when applied to the amount charged per connection and per cubic metre of water supplied. The following graph shows the forecast total income from rates revenue and the rates cap Forecast income from water rates revenue from water rates cap for water rates The annual amounts are specified in Appendix A. How we allocate rates We use a range of different rate types that reflect who benefits from or causes the need for our services. In preparing our long term plan we ve reviewed the share of rates paid by each household or property. Our research indicates that for a significant part of our district, rates are likely to be less affordable than New Zealand on average. We ve relooked at how our services are funded and are proposing to make more use of property value based rates. About81% of our income is received through rates. The amount of rates property owners pay includes a Our financial strategy 3b-15

50 portion that is a uniform charge a charge that is the same for every property and a capital value based charge where higher value properties pay a higher proportion of rates. The amount is currently about 50:50. We consider that owners of higher value properties should pay more for a number of our services than lower valued properties. The benefits of these services are more directly related to the value of properties. We have reassessed whether our current funding arrangements reflect this and we ve concluded that they don t in all cases. Property capital value is also the best tool we have available to reflect ability to pay. As a result of this review we re shifting about 5% more of our general rate funding from uniform annual charges to capital value based rates. About 34% of our income from rates comes from the general rate. This would mean approximately $0.5 million that would have been split evenly across all properties will now be charged proportionate to the capital value of your property. Ratepayers with higher value properties will pay more and ratepayers with lower valued properties will pay less. This change will be made over three years to smooth the impact it has on individual ratepayers. Roading rates differential To date we ve charged a differential on the rates charged for maintaining our road carriageways. A differential is a way of recognising that different types of users (such as road users) have different levels of use of our services or different impacts on our assets in this case, wear and tear on our roads. Applying a differential to rates means that the rates shared across our users will differ, even if their property value were the same. Our previous policy was to apply a differential of on mining and 10.9 on quarrying properties. This means that the rate they pay is times and 10.9 times the capital value rate respectively. We know that this does not match the current impact that each sector has on our road network. For example, dairy farming has a much bigger impact than residential and commercial properties due to the heavy vehicles regularly using the road but this isn t reflected in our current approach. That means residential and commercial properties are carrying more of the financial rates burden than they cause. However, defining what the exact current impact is complex and costly. It is fairer to remove the differential and we have proposed that in our revenue and financing policy. That means all properties roading carriageway rates would be based only on their capital value. Our budgets provide for this change. Our financial strategy 3b-16

51 What our plan means for borrowing and debt A number of the assets and infrastructure we provide have long lives. We usually borrow money so that we can spread the costs of these sorts of assets over time instead of imposing large one-off costs on ratepayers. In our previous plan, we forecast that debt levels would peak at about $46 million and decrease to $16 million by 2024/25. Because we are now having to spend more to increase our wastewater treatment environmental standards as well as to replace some of our infrastructure assets that are coming to the end of their lives, we are forecasting changes to what amount we borrow and when. We are now forecasting that our net debt will peak at $49 million and will still be at $48 million in June 2028 (the end of this plan). Despite this, over the next ten years, all our activities will have reduced debt levels, except for the wastewater activity. Because of the treatment plant upgrades, our wastewater debt levels will increase from $8 million to $22 million over the next ten years. These upgrades will continue beyond the life of this plan to 2022/23 and this will put pressure on our debt levels. Over the first three years of this plan we will be looking at options to reduce what we are forecast to spend on the upgrades and look to reduce the debt forecast. We believe that the requirements to fund these upgrades puts significant constraints on our ability to respond to other as-yet-unforecast future spend, whether they are driven by community need or regulatory change. Our debt caps We have determined what we believe are prudent debt levels and have set these as caps which ensure borrowing stays within prudent levels. We use four debt caps. To arrive at an overall debt cap, the four debt caps are calculated and the lowest value in any given year becomes our overall debt cap. Three of the caps we use are the same as those used in our previous and plans, and one has been revised. For the first five years of the this plan the overall cap is driven by the interest expense to total rates measure. For the last five years of this plan, the cap is the total debt to total revenue measure. We are a member of the Local Government Funding Agency (LGFA), a co-operative which allows councils to borrow at lower interest rates and have easier access to long term borrowing, which reduces our overall borrowing costs. The LGFA has a number of caps that its shareholders must adhere to and our financial strategy is well within these limits. Our forecast debt compares to our caps as follows: Our cap 1. Total net external debt will not exceed 175% of total revenue in any year. 2. Net interest expense is 15% of rates revenue in any year. 3. Net interest expense is 10% of total revenue in any year. 4. Net external debt per rating unit is $8,000 in any year. Our forecasts The LGFA has the same limit. We are forecasting to remain well within this debt limit in this plan, with a peak of 128% in 2018/19. We have set our limits more conservatively than the LGFA. The LGFA has a limit that net interest expense is 25% of rates revenue in any year. We will remain well within this debt limit, with a peak of 7.6% in 2019/20. We have set our limit more conservatively than the LGFA. The LGFA has a limit that net interest expense is 20% of total revenue in any year. We will remain within this debt limit, with a peak of 6.2% in 2019/20. The LGFA has no equivalent limit. We will remain within our debt limit, with a peak of $4,566 in 2020/21. In our previous plans, this cap was set at $5,000 per rating unit. This has been increased to $8,000 to more closely align with the other three debt caps. The forecast 10 year caps for each measure are specified in Appendix B. Overall, we believe our approach to debt to be financially prudent and appropriately conservative. Our external debt is forecast to remain relatively constant the period of this plan, ranging between $45 million and $49 million. The Our financial strategy 3b-17

52 2015/ / / / / / / / / / / / /28 $ million decreases in debt forecast in the previous plan are now not forecast to occur, due to the wastewater treatment plant upgrades that are required by changes in environmental standards. The following graph shows our projected net external debt 2 profile against the overall debt cap over the life of this plan, as well as the projected debt profile of the plan for comparison. We are forecast to stay comfortably within our caps in the first ten years, but we are concerned about the years 10 to 30 as this level of debt will likely continue beyond year 10 as infrastructure spend continues. In response we have proposed to keep rates levels beyond year three a good amount below our rates cap. This will give us some room to cover the cost of servicing ongoing debt. As a result though, our forecast rates income is higher in the first three years (refer to the what it means for rates section earlier in the strategy). Wastewater rates however are forecast to rise at a higher level in the latter years of this plan as our debt for this activity is facing high increases. We will monitor how our debt levels are tracking and continually review our expenditure and rates levels to ensure our debt remains at a prudent level. $ Net external debt 2018 LTP forecast debt 2015 LTP forecast debt debt cap Fees are going up We ve included new fees for vehicle crossing inspections, resource consents, and swimming pool inspections and raised some of our other fees to keep up with the increased cost of delivering our services. Our fees and charges are all included in a schedule available separately. We are raising our user fees and charges to ensure we recover the proportion of spend that individual users benefit from and reduce the amount of income we charge through rates. By raising fees we are forecasting an additional $130,000 income compared to the current year. 2 Net external debt is external debt (the amount that the Council owes to its external lenders such as banks) less the Council s cash and other similar liquid assets. Our financial strategy 3b-18

53 Policy on giving securities for borrowing We ll secure our borrowing against rates revenue as per section 115 of the Local Government Act Other forms of security may be considered if they will reduce the overall cost of borrowing. Objective for holding and managing financial investments and equity securities We don t currently hold equity securities (shares) for the primary purpose of earning a return on our investments. We have no plans to invest in equity securities during the term of the Long Term Plan. The companies in the table below are those in which we currently hold shares. There s no rate of return for these investments and the objectives for investment are noted in the table below. Company New Zealand Local Government Funding Agency (LGFA) (0.4% shareholding) Waikato Local Authority Shared Services (LASS) (1.97% shareholding) Civic Financial Service Ltd (0.5% shareholding) Objective of holding equity To ensure that the LGFA has sufficient capital to remain viable so that it continues as a source of debt funding. To ensure that the LASS has sufficient capital to remain viable so that it continues as a provider of shared services to the Council. To ensure the Council can obtain superannuation and financial services. Target rate of return 0% 0% 0% Our financial strategy 3b-19

54 Appendix A: Forecast rates change Increases in forecast rates (excluding water) and cap Forecast 2018/ / / / / / / / / /28 Forecast 6.49% 5.76% 5.43% 3.63% 3.44% 3.48% 3.53% 3.57% 4.40% 4.49% Rate Cap 7.5% 7.7% 7.7% 5.7% 5.8% 5.8% 5.9% 6.0% 6.1% 6.2% Difference (1.01%) (1.94%) (2.27%) (2.07%) (2.36%) (2.32%) (2.37%) (2.43%) (1.70%) (1.71%) Amount of income from rates forecast (excluding water) and cap Forecast ($ million) 2018/ / / / / / / / / /28 Forecast Rate Cap Difference (0.2) (0.7) (1.3) (1.9) (2.6) (3.3) (4.1) (5.1) (6.0) (6.9) Increases in forecast water rates and cap Forecast 2018/ / / / / / / / / /28 Forecast 6.0% 6.0% 6.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Rate Cap 8.0% 8.2% 8.2% 3.7% 3.8% 3.8% 3.9% 4.0% 4.1% 4.2% Difference (2.0) (2.2) (2.2) (1.7) (1.8) (1.8) (1.9) (2.0) (2.1) (2.2) Amount of income from water rates forecast and cap Forecast ($ million) 2018/ / / / / / / / / /28 Forecast Rate Cap Difference (0.2) (0.4) (0.5) (0.7) (0.8) (1.0) (1.2) (1.4) (1.6) (1.9) Our financial strategy 3b-20

55 Appendix B: Forecast annual debt caps Cap Net debt as % of total revenue Interest cost to total revenue Interest cost to total rates Net debt per rating unit 175% 127% 124% 121% 115% 105% 99% 98% 96% 96% 92% 10% 5.7% 6.1% 5.9% 6.0% 5.7% 5.2% 4.9% 4.9% 4.8% 4.8% 15% 7.1% 7.6% 7.4% 7.4% 7.0% 6.4% 6.1% 6.0% 5.9% 5.9% $8,000 $4,315 $4,416 $4,524 $4,398 $4,124 $4,001 $4,041 $4,081 $4,241 $4,178 Our financial strategy 3b-21

56 Our infrastructure strategy Executive Summary Our infrastructure strategy (our strategy) provides us with, along with our communities, our strategic direction for the provision of core infrastructure over the next 30 years. Core infrastructure includes our water supply, wastewater, stormwater, land drainage and land transport activities. This strategy outlines a 30-year view of strategic issues, expenditure requirements and significant decisions that will need to be made. Our infrastructure Our strategy covers infrastructure services provided by us for water supply, wastewater, stormwater, land drainage, and land transport (roading and footpath) activities. These activities support economic activity, protect private property and the environment, and support public health. We own and manage $504 million of infrastructure assets across these activities, including: 633 kilometres of roads (518 kilometres sealed, 115 kilometres unsealed) 145 bridges and major culverts and 114 kilometres of footpaths Four water treatment plants (five rural schemes have recently been decommissioned) supplying nine urban and three rural reticulated schemes with approximately 550 kilometres of pipes servicing 7,080 urban and rural properties. Seven wastewater treatment plants servicing approximately 6,050 properties via 166 kilometres of pipes. 90 kilometres of urban stormwater pipes and 40 kilometres of open drains 650 kilometres of rural land drains and 91 kilometres of stopbanks Our infrastructure strategy 3c - 1

57 Our land transport activity represents over 50% of the value of our infrastructure asset network at $307 million of the total $504 million. Our other activities make up the balance as follows: water supply is valued at $85 million, wastewater at $55 million, stormwater at $34 million and land drainage and flood protection at $23 million. Key infrastructure issues In preparing our strategy we ve identified 10 district-wide issues that need to be at the forefront of our infrastructure planning and decision-making. They are: Legislation and standards Population growth Natural hazards Sea level rise and coastal erosion Climate change Economic profile Geology Compliance Treaty settlement arrangements and cogovernance Aging population The following key issues have been identified for each of our infrastructure activities. Options to respond to the issues are identified in later in the document. Activity Key issues Water supply Wastewater Stormwater Land drainage Drinking water quality standards All of our resource consents will need renewing but we are uncertain about what the conditions will involve Capacity for growth in the water supply network Water network losses Effect of climate change on water supply The risk to water supply infrastructure from natural hazards Asset condition and performance Increased environmental compliance standards will need to be met Projected population growth will exceed the capacity of existing wastewater treatment plants, particularly in Kerepehi, Waihi and Paeroa Need to reassess the capacity of wastewater infrastructure to cope with climate change impacts more intense and frequent rainfall The impact of sea level rise, rising water tables and costal erosion on public and private wastewater infrastructure Understanding our leaky network catchments Asset condition and performance Increased environmental compliance standards will likely require the treatment of stormwater The impact of more frequent and intense rainfall events as a result of climate change We need to better understand the condition and performance of our older stormwater assets Impacts on land and property from sea level rise and coastal erosion Impact of climate change on the land drainage network Impact of natural hazards on the land drainage network Asset condition and performance Our infrastructure strategy 3c - 2

58 Activity Key issues Land transport Future level of funding subsidies is uncertain Aging population and accessibility on levels of service and costs of providing that service Impact of sea level rise and costal erosion on roading and bridge infrastructure Impacts on roading infrastructure from climate change Our bridges are aging but we don t know enough about their condition Water Supply The recent release of the Phase 2 report of the Havelock North Water Inquiry has highlighted the need to undertake the delivery of safe drinking water to the highest possible standards. While we generally meet the Drinking Water Standards (DWS), we need to make improvements to some of our internal procedures in the delivery of safe water. We ll need to assess any impact of potential legislative changes, changes to drinking water standards, and the requirement for treatment plant upgrades as a result of the Havelock North inquiry. We don t think we ll need to make significant changes to the treatment processes we currently have. Each treatment plant currently has multiple barriers including filtration, UV and chlorination. Uncertainty also exists with the expiry of water supply resource consents. It is expected that our resource consent costs will increase over the period in which we require our consents to be obtained. There is also uncertainty around the potential for a reduction in water allocations and increased demand management requirements. Variation 6 of the Waikato Regional Plan provides an element of protection to our water allocation, and we also have both universal metering of our water supplies and a proactive water loss management programme. As well as this, there s also uncertainty around the impact of governance from the Hauraki Treaty Settlement and the implications it will have on future Waikato Regional Plan changes by the Waikato Regional Council. These matters will continue to be monitored. The water loss management programme will has implemented a water meter replacement programme, proactive risk-based renewal programme and will undertake integrated growth management to understand the future demand on water supply needed to service the district and inform its applications for resource consents. We currently have sufficient excess capacity to accommodate the growth projections, but any significant increase in demand from dairy or industry may require significant expenditure for upgrades of the treatment capacity to deal with this demand. Wastewater The National Policy Statement on Freshwater (NPSFW) is driving significant changes to the quality of water discharges to water bodies. This includes both wastewater and stormwater discharges. We discharge all of our treated wastewater to rivers within the district. Over the first five years of our long term plan, we ll be required to renew all of our discharge consents for our wastewater treatment plants. The Waikato Regional Council (WRC) is required to ensure that the intent of the NPSFW is implemented when issuing discharge consents. In addition to this WRC is in the process of undertaking Plan Change 2 to its Waikato Regional Plan which will determine the standards for discharge to the Waihou and Piako River catchments. These changes will require upgrades to all seven of our wastewater treatment plants. These upgrades will need to start in 2024 and will continue through to Expected growth (residential and commercial / industrial) in the district may also drive the need to upgrade wastewater treatment plants. This is particularly relevant in Paeroa and Kerepehi where development is likely to drive the need to upgrade before the discharge consents requires us to do so. Our infrastructure strategy 3c - 3

59 The upgrades to the wastewater treatment plants will include a growth component. It is expected that about 10% of the upgrade costs will be attributable to growth. We ve undertaken investigations into the performance of our wastewater network and we re starting to undertake similar work to determine its condition. Our network generally has significant infiltration and ingress (I&I) of either stormwater or groundwater. As with water, a proactive risk-based renewal programme will be implemented to secure critical assets and reduce the I&I. The requirement to meet an increased level of service and planned renewals will increase wastewater debt from $8 million in 2017/18 to $22 million in 2027/28. Wastewater rates will also need to increase by 80% over the same tenyear period. Stormwater As with wastewater, the NPSFW is requiring improved quality of discharges to the receiving waters, and the Waikato Regional Plan Change 2 is likely to reinforce this. This will mean that we ll have to improve the quality of our stormwater discharges to the rivers. We are taking a proactive, opportunistic approach to retrospectively fit infrastructure that assists with improving the stormwater quality. All new stormwater infrastructure is being built to meet the expected standards. We will be required to renew our current stormwater discharge consents by It is expected that the stormwater discharge consents will further reinforce the need to actively improve stormwater discharge. We need to improve our knowledge of the condition of the stormwater network. This work is currently underway and will continue into the first few years of this strategy. We have proactively allowed for the future effects of climate change in determining pipe sizes and have provided for the recommended increase in rainfall intensities in our adopted designs. Land Drainage Climate change estimates are that the sea level rise we need to allow for is 0.8 metres above 1990 levels. Our primary stopbanks are at 3.0 metres based on the Tararu Datum. This means that by 2090 they will have to be progressively raised to 3.8 metres. This does not include any freeboard. As a result of the consolidation of the soft underlying soils, routine work is required to raise stopbanks to design levels, i.e. the stopbanks settle and need to be raised on a cycle of years to mitigate the settlement. The raising of the stopbanks to accommodate sea level rise predictions will be undertaken as part of this routine work. Over the thirty year period of this strategy, the levels of the primary stopbanks may need to be raised by approximately 0.4 metres above the current design level of 3 metres but this is dependent on actual sea level rise. Land Transport An increase in renewals for roads is required as the current approach of reducing sealed road resurfacing (resealing) and rehabilitation (rebuilding) work to test pavement and surfacing lives has led to increase in roughness of the network and a corresponding decrease in customer satisfaction. We are proposing to increase future resurfacing to 53 kilometres (10% of the road network) between 2018 and 2021 to work towards getting up to a more sustainable level. Work is being undertaken to determine what the sustainable annual resurfacing should be. We re mindful of the potential impacts of climate change on our roads particularly the peat underlying areas of the Hauraki Plains. Climate change scientists have indicated that we can expect more droughts and bigger rain events more frequently as the climate changes. The droughts can be particularly damaging to roads built on peat soils. Large rain events cause flooding and slips which may lead to increased maintenance costs for us and our ratepayers. The requirement to meet increased levels of service and planned renewals will increase roading rates by 114% between 2017/18 and 2027/28. Our infrastructure strategy 3c - 4

60 Funding We fund our infrastructure activities through a mixture of rates, subsidies and other fees and charges. The majority of funding comes from rates. We also use debt to spread the funding of large one-off costs, especially capital expenditure, over the useful life of the expenditure. Overall position The following graphs show the most likely scenario for total operating expenditure, total renewals versus depreciation expenditure and the total renewals for water supply, wastewater, stormwater, land drainage, and land transport. Our financial position has changed from that forecast in our Infrastructure Strategy. Better information has shown that reticulation and roading renewals need to increase over the planning period to keep our infrastructure performing. Forecast increased environmental standards will likely demand significant additional capital expenditure on our wastewater treatment facilities. Our previous forecast was for no population or rating unit growth in our communities. Current and forecast growth means we ll need to upgrade some of our infrastructure. We also face risks from future climate change and natural hazards. Our ability to fund our responses to the challenges above is affected by the incomes of our communities. We have a higher than average number of low-income households in our district. We want to ensure that our communities can afford to pay to use our services and their rates bill, but we also need to be in a good financial position to cope with the likely changes ahead. The amount that we spend and borrow in the short to medium term will shape how much flexibility we have to respond to these new challenges ahead. There is a high degree of uncertainty for some of the expenditure that will be required to meet future growth and service level changes. We have responded by prioritising our must-dos and cutting back on some of the nice-tohaves. We have also increased our rate and debt caps. The rate increases now forecast mean that we maintain a solid financial position, but further infrastructure cost increases may put this at risk. Our financial strategy provides more detail. The focus of capital expenditure in the first twelve years of the strategy is largely wastewater related, including $38.7 million for the upgrade of our wastewater treatment plants. There is a focus on land drainage and flood protection of the last six years. Roads are high spend items and we are forecasting increases in our land transport activity over the duration of the strategy. An ongoing water pipe renewal programme and the replacement of a raw water tank accounts for a high proportion of the capital expenditure in our water supply activity. Our infrastructure strategy 3c - 5

61 2018/ / / / / / / / / / / / / / /47 $ millions 25 Total Capital Expenditure Land Transport Water Supply Wastewater Stormwater Drainage Flood Protection Figure 1: Total capital expenditure forecasts Sections three to seven provide an overview of the expenditure drivers for each of our infrastructure activities. Our infrastructure strategy 3c - 6

62 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Total Operating Expenditure Land Transport Water Supply Wastewater Stormwater Drainage Flood Protection Figure 2: Total operating expenditure forecasts The largest increase in operating expenditure over the 30 years is in relation to water supply. The chart above clearly shows the impact of inflation on our expenditure. Total - Cumulative Renewals and Depreciation Renewals Depreciation Figure 3: Total cumulative renewals and depreciation forecast uninflated We have a large amount of reticulation infrastructure coming to the end of its life in the later years of our strategy. While over the lives of our assets, forecast renewal spend will equal depreciation, the total amount of expenditure on Our infrastructure strategy 3c - 7

63 2018/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / /48 $000's renewals will exceed depreciation by We will need to fund this by either running operating surpluses or by borrowing. 70,000 60,000 50,000 40,000 30,000 Net Debt 20,000 10, ,000-20,000-30,000 Figure 4: Net debt forecast Our net debt is expected to peak in 2032 at $59.7 million, steadily dropping to zero by The increases are driven by the increased renewals and levels of service. Once the peak of renewals is past, debt should start to reduce. Summary We ve identified a number of infrastructure challenges over the next 30 years and our infrastructure strategy identifies the strategic approach to addressing these. The initial period of our strategy is focussed on water and wastewater infrastructure provision whilst the latter part of the strategy also has an increased emphasis on land drainage and flood protection. Roads and footpaths in our land transport activity continue to be our largest infrastructure asset. Our infrastructure strategy 3c - 8

64 Introduction Purpose of this strategy Our infrastructure strategy (our strategy) has been prepared in accordance with the requirements of section 101B of the Local Government Act 2002 (LGA). The purpose of our infrastructure strategy, as stated in the LGA is to - identify our significant infrastructure issues over the period covered by the strategy, and identify the principal options for managing those issues and the implications of those options. In accordance with section 101B (6) of the LGA, our strategy includes infrastructure assets used to provide our services or services on our behalf, in relation to the following groups of activities: water supply wastewater (sewerage and the treatment and disposal of sewage) stormwater land drainage (flood protection and control works) land transport (the provision of roads, bridges and footpaths). As well as the infrastructure we provide, flood protection and control works are also provided by the Waikato Regional Council. This infrastructure strategy only relates to those assets that we provide. Our strategy does not include state highways. Planning for, providing and managing state highways is the responsibility of the New Zealand Transport Agency (NZTA). The LGA also provides for other assets to be included in the infrastructure strategy at each local authority s discretion. At this time, we have decided to focus on the five asset groups identified above, with a view to considering including additional asset groups in our next infrastructure strategy in Hauraki District context The Hauraki District covers an area of approximately 1,269 square kilometres. Our district spans from the Kaiaua (or seabird) Coast across the Hauraki Plains, through the Karangahake Gorge and over the Kaimai / Coromandel ranges before reaching the Golden Valley farmlands in the northeast, and the Pacific Ocean at Whiritoa. Historically, the Hauraki Plains was a large swamp, but after extensive drainage work, it is now highly productive dairy land. Areas within the Hauraki Plains have an underlying peat layer and / or soft estuarine mud both of which are susceptible to increasing and decreasing water levels which have a direct impact on our infrastructure assets, particularly our roads and pipes. Natural hazards continue to pose a risk to our district, particularly the Hauraki Plains area which is either at or below sea level. The three largest urban centres in the district are Waihi, Paeroa and Ngatea, however the district also includes a number of smaller townships including Kaiaua, Turua, Kerepehi, Mackaytown, Waikino, Whiritoa and Waitakaruru. Industry Our district is most well-known for its farming, mining and growing tourism industries. We have a strong farming history which is predominantly pastoral farming, with a significant number of businesses supporting and servicing the farming industry. A number of new industries have recently established in our district including an ice cream manufacturing plant at Kerepehi. The mines in Waihi, which include an open pit and several underground mines, are only a handful of mines in the developed world that operate within an established residential community. As such, a paramount link to the mine s success and on-going development is its relationship with the surrounding community and the Hauraki District Council. Tourism has been growing with the Hauraki Rail Trail, Karangahake Gorge and the Seabird Coast, Ngatea Water Gardens, attracting people to visit the District. The increase in tourism numbers has placed an increasing demand on our infrastructure and facilities, as well as the NZTA and the Department of Conservation facilities. Our infrastructure strategy 3c - 9

65 Demographic context Over the last two years our district has experienced higher population growth than previously projected or planned for. In 2013 the resident population was 18,600, and it is now estimated that it will reach 20,650 by June 2018, 22,300 by 2028 and 23,695 by We estimate that in % of the population will be aged 65+, with this increasing to 38% by While the recent growth and that forecast isn t high, it is a significant change from our previous infrastructure strategy, which was based on a stable or slightly declining population that was aging and already much older than the national average. This population growth will have a significant impact on our infrastructure as the network capacity has already been, or will soon be reached. Significant investment will be needed in upgrading or replacing infrastructure, securing the required land use outcomes and consents, and the ongoing maintenance of the assets. While we have adopted the higher end of growth projections scenarios provided by our population experts, and these have been used in the development of this strategy, the main drivers for infrastructure development are currently legislative and regulatory. Dwelling and rating units An increase in population can result in demand for dwellings for either living or holiday purposes. In June 2016 our district had 9,715 dwellings and it is estimated that we ll have 10,320 dwellings by 2018/19, increasing to 13,024 dwellings by 2048/49. It is estimated that the proportion of occupied dwellings will remain relatively stable, reducing from 88% in 2013 to around 82% in Rating unit growth is driven by the economy, population and other changes in demographics, lifestyle patterns, and growth in neighbouring districts, including Auckland. In 2016/17 our district had 10,895 rating units, and is estimated to have 11,452 by 2018/19. It is projected that by 2028 the number of rateable units will increase to 12,576, and 14,492 by Social deprivation and annual household income Our district continues to experience higher levels of deprivation compared to other parts of the country. On a scale of one to ten (least to most deprived) our district as a whole scores 7.6, however, Waihi and Paeroa are assessed individually as having a value of 10 which means that they are in the most deprived 10% of areas in New Zealand. Kerepehi is also assessed as a 9. Half of the children in the district aged between 0-14 live in the most deprived areas (9 and 10). Our average annual household income was $66,838 in 2015 which is significantly lower than the national average of $91,198. Given that our district has a high proportion of the population over 65 years of age, a higher number will have income from superannuation and means tested benefits which will impact on the average household income for our district. Our infrastructure strategy 3c - 10

66 Overview of our infrastructure We own and manages $504 million of infrastructure assets which can be summarised as follows: Land transport value $307 million We re responsible for the planning, provision, development, operations and maintenance of our district s land transportation network and facilities to ensure the safe and efficient movement of people and goods around the district. We have 633 kilometres of roads (518 kilometres sealed, 115 kilometres unsealed), 145 bridges and major culverts, and 114kms of footpaths. In addition to this the we own the assets of the Hauraki Rail Trail across the three districts it travels through (Hauraki, Thames-Coromandel and Matamata-Piako Districts). The land transport activity represents more than half of the our infrastructure value with a 2017 replacement cost of over $307 million 1. Water supply value $85 million We provide safe drinking water to dwellings, commercial/industrial premises and many rural properties. The provision of safe drinking water is a public health priority. Four water treatment plants supply eight reticulated schemes with approximately 600km of pipes supplying 7,080 properties. Wastewater value $55 million We collect, treat and dispose of treated wastewater from properties in the district. The safe disposal of wastewater is required for public and environmental health. Seven wastewater treatment plants service 6,150 properties. Stormwater value $34 million Our stormwater network consists of 90km of urban stormwater pipes and 40km of open drains to manage the disposal of water from prolonged periods of rain to reduce risks to people and property. Land drainage and flood protection value $23 million We provide 650 kilometres of rural land drains and canals and 91 kilometres of stopbanks to collect runoff from rural catchments and to discharge it to river or sea outlets. 1 Hauraki District Council Land Transport Asset Revaluation 2017, Beca Our infrastructure strategy 3c - 11

67 Achievements since the infrastructure strategy was adopted In the last three years, we ve continued to maintain, repair and construct our infrastructure. We ve also been investigating issues, progressing areas of improvement and undertaking strategic actions. Water supply We ve developed and will begin to implement a water loss management programme that: sets a target to reduce the percentage of real water loss from our water supply network from 30-35% in 2015/16 to 15-20% in the next ten years will see the installation of zone meters to identify where in the network the most water losses occur includes an ongoing water meter renewal programme to improve water meter accuracy and to align renewals to industry accepted asset life. All water supply schemes now comply with the New Zealand Drinking Water Standards. We consolidated our water treatment plants down to four, and improved headworks: Waikino has been connected to the Waihi network. The headworks that previously supplied Waikino with water have been decommissioned. The Waitete stream intake for the Waihi water supply has become redundant. We will have to consider the value and disposal method for these assets. The Hurua intake for the Plains water supply is no longer used and the assets have been disposed of. The bores that supplied the Waitakaruru water treatment plant are no longer required due to the development of the Tetley s raw water storage. The bores need to be removed. Mackaytown and Karangahake networks were connected to the Paeroa supply in April Both of these sources are now redundant. We re working with the Waikato Regional Council, our communities, and interest groups regarding the removal of the dams that supplied the decommissioned Waikino, Mackaytown and Ohinemuri schemes. Similar work is being undertaken for the removal of the Steen Road Dam that previously supplied water to the Waitakaruru treatment plant and the Waitete dam that provided Waihi with water. A pipe renewal plan for aging asbestos cement and alkathene pipes has been provided for, as has a renewal plan for cast iron pipes which are now delivering reduced levels of service. Wastewater We continue to monitor dry weather overflows and enhance wastewater plant communication systems to avoid future overflows. Stormwater We ve mapped the overland flow path network which will inform the development of a mitigation plan for high risk flow paths. Land transport We have entered into a shared bridge inspection contract with the Waitomo and Matamata-Piako District Councils which will involve developing a bridge replacement programme. We ll develop a strategy to address issues resulting from this work. Land drainage An investigation programme into raising stop bank levels to cope with 100-year flood events and some additional freeboard has been proposed for approval as part of the 2018 Long Term Plan (LTP). Strategic Principles In essence this infrastructure strategy is looking to ensure the right asset is in the right place at the right time in our district. There will be competing needs, priorities, demands, resource availability and financial considerations that will need to be balanced as part of the infrastructure planning and decision-making process. Our infrastructure strategy 3c - 12

68 We have developed a set of strategic principles that will guide infrastructure planning for our district over the next 30 years. Financial sustainability is an overarching principle that crosses all of the other principles identified below: Financial Sustainability The proactive provision of critical assets Robust asset management practices An integrated approach in the integrated provision of infrastructure Capex over $100,000 requires a business case An integrated plan for district wide growth Make the best use of our existing investment Our vision, mission and community outcomes in the Our Direction section of this plan guides what we deliver and how. Our infrastructure is a key mechanism to achieve our goals. Our water supply and wastewater infrastructure provide safe and reliable drinking water and disposal of wastewater in a sustainable manner, while land drainage protects land from inundation and water ponding. Land transport provides safe roads, bridges and footpaths for the community, businesses and visitors to the area. The provision of the five infrastructure classes covered by the strategy all contribute to economic development of our district, enabling goods to get to market, supports public health and, protects land. Identified issues We have identified ten strategic issues that will impact on the provision of infrastructure over the next 30 years. They are: Strategic Issue Legislation and standards Population growth and funding Treaty Settlement arrangements and cogovernance Sea level rise and coastal erosion Climate change Economic profile Geology Compliance Description Planning for changes to legislation and standards that are known and unknown e.g. water supply and drinking water. There is also potential for changing consent requirements or standards for water supply and wastewater / stormwater discharges through a future Waikato Regional Plan Change 2 by Waikato Regional Council. Previously the population of our district was projected to decline or remain static, but in recent years has grown and we have adopted the higher of three growth forecast scenarios for our district. We don t yet know where this growth will be within the district and what this means for our infrastructure capacity in those areas. For increased infrastructure provision consideration will need to be given to how this is paid for. The Hauraki Treaty Settlement will result in iwi having co-governance arrangements with the Waikato Regional Council and local councils and will have a greater role in governance and fresh water. The full impact and implications (including financial) of the Treaty Settlement are unknown and a watching brief will be kept on this. We are required to plan for a progressive sea level rise to predicted level of 0.8 metres in 2090 (above 1990 levels) in accordance with the Waikato Regional Policy Statement. This will have direct and indirect implications on our infrastructure. There are also potential impacts on stopbanks and outfalls at Whiritoa and Kaiaua from coastal erosion. The impact of rising water tables may require more reticulated systems as septic tanks and disposal fields are no longer able to function. In addition to sea level rise, we expect to see increased intensity and frequency of storm events and droughts and the impact on the provision of infrastructure. The impact on infrastructure capacity from economic development activity in the district e.g. an increase in agriculture, industry, manufacturing and the demand on infrastructure. Areas of the Hauraki Plains have an underlying peat layer that impacts on underground infrastructure and roading as a consequence of water levels change through the peat layers each year. Resource consents will be required for water supply, wastewater and stormwater, and it is likely that conditions imposed on consents will be more restrictive in the future. There is Our infrastructure strategy 3c - 13

69 Natural hazards Sustainability uncertainty of what future Waikato Regional Plan Change 2 by the Waikato Regional Council will mean for infrastructure, costs of compliance and monitoring when renewing consents or building new infrastructure. Our district is subject to fault lines and liquefaction that has direct implications on our infrastructure The ability to provide infrastructure to meet changing circumstances, requirements, and community needs. Our infrastructure strategy 3c - 14

70 Key planning assumptions This strategy is based on the following assumptions: That our vision statement will apply for the duration of this 30-year strategy The NZTA will continue to provide us with subsidised funding for the road transport network over the next 30 years Our district will continue to grow over the next 30 years as projected in the higher growth scenario that we have adopted, with an expected resident population of 23,695 by That by 2021 sufficient useable land has been identified to accommodate growth across the district (residential / business / industrial) Having a higher proportion of older people in our district will have an impact on levels of service for some infrastructure classes such as land transport over the lifetime of the strategy The Hauraki Treaty Settlement Deed will include provision for co-governance entities responsible for developing a strategic vision and direction for natural resource issues in the Waihou and Piako River catchments Future water supply, wastewater and stormwater consent conditions will be more restrictive and will cost more to comply with, implement and monitor Sea level rise, coastal erosion and weather events as a result of climate change will increase requiring better management of our assets Future Waikato Regional Plan Change 2 by the WRC will result in higher levels or standards of compliance for water supply and wastewater and water discharge may increase construction and/or monitoring costs The requirement of the Waikato Regional Policy Statement to give greater regard to reducing natural hazards will remain in place for the foreseeable future and until a National Policy Statement (NPS) on Natural Hazards is completed in the impacts of the NPS are unknown and the Council will keep a watching brief on the development of the NPS. We will continue to be responsible for these core infrastructure activities. We will provide services at the levels forecast in our asset management plans and 2018 long term plan. Uncertainty and implications In developing this strategy there are a number of things that we do not or cannot know. This has flow on effects on the identification of issues and options for dealing with issues and how the we can best respond. Areas of uncertainty we have identified are: Years There is a focus on years 1-10 of the strategy which aligns with the LTP. Further work is required to understand what years look like across the infrastructure classes as at the moment information is not robust enough to give certainty of what the future is expected to look like. Growth It is not yet known where population and business growth will go so it is not yet possible to understand the real implications of growth on the capacity and provision and expenditure of infrastructure. Funding for growth financial contributions / development contributions Our Operative District Plan provides us with the ability to take financial contributions for new developments that require connecting to our services. Changes to the Resource Management Act mean that we will not be able to charge financial contributions from 18 April 2022 and will need to identify our arrangements for collecting development contributions in a development contributions policy. We will be introducing a development contributions policy to replace financial contributions by Regulatory changes There could be future changes to legislation and standards including WRC s development of future Waikato Regional Plan Change 2 addressing water quality in the Waihou-Piako and Coromandel catchments. This could restrict land use change, discharges, and contain regulatory interventions and consent and compliance costs with impacts for our district. We will continue to participate in any consultation/forum opportunities and keep a watching brief on this. Our infrastructure strategy 3c - 15

71 Legislative changes and changes to standards tend to have a long lead in time which enables us to be involved in the process and respond and plan as required. E.g. National Policy Statement on Natural Hazards. Reliability of information We have various levels of reliability of information across the five activities covered in this infrastructure strategy. There is little information to give certainty to what years of the strategy looks like across the infrastructure classes as the focus has been on years 1-10 for the LTP. We are actively seeking to fill information gaps over the first three years of this strategy that will inform the infrastructure strategy. Gaps have been identified in the following areas: The location of future growth, the impact on capacity of infrastructure and how it will be funded. Natural hazards information and mapping. Climate change and drought effects and mapping. Age of infrastructure and condition - because many assets are below ground it is difficult and costly to assess the condition of a pipe and as a result, condition assessments generally rely on opportunistic sampling. Predictability of performance of assets. Impact of rising groundwater levels on septic tanks in low-lying coastal areas e.g. Kaiaua. Hauraki Treaty Settlement The details and timing of the Hauraki Settlement and details of co-governance as it relates to freshwater are not known. We will keep a watching brief on this. Mining At the time of writing, mining in Waihi only has sufficient proven resource for mining to continue until the third quarter of 2019 unless additional resource is found in existing mines or new resource is identified that allows for further consent applications to be made. Significant exploration work is currently being undertaken to identify and prove possible future resource. Until the future of mining has been determined, we are not able to fully understand the long term impact of the mining (or any remediation) on our assets and infrastructure. However, any impacts are not expected to be major. Our infrastructure strategy 3c - 16

72 Water Supply Background We are responsible for the provision of safe, clean drinking water to domestic, commercial, industrial and agricultural communities as a matter of public health. Nearly 80% of the water we treat is consumed by rural communities for agriculture. It is not used for irrigation. Our water supply network draws water from surface water bodies. There are four water treatment plants supplying eight reticulated schemes with approximately 550 kilometres of pipes supplying 7,080 properties. All resource consents for water supply will need to be renewed over the duration of this strategy. Prolonged rainfall impacts the water supply in our district by raising river levels, and increasing the sediment carried by the rivers. This makes the treatment of water drawn from our rivers more difficult. Currently, the Kerepehi water treatment plant cannot effectively remove manganese in the water. However, a planned upgraded water treatment process is being considered which will resolve this issue in Periods without rain during summer months are also expected to become more prolonged as a result of climate change. Our previous approach to water assets was to replace assets when they failed to meet service levels. This approach has led to higher reactive costs and more service failures. A change to a proactive and risk based approach will be implemented, gathering information on the condition of assets to better predict their useful age and provide more accurate data for financial planning. Changes to the pipe renewals programme proposed within the next three years will be focussed on gathering and assessing information on the condition of assets to better predict the useful age and provide for accurate data for financial planning. Some areas in the network have high levels of unidentified water loss. This is believed to be caused by a combination of older water metres, flushing, leaks and breaks in the network (the extensive nature of the mainly rural Hauraki Plains network makes leak detection difficult) and possible illegal connections. We have developed a water loss reduction programme with a target of reducing real water loss from the network from 30-35% down to 20-15% in the next 30 years. We are targeting a reduction to 30-20% in the first 10 years. With our district experiencing unexpected growth, which is projected to continue, the spare capacity of the water treatment plants has been assessed. Capacity limitations have been identified and the implications of this are being considered as part of planning for growth and rezoning of land. A combined review of the delivery of the water supply and wastewater activities was undertaken 2. The review found that an enhanced status quo (doing it the way we do but improving on some processes) was the best way to deliver these services to our communities. We currently deliver the services through the use of in-house teams, but make use of both external consultants and / or contractors for specialised works. Havelock North Drinking Water Inquiry In August 2016 there was a significant gastroenteritis outbreak in Havelock North with approximately 5,500 of the town s 14,000 residents estimated to have become ill with campylobacteriosis. Sheep faeces were the likely source of the campylobacteriosis. The outbreak was traced to contamination of the town s drinking water supplied by two bores on the outskirts of Havelock North which raised serious questions about the safety and security of New Zealand s drinking water. A Government inquiry was launched, with a Stage 1 report released in May 2017 that focused on determining the facts and assessing the conduct of core participants in the water supply. The report on Stage 2 of the inquiry was released in December We have reviewed the report and are assessing the potential impacts of the recommendations. In this respect, there is uncertainty in what the future water supply legislative framework, standards, practices and procedures will look like, and what that means for the provision of a 2 Fulfilling the requirements of section 17A of the Local Government Act Our infrastructure strategy 3c - 17

73 safe supply of drinking water for our district beyond However, we are confident that we can continue to deliver safe drinking water that meets the requirements of the Drinking Water Standards. Our infrastructure strategy 3c - 18

74 Significant issues and options Table 1 below identifies the significant district wide issues and the options facing water supply in our district. Table 1 Significant issues and options for water supply Significant issue Principal options for managing the issue Implications of the option Years 1 10 Years Years Risk (H/M/L) Drinking water quality standards There may be changing requirements to address public health/safety requirements from the Havelock North Drinking Water Inquiry and the costs to us in meeting any changes in standards and legislation proposed. All of our resource consents will need renewing but we are uncertain about what the conditions will involve. Resource consents for water supply takes expire between 2019 and Renewals or variations will need to commence from Details of the Hauraki Treaty Settlement which may affect future water consent conditions and future Regional Plan Change 2 are both unknown and will influence Maintain a watching brief on the legislative and regulatory outcomes of the Havelock North Drinking Water Inquiries. Increase monitoring of drinking water quality and staff expertise. This involves getting appropriate systems set up. Allocate funding and resourcing to secure new resource consents and monitoring of conditions. Progress investigations into unaccounted for water loss through the water loss management programme to understand actual amounts of water needed to be taken. Implications at this stage are uncertain. There may be changes to address public health/safety. This will be resourced through existing budgets. We will be more prepared to respond to changes in water quality management. Budget implication in the tens of thousands of dollars, rather than hundreds of thousands. The monitoring process should be largely automated. The requirements to prepare a resource consent may increase (for example completing environmental impact assessments). The resource consenting process may require changes to the amount of water we can take for supply. Additional operational and capital expenditure may be required to meet consent conditions. This investigation will determine whether water is being lost from the system through leaks and breaks for example. Corrective action may reduce the volume of water needed from the water take. Low cost from existing resource Low cost from existing resource $50,000 per annum for consent monitoring $100,000 Waihou intake consent Low cost from existing resources Unknown Unknown Medium There will be changes but the effects are likely to be minor due to the recent significant investment in upgrading all our water treatment plants. Low We have time to identify and respond to changes. Medium Our infrastructure strategy 3c - 19

75 Significant issue Principal options for managing the issue Implications of the option Years 1 10 Years Years Risk (H/M/L) resource consent applications, implementation and compliance and monitoring costs New consents might have restrictions on water take, however our rivers aren t considered to be over allocated. Capacity for growth in the water supply network Areas where growth or industry change will be located have not yet been identified so the impact on water demand and capacity of the network cannot be properly considered at this time. Identify preferred areas of residential and industrial land use change and existing infrastructure capacity and future needs. Monitor demand and address when it becomes an issue. Focus attention on Waihi, Paeroa and Kerepehi where treatment plant capacity is considered to be limited. Consider proactively providing for additional capacity in and connectivity between Paeroa and Kerepehi. Water supply needs to be coordinated with land use zoning and capital investment. Demand is more sensitive to agricultural and industrial changes and a change in population might not have a big impact. The growing population will have an impact on our capacity to supply water. For example, if large scale new subdivisions occur, this will have a direct impact on our ability to supply water to the site using existing infrastructure capacity. If we experience a large demand for growth of either industry or population we may be required to increase our water production capacity. Private developers would be expected to pay the cost of increasing capacity through financial contributions or development contributions in the future. It is estimated that cost would be high and give rise to major affordability concerns. As such this is not a preferred option at this time and has not been provided for. Low cost from existing resources Low cost from existing resources Low cost from existing resources Low cost from existing resources High High Our infrastructure strategy 3c - 20

76 Significant issue Principal options for managing the issue Implications of the option Years 1 10 Years Years Risk (H/M/L) Water loss Water loss is a known problem within our networks. The issue is that we may be treating more water than necessary. Measure network performance and undertake detection water loss reduction programme Set targets for reductions in unaccounted for water loss (to 15-20% in 30 years) as a result of an effective water loss management programme Extent of water being lost through leaks identified. Water loss reduction capital programme can be identified. Reduced water take to meet current needs may be possible. Greater capacity to service growth needs. Low cost from existing resources Compilation of costs noted elsewhere Medium Potential cost of unaccounted water could be high Effect of climate change on water supply Upgrade to more modern meter technology and implement an appropriate renewal programme for water meters Investigate an alternative water supply for Kerepehi due to potential saltwater intrusion as sea levels rise Higher demand might require an upgrade of treatment plants Cross-council assessment of climate change and natural hazard implications and adaptation program (planned for ). Accurate measurement of water used. Water meters are replaced in accordance with accepted industry renewal timeframes. Modelling will be required to determine whether saltwater intrusion to the Kerepehi water source is a risk requiring mitigation and what those mitigation measures will be. This will be done during the resource consent renewal process prior to Water supply continuity. Cost of relocation. Significant expenditure would be incurred. Developers may be required to contribute to the cost of upgrading the treatment plants. Water demand likely to continue to be heightened during hot, dry summers whatever option is pursued. $2 million over 10 years Low cost from existing resources Low cost from existing resources $250,000 per year $250,000 per year Will be known after investigation is completed. If required it will be beyond the term of this strategy. Significant expenditure Low We have time to identify and respond to changes. The risk to water supply infrastructure from natural hazards Earthquakes could result in: Ensure that all treatment plants comply with latest earthquake standards Replacing structures with earthquake proof structures including the raw water tank Approx. $2 million for High Our infrastructure strategy 3c - 21

77 Significant issue Principal options for managing the issue Implications of the option Years 1 10 Years Years Risk (H/M/L) Loss of treatment plant equipment Multiple breaks in the supply network Multiple breaks in raw water lines Loss of storage structures (e.g. Kerepehi raw water tank is almost 70 years old and already showing signs of distress) Asset condition and performance Water for firefighting With changes to legislation (s74 Fire and Emergency New Zealand Act 2017), we need to undertake investigations into our flow and pressure of our urban water network to confirm if it meets or otherwise - the requirements Increase emergency supplies for pipe repairs study required to determine number of faults to plan for. Undertake condition sampling of the pipes to get more realistic data on asset condition and measure network performance. Implement pipe renewal programme (new proactive and risk based approach) Complete an assessment of where we do and do not provide sufficient water pressure for firefighting purposes and then maintain the status quo, but notify Fire and Emergency New Zealand (FENZ) of the status of individual hydrants. Most hydrants are likely to meet the code requirements. The nature of some pipes on the rural line could result in a number of breakages in the case of earthquakes. The Council would need to install replacement pipes. We have a proactive risk-based renewal programme to replace pipes made of brittle material. We have 180 kilometres of asbestos pipes in the water network. The life of these pipes is less than previously thought which will have a significant resource, construction and expenditure implications for us. Over or underestimation of risk if the wrong assumptions are made for asset life Current condition assessments signal a bow wave of replacements in the medium term and corresponding cost profile. We will look at levelling this bow wave through spreading work or funding over the time period. We are concerned that the presence of fire hydrants and a target to provide proximity to hydrants as a level of service target will imply that water for firefighting purposes can be provided. FENZ will have a clear understanding of the areas where they may need to provide additional tanker water. $1.32 million $5.5 million $5.5 million over ten years Low cost from existing resource raw water tank $900,000 $7.15 million $6.89 million High impact but low likelihood Low to medium, however the cost would be high if critical assets fail. Medium Our infrastructure strategy 3c - 22

78 Significant issue Principal options for managing the issue Implications of the option Years 1 10 Years Years Risk (H/M/L) the firefighting code of practice. Complete an assessment of where we do and do not provide sufficient water pressure for firefighting purposes, and then make a decision on what level of service we will provide in future. Enables costs of any upgrades to be identified and a programme planned for. In the meantime, we d temporarily withdraw the level of service it commits to providing in the LTP. Costs of providing a level of service is unknown until an assessment has been done. Could upgrade for firefighting purposes as replacements are made. Low cost from existing resource Our infrastructure strategy 3c - 23

79 2018/ / / / / / / / / / / / / / /47 $ millions Water supply expenditure forecasts Figure 6 and Figure 7 present the expenditure forecast for water supply which is based on the following assumptions: Legislative and regulatory changes will not require water treatment process changes. Capacity exists to accommodate forecast high growth figures. Existing legislation and service levels will be maintained. We will provide services at the levels forecast in our water supply asset management plan and 2018 long term plan. Major capital expenditure items include: upgrades to more modern water meter technology ($2 million over 10 years and $250,000 per annum in years 11 30) replacement of asbestos pipes in the first 10 years ($5.5 million) a new ongoing pipe renewal programme ($19.5 million over 30 years), and the replacement of rural water reservoir and Kerepehi in 2030 (approximately $2 million) Water Supply Capital Expenditure Demand Renewals Levels of Service Figure 5: Water supply capital expenditure renewals and levels of service Our infrastructure strategy 3c - 24

80 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Water Supply Operating Expenditure Figure 6: Water supply operating expenditure 60 Water Supply - Cumulative Renewals and Depreciation Renewals Depreciation Figure 7: Water supply cumulative renewals and depreciation (uninflated) Our forecast renewals are lower than depreciation as we have recently replaced our major water treatment plants. Funding this activity We fund our water services through a targeted rate comprised of annual charges and volume charges. As with all our activities, our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. Our infrastructure strategy 3c - 25

81 Wastewater Overview We collect, treat and dispose of treated wastewater from domestic property and commercial / industrial premises on our reticulated wastewater network for seven urban townships in our district. Seven wastewater treatment plants service 6,150 properties via 166 kilometres of pipes. Resource consents are required for discharging into six water bodies and onto planted forestry and are issued by WRC. The main purpose of a consent is environmental protection and is driven by the Resource Management Act. These consents are subject to requirements that restrict the volume of water that can be discharged, and stipulate the water quality parameters the discharged water must meet. We generally meet the current resource consent capacity limits, and with the exception of the occasional spike in some parameters, meets the water quality parameters as well. As a result of the National Policy Statement for Freshwater Management, future conditions of consent that will be set by the WRC will require wastewater treatment plant upgrades. It is likely that all wastewater consents will require renewal within ten years of their consent being granted. This means that within the next 15 years all of our wastewater treatment plants will require an upgrade. The wastewater network has a large portion of aged assets coming to the end of their design life. There is a known asset performance issue for networks with older infrastructure such as in Paeroa and Waihi. Our response is a renewal strategy to address unacceptable high levels of inflow and infiltration to ensure public health and environmental service levels are met. A wastewater plant upgrade for Paeroa is planned to start in 2025/26. If growth occurs in Paeroa, an earlier upgrade will be required. A combined review of the delivery of the water supply and wastewater activities was undertaken 3.The review found that an enhanced status quo (doing it the way we do but improving on some processes) was the best way to deliver these services to our communities. We currently deliver the services through the use of in-house teams, but make use of both external consultants and / or contractors for specialised works. 3 Fulfilling the requirements of section 17A of the Local Government Act Our infrastructure strategy 3c - 26

82 Significant issues and options Table 2 Significant issue Significant issues and options for wastewater Increased environmental compliance standards will need to be met. The likely wastewater resource consent conditions are reflective of the anticipated impacts of NPS for Freshwater and Waikato Regional Plan changes, the Three Waters Inquiry and Hauraki Iwi water aspirations. Significant upgrades to meet new discharge consent conditions was not anticipated. Principal options for managing the issue Continue working with WRC to negotiate the best way forward, including identifying where better outcomes would be achieved through other initiatives than the treatment upgrades and exploring different funding mechanisms (Adopted by Council resolution) Implications of the option The Paeroa plant is discharging at the limit of its consent for total nitrogen and phosphorus. There is no capacity for any additional connections beyond areas currently consented for development. Some works could be undertaken to improve the nitrogen and phosphorous levels, but this may be unnecessary if an upgrade is required We are concerned at the affordability of upgrading the wastewater treatment plants. Uncertainty of water quality contributions required. Risk of non-compliance if alternative initiatives are not agreed upon. Years 1 10 $800,000 Years Years Risk (H/M/L) High Forecast upgrading all plants in the LTP but also continue to work with the WRC (as above) Upgrading the plants would occur over a 15 year period in line with current resource consent expiry timeframes at a total capital cost of $35.5 million In Ngatea specifically, the preferred option involves conveying effluent from the Ngatea Plant to the new Kerepehi Plant. This will require a new Ngatea pump station and rising main. These are both dependent on the new Kerepehi Plant to treat Ngatea and Kerepehi wastewater. The upgrades may not have substantial positive environmental improvements and be unaffordable for the district given limited funds available. Currently anticipated that $17.05 million of capital expenditure would occur in the years $3.2million Ngatea-Kerepehi pipeline if 1 plant is built to service both communities $18.45 million of capital expenditure would occur in years Our infrastructure strategy 3c - 27

83 Significant issue Projected population growth will stretch the capacity of existing wastewater treatment plants, particularly in Kerepehi, Waihi and Paeroa Need to reassess the capacity of wastewater infrastructure to cope with climate change impacts more intense and frequent rainfall Principal options for managing the issue Identify preferred areas of residential and industrial land use change and existing infrastructure capacity and future needs. Consider and address capacity issues at the time of each scheme s resource consent review. Increase treatment capacity at selected treatment plants through remedial works. Identify an improvement programme for identifying groundwater infiltration and responses refer above Prolonged rainfall can increase groundwater levels which can increase the chance that groundwater will find its way into wastewater pipe network defects and use capacity within the network. This will lead to more wet weather overflows. A cross-council assessment of climate change and natural hazard implications and adaptation programme planned for Implications of the option Growth may impact on capacity, particularly in the older parts of the wastewater network in Paeroa and Kerepehi and upgrades may be required. In the meantime, we would deal with new developments requiring additional capacity on a case by case basis. Potential for financial contributions to be collected until a Development Contribution policy is adopted or entering into a development agreement. Implement an I&I reduction programme in Paeroa and Waihi. This will also address the District s leaky network catchments. Undertake desludging at Turua, Waihi and Whiritoa schemes to create capacity. Reduce nitrogen and phosphorus discharges at the Paeroa plant to accommodate the existing consented development. Increases capacity in existing schemes through stopping groundwater infiltration. Forecast impacts better understood Adaptation options better able to target issue. Years 1 10 Low within existing budgets Years Within either years 1-20 or and costs as per the plant upgrades above. $2.5 million I&I $0.3 million desludging $800,000 Paeroa $3 million over 10 years Low cost from existing resources Years Risk (H/M/L) High Low We have time to identify and respond to changes Our infrastructure strategy 3c - 28

84 Significant issue The impact of sea level rise, rising water tables and coastal erosion on public and private wastewater infrastructure Rising water takes combined with sea level rise may present issues for (privately owned) septic tanks in the Kaiaua area. Kaiaua properties currently have septic tanks on reasonably porous ground (shell). As the sea level rises the current septic systems may become inundated with a corresponding rise of ground water and seawater and become ineffective. Asset condition and performance Principal options for managing the issue Develop a community plan for Kaiaua to address strategic issues and options before making investment decisions on infrastructure. A cross-council assessment of climate change and natural hazard implications and adaptation programme planned for ). Undertake condition sampling of the pipes to get more realistic data on asset condition and measure network performance Implications of the option While the Council isn t responsible for resolving any future septic tank issues in Kaiaua, it could potentially contaminate ground water and become a health risk which needs to be considered as part of the development of the community plan. Coordinates infrastructure decisions with future strategic goals and land use needs. Forecast impacts better understood Adaptation options better able to target issue. The Council has 166km of pipes in the wastewater network. Over or underestimation of risk if the wrong assumptions are made for asset life Sampling would result in a targeted renewals and replacement programme that would provide more resilience to the network and reduce possible failures and risk to health from failures Years 1 10 Low cost from existing resources Low cost from existing resources Low cost from existing resources Years Low cost from existing resources Years Low cost from existing resources Risk (H/M/L) Low We have time to identify and respond to changes Low to medium, however the cost would be high if critical assets fail Our infrastructure strategy 3c - 29

85 2018/ / / / / / / / / / / / / / /47 $ millions Wastewater expenditure forecasts Figure 9 and Figure 10 present the expenditure forecast for wastewater which are based on the following assumptions: That the application of the National Policy Statement on Freshwater will require us to upgrade all of our wastewater treatment plants and not be able to offset the effects elsewhere. We will be required to fully fund the capital cost of all upgrades. Based on existing legislation, policy statements and regional plans and the increased levels of service required therein. Projected growth will be built into the required upgrades to the wastewater treatment plants. It is expected that 10% of the cost of the upgrades will be growth driven. That the required upgrade to Paeroa will be as a result of legislation and regulation and not growth. Should growth precede this then it may be the driver for change. We will provide services at the levels forecast in our wastewater asset management plan and 2018 long term plan. Major capital expenditure items include: the upgrades of all wastewater plants in the first 20 years of this strategy ($35.5 million) increasing the capacity of the Paeroa, Waihi, Turua and Whiritoa through remedial works ($3.6 million in the first 10 years of this strategy), and an improvement programme for identifying ground water infiltration ($3 million in the first 10 years of this strategy). 8 Wastewater Capital Expenditure Demand Renewals Levels of Service Figure 8: Wastewater capital expenditure, renewals and levels of service Our infrastructure strategy 3c - 30

86 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Wastewater Operating Expenditure Figure 9: Wastewater operating expenditure Wastewater - Cumulative Renewals and Depreciation Figure 10: Wastewater cumulative renewals and depreciation (uninflated) Our forecast renewals are lower due to the replacement of the treatment plants in the first 15 years of the plan. These replacements do not show in this renewal profile as the primary driver of the replacement is increased environmental requirements which is a level of service increase, rather than a renewal. Funding this activity Renewals Depreciation We fund our wastewater services through a combination of a targeted pan charge rate (85-100% of our operational costs) and trade waste fees and charges (0-15%). As with all our activities, our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. Our infrastructure strategy 3c - 31

87 Stormwater Overview Stormwater is the runoff of rain water from a rain event which requires management and disposal of using various drainage systems. We have 90 kilometres of urban stormwater pipes and 40 kilometres of open watercourses. Four comprehensive stormwater discharge consents authorise the diversion and discharge of urban stormwater runoff and associated contaminants, for the townships of Waihi, Waikino, Karangahake, Mackaytown, Paeroa, Ngatea, Kerepehi, Turua, Kaiaua and Whiritoa. They also authorise the continued use of the stormwater outlets. The four consents were granted in 30 April 2003 and expire on 1 May $130,000 has been budgeted for obtaining consents in 2022/23. There is the potential the quality of stormwater entering the environment will need to be improved, although the implications of the National Policy Statement on Freshwater are not yet known. Between 2018 and 2021 we will focus on investigating and assessing requirements and costs associated with carrying out retrospective upgrades to satisfy future increases in level of service and demand. More frequent intense rainfall is expected to increase the occurrence of water ponding on land. Stormwater infrastructure constructed in the last 10 years will have the capacity to deal with the effects of an expected 2.1 degrees Celsius rise in temperature by 2090, however older infrastructure will need to be renewed by the time projected climatic variations are seen. Our internal business unit undertakes stormwater operating and maintenance activities as part of our three waters activity management. Other contractors are used from time to time for specialist works. We haven t undertaken a service delivery review under the provisions of the Local Government Act 2002 (section 17A) as we found that the cost would outweigh the benefit of doing so. Our infrastructure strategy 3c - 32

88 Significant issues and options Table 3 Significant issues and options for stormwater Principal options for managing the Significant issue issue Increased environmental Continue to retrofit existing compliance standards will infrastructure to comply with treatment require the treatment of of discharge requirements. stormwater. Implications from the National Policy Statement on Freshwater Management on the future discharge of stormwater The impact of more frequent and intense rainfall as a result of climate change More frequent intense rainfalls are expected to increase the occurrence of surface water ponding. All stormwater infrastructure built in the last 10 years has the capacity to deal with the associated 2.1 degrees Celsius rise in temperature. We needs to better understand the condition and performance of our older stormwater assets As an interim measure provide budget in 2022/23 for obtaining new resource consents. Monitor changes to stormwater discharge treatment requirements. Retrofit older infrastructure to handle climate change events as pipes are renewed. A cross-council assessment of climate change and natural hazard implications and adaptation programme will occur in first 3 years of this Strategy. Investigate condition of stormwater assets older than 10 years Implications of the options More cost effective option to retrofit existing pipes when renewed. Implications of freshwater legislation/standard changes unknown, but may result in more changes to discharge standards when resource consents expire. Impact on funding and resourcing Implications will be assessed once known. Pipes will be increased in capacity to cope with projected climatic variations as they are replaced or new infrastructure is installed. Forecast impacts better understood Adaptation options better able to target issue. Better identification of renewal needs for older assets and development of an appropriate programme Years 1 10 $0.79 million over 10 years $130,000 in 2022/23 Low cost within existing resource $0.3 million total renewal budget Low cost within existing resource Low cost within existing resource Years $100,000 per year $1.45 million Replacement of end of life infrastructure to comply with new design requirements Renewal and treatment. Years Replacement of end of life infrastructure to comply with new design requirements Risk (H/M/L) Medium Low We have time to identify and respond to changes Low Our infrastructure strategy 3c - 33

89 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Stormwater expenditure forecasts Figure 12 and Figure 13 present the expenditure forecast for stormwater which are based on the following assumptions: The National Policy Statement on Freshwater, WRC Plan Change 2 and co-governance of the rivers will drive the need to improve water quality. We will be required to retrospectively install measures to treat stormwater to acceptable levels prior to discharging to the receiving water body We will continue to replace end of life infrastructure with infrastructure sized to accommodate climate change. We will provide services at the levels forecast in our stormwater asset management plan and 2018 long term plan. Major capital expenditure items include: continued retrofitting of existing stormwater pipes when they are renewed ($1.79 million in the first 20 years of this strategy increasing the capacity of existing pipes as they are replaced or new pipes installed ($0.3 million in the first 10 years of this strategy) obtaining new resource consents ($100,000 in 2022/23) Stormwater Capital Expenditure Demand Renewals Levels of Service Figure 11: Stormwater capital expenditure renewals and levels of service 2.0 Stormwater Operating Expenditure Figure 12: Stormwater operating expenditure Our infrastructure strategy 3c - 34

90 2018/ / / / / / / / / / / / / / /47 $ millions Stormwater - Cumulative Renewals and Depreciation Figure 13: Stormwater cumulative renewals and depreciation (uninflated) We expect that our stormwater pipe network will need few replacements in the next 20 to 25 years. After that, a large part of the stormwater network will need replacement. The impact of most of this replacement is beyond the 30-year timeframe of this strategy. Funding this activity Renewals Depreciation We fund our stormwater services through a rates. The rates include a capital value-based district rate (15% of our operational spend) and a capital value-based targeted rate (85%). As with all our activities, our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. Our infrastructure strategy 3c - 35

91 Land Drainage Overview Land drainage involves collecting runoff from the rural catchment areas of our district and discharging it directly to river or sea outlets. Drainage schemes are designed to ensure that water does not lie on the ground for more than three days for an even of 10% annual exceedance probability (AEP the equivalent of a 1 in 10 year event). This is primarily to protect pasture. While most land drainage activities are undertaken by regional councils, we also provide land drainage services across four drainage districts. We are also dependent on the performance of the regional flood protection schemes which are not under our control. We have 650 kilometres of rural land drains and 54 kilometres of primary stopbanks and 49 kilometres of secondary stopbanks. Settlements, or parts of settlements that sit alongside these land drains include Ngatea, Kopuarahi, Kerepehi, Patetonga, Netherton, Turua, Oronga, Waitakaruru and parts of Paeroa. These settlements, or those parts of these settlements that sit alongside the land drains have a higher level of risk if the land drains are not able to meet capacity during storm events. It is likely that climate change will impact on the land drainage activity over time and may affect future extensions to and/or maintenance of this asset. As the peat shrinks and the land contour changes, some re-orientation of the drainage network will be required. In addition to this the Waikato Regional Plan has adopted a sea level rise of 0.8 metres above the 1990 levels by Maintenance is undertaken to raise the stopbanks back to the required design level as the soft estuarine muds compress under the weight of the stopbanks thus causing them to settle. The primary stopbanks require maintenance work every years. The stopbanks will need to be progressively raised when this maintenance is undertaken. The current level of 3 metres (Tararu Datum) will thus need to be increased to 3.8 metres. This will have the additional effect of increasing the settlement rate and will potentially reduce the timeframe between required maintenance works. In the next three years we will be undertaking investigations into raising stop bank levels to cope with 100 year flood events (3 metres + sea level rise) with 0.5 metres freeboard to bring it up to the WRC flood protection level of service in our district. Results from this investigation will inform the Infrastructure Strategy and the LTP. Indicative figures only have been included in this strategy. At the moment the land drainage activity does not require any consents. It is possible that in the future the Hauraki Treaty Settlement, future Regional Plan Change 2 or changes to the National Policy Statement on Freshwater Management may result in consents being required, or impose water quality standards on water discharged into river or sea outlets from land drainage schemes. We would need to consider land use and how and what can find its way into the land drainage network if we were required to obtain consents or treat water we discharge. The cost of obtaining consents could be significant, as well as the treatment of discharged water. A watching brief will be kept on this. Our internal business unit undertakes land drainage operating and maintenance activities. Other contractors are used from time to time for specialist works. We haven t undertaken a service delivery review under the provisions of the Local Government Act 2002 (section 17A) as we found that the cost would outweigh the benefit of doing so. Edgecumbe flooding In April 2017, the town of Edgecumbe was seriously flooded when stopbanks had been undermined and failed. An independent review of the Rangitaiki River scheme found that the risks to the community were overlooked while the river scheme was being upgraded and that evacuation plans in the event of the river flooding were inadequate. A review of the report will be undertaken to identify any information or findings that will enable us to better plan for and respond to flood events and the flood protection measures needed to protect people and property in the future. Our infrastructure strategy 3c - 36

92 Significant issues and options Table 4 Significant issues and options for land drainage Significant issue Principal options for managing the issue Implications of the option Impacts on land and property from sea level rise and coastal erosion Large areas of the plains are below high tide levels and are more susceptible to increasing sea level and coastal erosion processes Impact of climate change on the land drainage network More pump stations and more pumping hours Stopbanks will need to be raised regularly to keep in step with the rising sea levels. Investigate raising the stopbanks to cope with 100 year flood events (3 metres) as well as some additional freeboard levels. Monitor drainage flows to identify is reverse flow is occurring where water is flowing back into the drainage system. Stop flow mechanisms may need to be installed. Increase the height of the stopbanks when maintained to keep ahead of sea level rise. Levels of service may also need to be increased to include a higher level of protection and freeboard. A cross-council assessment of climate change and natural hazard implications and adaptation programme is planned for The use of land, property and economic sustainability of the District will continue if the amount of useable land is protected from sea level rise More pumps and pumping would be required as the water table rises. This will mean increased energy and operating costs. Stopbanks will be high enough to serve purpose. Flood gates will become submerged and ineffective. Avoid backflow into the land drainage network. The stopbanks in the Waitakaruru area (owned by HDC) are designed to cope with a 2% AEP (1 in 50 year) event (whereas the Waikato Regional Council-owned stopbanks are designed for a 1% AEP (1 in 100 year) event. Increased pumping due to increased storm events. A drought will not impact land drainage Forecast impacts better understood Adaptation options better able to target issue. Years 1 10 Low cost within existing resource Low cost within existing resource TBC Low cost within existing resource Years TBD Low cost within existing resource Years TBD Low cost within existing resource Risk (H/M/L) Low We have time to identify and respond to changes Low We have time to identify and respond to changes Our infrastructure strategy 3c - 37

93 Significant issue Principal options for managing the issue Implications of the option Impact of natural hazards on land drainage Stop bank failure would be catastrophic on low lying and coastal settlements Asset condition and performance Model what failure looks like to understand what mitigation measures may be required needed Greater understanding is required of the land drainage network to ensure effectiveness and optimal performance. This includes a survey of drain depth and shape. Provides for better mitigation measures to respond to the threat of natural hazard effects. Results in a refocus or better coordination of the current maintenance regime, increasing effectiveness. Years 1 10 Low cost within existing resource Years Years Risk (H/M/L) High catastrophic impact but unlikely to occur. Low Our infrastructure strategy 3c - 38

94 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 Millions Land drainage expenditure forecasts Figure 15 and Figure 16 present the expenditure forecast for land drainage which are based on the following assumptions: Climate change will result in a sea level rise of 0.8 metres above the 1990 level by The investigation into the raising of the stopbanks to cope with sea level rise will provide a more accurate understanding of a capital works programme and forecasts. Stopbank maintenance / renewal is required every 10 to 15 years. This is reflected in our capital expenditure forecasts below. We will provide services at the levels forecast in our land drainage asset management plan and 2018 long term plan Land Drainage and Flood Protection Capital Expenditure 0.0 Year Ended Demand Renewals Levels of Service Figure 14: Land drainage and flood protection capital expenditure renewals and levels of service 3.0 Land Drainage and Flood Protection Operating Expenditure Figure 15: Land drainage and flood protection operating expenditure Our infrastructure strategy 3c - 39

95 2018/ / / / / / / / / / / / / / /47 $ millions 14 Land Drainage and Flood Protection - Cumulative Renewals and Depreciation Figure 16: Land drainage and flood protection cumulative renewals and depreciation (uninflated) We expect that our stop banks will need topping up every 10 to 15 years. The top-ups shown in the capital expenditure chart are described as renewals, however they have an element of level of service increase as the topped up banks will be higher than the current banks. Funding this activity Renewals Depreciation We fund our land drainage services through rates. The rates include a land-value based targeted rate (85% of our operating spend) and a capital value-based district rate (15%). As with all our activities, our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. Our infrastructure strategy 3c - 40

96 Land transport - roads and footpaths Overview We provide 633 kilometres of roads (518 kilometres sealed and 115 kilometres unsealed), approximately 160 bridges and 112 kilometres of footpaths in our district. Our roads are generally in good condition but because of the underlying geology of a peat sub-base that the roads sit on, particularly in the Hauraki Plains area, the impact of water, whether it is increased or decreased is a significant challenge in the maintenance and construction of roads. The effects of climate change, incuding sea level rise may damage elements of our roads (flooding, drought, slips, and erosion) particularly for the peat soils in the Hauraki Plains. In response we will be preparing a cross-council climate change and natural hazards adaptation programme and working with the regional council to prepare long term strategies for communities at risk between The age profile of bridges shows that the majority of our bridges are years old, with over 50 of the 160 bridges being years old. Bridge condition is not well understood and we are commencing a shared bridge inspection contract with the Waitomo and Matamata-Piako District Councils under RATA (Waikato Road Asset Technical Accord) which will involve developing a replacement programme, and we will develop a strategy to address issues resulting from this work. The inspections will be staged over a number of years. Our footpaths mainly service urban areas and are in good condition, however the aging population may mean that changes to levels of service e.g. wider footpaths to accommodate mobility scooters, may be required to ensure accessibility in the future. Not all urban streets have footpaths on both sides. We ll develop a programme of works to support the implementation of an accessibility study, commencing in As new assets are created they will impact on expenditure for maintenance and renewals. A change to renewals for roads is required as the current approach of reducing sealed road resurfacing work to test pavement and surfacing lives has led to an increase in road roughness and in the backlog of reseal work and a decrease in customer satisfaction. We will increase future resurfacing to 53 kilometres (10% of the road network) between 2018 and Work is being undertaken to determine the required additional percentage to be resurfaced beyond 2021 to ensure that our programme is sustainable. The NZTA subsidy for roading is a critical factor in managing our roads. If this subsidy was no longer available there would be a significant impact on our expenditure and rates. We are aware that technology is rapidly changing with autonomous and driverless car technology being at the forefront of changes to the way people travel. This may result in changes to our land transport infrastructure over the life of our strategy. At this point no specific response is required; however, we will keep a watching brief on technology changes. It is not anticipated that there will be significant impacts on roads and footpaths. Most heavy vehicles for farming, quarrying, forestry and aquaculture use State highways. While growth is predicted to continue in these industries it is not anticipate there will be a significant impact on the assets. There are some seasonal holiday peaks for short periods which can put a strain on the road network, but these are usually only for a few days at a time. In the past three years there has been fluctuation in emergency road works which is an unpredictable expense. we have budgeted $150,000 annually to fund our share of emergency works. We have a road safety performance target to reduce the number of fatal and serious injury crashes. Since 2015 there have been four fatal crashes in 2014/15 with four serious crashes in 2014/15 and 2015/16, and six serious crashes in 2013/14. We have budgeted $150,000 of capital budget for new transport infrastructure attributable to growth within the district. Our infrastructure strategy 3c - 41

97 A combined review of the delivery of our land transport activity was undertaken in 2016/17 4. The outcome of this review saw us bring the professional services in-house and the subsequent establishment of a transport team. The team collaborates closely (as a member) with the Waikato Road Asset Technical Accord. Specialised services are still procured externally. The majority of physical works are undertaken via contract. 4 Fulfilling the requirements of section 17A of the Local Government Act Our infrastructure strategy 3c - 42

98 Significant issues and options Table 5 Significant issues and options for land transport Principal options for managing the Significant issue issue Future level of funding Maintain a watching brief of funding subsidies is uncertain. reviews and submit to funding reviews Changes to national and regional where appropriate. funding arrangements could have a significant impact on the ability of the Council to deliver its land transport programme. Implications of the options The Plan includes a regional programme of activities proposed. Any changes to funding for projects within our district will have implications in our forecasting capex expenditure and delivering community outcomes. Years 1 10 Low cost within existing resource Years Low cost within existing resource Years Low cost within existing resource Risk (H/M/L) Medium Ageing population and accessibility on levels of service and costs of providing that service Allocate funding for improving nonvehicular transport routes including walking, cycling and mobility impaired forms of travel and prepare an annual programme of works to prioritise initiatives. Works will be prioritised. Provides greater transport options. Encourages linkages to future new subdivisions. $70,000 per annum $70,000 per annum $70,000 per annum Low Impact of sea level rise and coastal erosion on roading and bridge infrastructure A cross-council assessment of climate change and natural hazard implications and adaptation programme. planned for Prepare a comprehensive erosion management plan for the protection of the Kaiaua coastal roading corridor from the sea. Forecast impacts better understood Adaptation options better able to target issue. Identifies protection interventions required. Provides for greater resilience of road corridor. Road erosion north of Kaiaua would prevent use of road and repair works would be significant ($millions). Low cost within existing resource $200,000 over life of plan + future structural works Medium Some parts of the network have a higher risk Our infrastructure strategy 3c - 43

99 Significant issue Impacts on roading infrastructure from climate change Principal options for managing the issue Continue to reactively respond to weather events causing road damage including droughts and slips. Implications of the options Drought damage responses can be significant ($1.8 million for last drought). Droughts don t currently follow a foreseeable pattern. More slips are likely if recent rainfall events are indicative of annual occurrence The Plains area is predominantly peat soils which are susceptible to increases and decreases in water which impacts on our renewals and maintenance plans as road surfaces need to be replaced more often Years 1 10 Low cost within existing resource Years Years Risk (H/M/L) Medium Our bridges are aging but we don t know enough about their condition In collaboration with RATA, undertake a staged inspection programme of aging bridges and develop a replacement programme. Provides for proactive inspections and enough time to programme in replacement needs. Programme will be based on bridges needing improvements in condition rather than age. Inspections low cost within existing resource. Programme TBD Medium Our infrastructure strategy 3c - 44

100 2018/ / / / / / / / / / / / / / /47 $ millions Land transport expenditure forecasts Figure 18 and 19 present the expenditure forecast for roads and footpaths which are based on the following assumptions: The New Zealand Transport Agency will continue to provide us with subsidised funding for the road network over the next 30 years under the current rates and criteria We will continue to fund at the levels in the LTP and 10 year forecasts stated in our long term plan No account has been taken of the impacts related to the acceptance and implementation of the Risk Management Plan Revenue from financial contributions will be available as forecast until they are no longer able to be imposed from 18 April 2022 We will provide services at the levels forecast in our land transport asset management plan and 2018 long term plan. Major capital expenditure items include: $40.5 million to reseal 10% of our roads (about 53 kilometres) each year for the next three years, and 8.8% (45 kilometres) each year from then onwards. Improvement of non-vehicular transport routes including walking, cycling and mobility impaired forms of travel ($2.1 million over the 30 years of this strategy) Land Transport Capital Expenditure Demand Renewals Levels of Service Figure 17: Roads and footpaths capital expenditure renewals and levels of service Our infrastructure strategy 3c - 45

101 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Land Transport Operating Expenditure Figure 18: Roads and footpaths operating expenditure Land Transport - Cumulative Renewals and Depreciation Renewals Depreciation Figure 19: Roads and footpaths cumulative renewals and depreciation (uninflated) Funding this activity We fund our land transport services from a range of sources: Carriageways operating expenditure NZ Transport Agency Subsidy (59-60%) Rate Capital Value Roading (remainder) Footpath operating expenditure Rate Uniform Annual Charge Ward (100%) Safety operating expenditure Land Transport Subsidy (59-60%) Rate Capital Value Roading (remainder) Amenities operating expenditure Land Transport Subsidy (59-60%) Fees and charges 1% Rate - Capital Value Roading (remainder) As with all our activities, our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. Our infrastructure strategy 3c - 46

102 Financial summary Our strategy for our infrastructure is dominated by the impacts of the National Policy Statement for Freshwater and the associated infrastructure upgrades to increase current levels of service it will drive. Activities where there is an increase in costs but a maintaining current levels of service include water pipeline and meter renewals and road resurfacing and renewals (resealing). The upgrades to the wastewater treatment plants and various reticulation networks, while driven primarily by legislative and regulatory requirements, also include a growth component. This is to accommodate the increase in demand on our infrastructure that the expected growth will generate. Summary of key financial assumptions The most likely scenario for our district is as follows: Levels of service will remain largely unchanged, except for the upgrade to wastewater treatment plants and other infrastructure upgrades driven by the NPFSW. There will need to be significant expenditure in the long term to meet requirements for the management of freshwater. Performance data for assets is assumed to be accurate. We will continue to deliver services at the forecast costs. We will maximise the useful and economic lives of our assets. We will use risk management practices to maximise assets and the management of risk of a critical asset failing. There will be an increase in the demand for infrastructure services over the life of this Strategy. There will be increased costs for the acquisition, implementation, compliance and monitoring of resource consents. The NZTA will continue to provide subsidised funding to the Council for the road network over the next 30 years under the current rates and criteria. Revenue from financial contributions will be available as forecast until they are no longer able to be imposed from 18 April A development contributions policy will be developed by June Financial forecasts All financial information presented in our strategy includes inflation, except for the graphs which present the renewal and depreciation expenses. In delivering the infrastructure services and addressing the identified issues outlined throughout the Strategy, we expect to spend the operating and capital expenditure as set out in Table 6 over the 30 year period. Table 6 Expected total operating and capital expenditure (Inflated values) Infrastructure Activity Operational Expenditure ($million) Capital expenditure ($million) Water supply Wastewater Stormwater 34 7 Land drainage Land transport Total Figure 21 and Figure 22 present the anticipated operating and capital expenditure broken down over the 30 year period. Our infrastructure strategy 3c - 47

103 2018/ / / / / / / / / / / / / / /47 $ millions 2018/ / / / / / / / / / / / / / /47 $ millions Total Operating Expenditure Land Transport Water Supply Wastewater Stormwater Drainage Flood Protection Figure 20: Total operating expenditure forecasts Total Capital Expenditure Land Transport Water Supply Wastewater Stormwater Drainage Flood Protection Figure 21: Total capital expenditure forecasts Our infrastructure strategy 3c - 48

104 2018/ / / / / / / / / / / / / / /47 $ millions Total - Cumulative Renewals and Depreciation Renewals Depreciation Figure 22: Total cumulative renewals and depreciation forecasts 2018/2048 (uninflated) Decisions we expect to make We will have to make a number of large decisions over the duration of our strategy. Some of these decisions will be significant to our district and some won t. We consider that a decision will be significant if making that decision will affect our ability to continue providing our activities without major implications for debt, rates and other funding requirements. Decisions that are lower in cost but have a major impact on a large portion of our district community may also be significant (these and other criteria are set out in our Significance and Engagement Policy). We consider our decision on the future changes to our wastewater treatment plants to improve discharge quality to be significant. Based on known information, we undertook a business case review of the upgrade options for our wastewater treatment plants. These upgrades are needed to comply with the National Policy Statement on Fresh Water. The options considered include: Our preferred option would entail designing all plants for the higher of our growth scenarios, disinfection of wastewater, and reducing contaminant loads to 75% of current loads. Our treatment plant at Kerepehi would be upgraded to treat wastewater from Kerepehi and Ngatea townships and potential industries in Kerepehi. All other plants would be upgraded individually. A less ambitious option involves designing all plants for the medium of our growth scenarios, disinfecting wastewater and maintaining the current loads of contaminants. As per the option above our treatment plant at Kerepehi would be upgraded to treat wastewater from Kerepehi and Ngatea townships and potential industries in Kerepehi. All other plants would be upgraded individually. A more ambitious option involves designing all plants for high growth scenario, disinfecting wastewater, and reducing contaminant loads to 75% of current loads. Our treatment plant at Kerepehi would be upgraded to treat wastewater from Kerepehi, Ngatea and Turua townships and potential industries in Kerepehi. All other plants would be upgraded individually. Our preferred option provided the most cost effective and good quality option as defined by the Local Government Act 2002 (section 10) and thus we resolved to adopt this option. The decisions to be made over the duration of this strategy will be on the actual design and resulting cost implications of each wastewater treatment plant. We ll start working towards a more concrete decision on this in Our infrastructure strategy 3c - 49

105 2023 to We don t know what the scale of costs of any design options might be yet but estimates so far tell us that it may be a total of approximately $35.5 million and that s what we ve provided for in our budgets. We consider this to be significant because the financial consequences are high, and will affect both our capacity to deliver our range of existing services without significantly impacting on our debt levels and our rates funding requirements. This would affect ratepayers across the district financially through higher increases in wastewater rates. Other matters which may require decisions in future but that we can t identify yet include: defining our response to the identified implications of sea level rise, rising water tables and coastal erosion implications on the district, low lying areas and settlements including Kaiaua and the affordability of our options. responding to the results of our various infrastructure study programmes on completion and their implications for assets and financial planning, once known, identifying the implications of the capacity our current network infrastructure for providing for future demand including the costs of doing so and our response. Funding implications There are significant funding implications from capital expenditure doubling and renewals expenditure exceeding depreciation by We are proposing significant rates increases over the next ten years, particularly a 114% increase in roading rates and an 80% increase in wastewater rates. This will have a significant impact on the affordability of rates for a number of our ratepayers. This is discussed in more detail in our Financial Strategy. Our infrastructure strategy 3c - 50

106 Summary of our Significance and Engagement Policy Purpose of the policy Our significance and engagement policy enables us, along with our communities, to identify the level of significance attached to particular issues, proposals, assets, decisions and activities. The policy informs us about whether further requirements will need to be met if a decision is considered significant. This, for example, might mean making an amendment to our long term plan, or going through an audit process for particular policies. The policy also provides clarity about how and when communities can expect to be engaged in the decisions we make. Engagement with the community is needed to understand the views and preferences of people likely to be affected by or interested in a proposal or decision. An assessment of the degree of significance of proposals and decisions, and the appropriate level of engagement, will be considered in the early stages of a proposal before decision making occurs and, if necessary, reconsidered as a proposal develops. In general, our policy is that the more significant an issue, the greater the need for community engagement. What s significant and when you can expect to be engaged For issues requiring a decision, we ll take into account the following matters when assessing the degree of significance of proposals and decisions, and the appropriate level of engagement, on a case by case basis: The level of financial consequences of the proposal or decision. Whether the proposal or decision will affect a large portion of the community. The likely impact on present and future interests of the community, recognising Māori culture values and their relationship to land and water. Whether the proposal affects the level of service of a significant activity. Whether community interest is high. Whether the likely consequences are controversial. Whether community views are already known, including the community s preferences about the form of engagement. The form of engagement used in the past for similar proposals and decisions. We have also set some thresholds to help us assess the extent that our proposals or decisions are significant. This includes the transfer of ownership or control, or abandonment of a strategic asset (listed below). These thresholds are set out in our full policy. We ll use the special consultative procedure and consult in accordance with the principles of consultation (as set out in section 82 and 83 of the Local Government Act 2002 (LGA 2002) where we re required to do so by law. For such consultation, we will develop information fulfilling the requirements of the LGA 2002, will make this available to the public, allow for feedback to be received for a period of up to 4 weeks, and will consider all feedback prior to making decisions. If we make a decision that is significantly inconsistent with this policy, we will clearly identify the inconsistency, the reasons for the inconsistency, and any intention we have to change the policy to accommodate the decision. Our strategic assets The following is a list of our strategic assets. The Hauraki District Council roading network as a whole; Summary of our Significance and Engagement Policy 3d - 1

107 The Hauraki District Council land drainage network as a whole; The Hauraki District Council wastewater network as a whole; The Hauraki District Council water network as a whole; The Hauraki District Council urban stormwater network as a whole; Memorial halls in Ngatea, Paeroa and Waihi; Pensioner Housing. How you can expect to be engaged Differing levels of engagement may be required during the varying phases of decision-making on an issue, and for different stakeholders. It will not always be appropriate or practicable to conduct processes at the collaborate or empower end of the spectrum. Many minor issues will not warrant such an involved approach. Time and money may also limit what is possible on some occasions. Inform Consult Involve Collaborate Empower One-way communication providing balanced and objective information to assist understanding about something that is going to happen or has happened. Two-way communications designed to obtain public feedback about ideas on rationale, alternatives and proposals to inform decision making. Participatory process designed to help identify issues and views to ensure that concerns and aspirations are understood and considered prior to decision-making. Working together to develop understanding of all issues and interests to work out alternatives and identify preferred solutions. The final decision making is in the hands of the public. Under the LGA 2002, the Mayor and Councillors are elected to make decisions on behalf of their constituents. View our full significance and engagement policy more information. This is available at Summary of our Significance and Engagement Policy 3d - 2

108 Section 4 Our services An introduction to our services Governance and leadership Land transport Water supply Wastewater Stormwater Land drainage Solid waste Community services Community development Regulatory services Significant negative effects Capital projects Our service providers section 4a 4b 4c 4d 4e 4f 4g 4h 4i 4j 4k 4l 4m 4n

109 An introduction to our services The services we provide We provide the residents and ratepayers of our communities with a wide range of services some essential and some nice to have. Some services are provided as it is a requirement to do so by law. The services you can expect us to provide are: Governance and Leadership Democracy Policy development Iwi Liaison Land Transport Community services Community recreation Community facilities Water supply Community development Community growth Community initiatives Wastewater Regulatory Resource management implementation Building control Community protection Animal control Stormwater Land Drainage Solid waste An introduction to our services 4a - 1

110 An overview of this section For each of the services we provide, we have explained what the service is, how we will deliver it, and what it will cost. Each service has its own section, and is split out into sub-sections to make this document easy to read. Here s what you can expect to see in each section. Overview A summary of what the service is, what sub-services are also provided, and why we deliver it. We ve also identified the outcomes that we want to achieve by providing this service. Our plans for this service The section explains the key issues we ve identified for this activity, if and how we intend to change any service levels we provide, the challenges ahead, major changes to the cost of providing this service, and our plans for addressing these matters over the next ten years. This section also details the projects that are planned for this service over the next ten years, when the project is scheduled to occur and how much it will cost. What you can expect from us This section sets out what level of service our customers can expect to receive and our annual targets. Our performance against these targets will be monitored throughout the year and we ll report on them in our annual report. This is our way of reporting back to the community on how we are performing against our targets. The performance statements include measures we have to include by law as well as our own level of service statements. How much it costs Here we set out the projected expenditure for this service over the next ten years. For some services this will include operating costs and different types of capital costs, and for others it will only include operating costs. Where the money will come from This graph shows the source of funding for this service; either rates, user fees, subsidies or other (grants/donations, investment fund), or a combination of these sources. An introduction to our services 4a - 2

111 Governance and Leadership GOVERNANCE & LEADERSHIP What this group includes: Democracy Iwi Liaison Policy Development Our governance and leadership group includes our local democratic system which represents the residents of our district, our relationships with Māori, and the development of policies including those required by law and other voluntary local policies. The governance and leadership group mainly contributes to the following community outcomes Governance and Leadership 4b - 1

112 Governance and leadership cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 - $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Democracy 2,101 2,185 2,366 2,417 2,605 2,692 2,698 2,779 3,024 3,105 3,167 Iwi Liaison Policy Development , , ,096 3,243 3,483 3,601 3,645 3,709 3,854 3,838 4,104 4,335 4,295 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates 2,905 2,417 2,559 2,926 3,003 2,972 3,158 3,180 3,275 3,505 3,483 2,905 2,417 2,559 2,926 3,003 2,972 3,158 3,180 3,275 3,505 3,483 OPERATING SURPLUS/(DEFICIT) (191) (826) (924) (675) (642) (737) (696) (658) (829) (830) (812) Hauraki District Council: Funding impact statement for for Governance and Leadership 2017/ / / / / / / / / / /28 Annual Plan ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties 2,905 2,417 2,559 2,926 3,003 2,972 3,158 3,180 3,275 3,505 3,483 Targeted rates Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 2,905 2,417 2,559 2,926 3,003 2,972 3,158 3,180 3,275 3,505 3,483 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 1,206 1,135 1,268 1,271 1,182 1,184 1,247 1,155 1,259 1,391 1,234 Finance Costs ,005 Internal charges and overheads applied 1,825 2,094 2,037 2,019 1,979 1,999 2,027 2,065 2,021 2,047 2,049 Other operating funding applications Total Applications of Operating Funding (B) 3,093 3,241 3,476 3,598 3,641 3,706 3,848 3,832 4,099 4,331 4,288 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) (188) (824) (917) (672) (638) (734) (690) (652) (824) (826) (805) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt - 1,638 1,664 1, , ,337 1,296 Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) - 1,638 1,664 1, , ,337 1,296 APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves (188) ,209 (117) (53) 7 1, Increase (decrease) of investments Total Applications of Capital Funding (D) (188) ,209 (117) (53) 7 1, SURPLUS (DEFICIT) OF CAPITAL FUNDING (C-D) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Governance and Leadership 4b - 2

113 Democracy DEMOCRACY Local governance system Representation Decision-making structures Oversight of Council controlled organisations and Council organisations Overview Local government in New Zealand receives its mandate from the government through legislation. Local democratic representation is currently considered to be the most appropriate way for our local communities voices to be heard. The majority of our democracy services are set in law; the Local Government Act 2002 and the Local Electoral Act 2001 determine the processes that ensure each community is fairly represented. Our plans for democracy services We re planning for largely business as usual in our democratic services for the next few years, with a couple of exceptions. We re planning on funding an additional communications resource to continue to improve our communication and engagement with our communities. We ve changed the way we fund our democracy services; by changing the source of funding to be entirely from capital value rates. For more information on this change, see our Revenue and Financing Policy. Planned projects We ve increased our mayoral and discretionary grants to $15,000 each to allow for communication campaigns. Here s an overview of some projects we ve got planned for the next ten years for our democracy services. Programme When Local body elections 2019, 2022, 2025, 2028 Triennial agreement development Three yearly, following election Triennial survey Three yearly, from 2019 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our annual reports. How we will measure our performance Baseline Targets You can expect: the Council to conduct all its business in an open and transparent manner. Agendas for meetings (other than extraordinary meetings) of the Council and its Committees are publicly available at least two clear working days prior to the meeting date, as measured by the Council secretary s checklist. 100% of agendas available (2016/17) 100% of agendas are available on the internet and in the Council offices and libraries two clear working days before each meeting. Democracy 4b - 3

114 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Where the money will come from rates 100% Democracy cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Democracy 2,101 2,068 2,167 2,135 2,229 2,290 2,262 2,308 2,434 2,466 2,461 Interest ,101 2,185 2,366 2,417 2,605 2,692 2,698 2,779 3,024 3,105 3,167 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates 2,092 1,444 1,513 1,733 1,954 1,929 1,981 2,097 2,176 2,276 2,357 2,092 1,444 1,513 1,733 1,954 1,929 1,981 2,097 2,176 2,276 2,357 OPERATING SURPLUS/(DEFICIT) (9) (741) (853) (684) (651) (763) (717) (682) (848) (829) (810) The interest figures alone represent the interest cost on debt that relates to all district rate funded activities. This is shown under this activity as it s the activity with the highest proportion of district rate funding. Other district rate funded activities include libraries, reserves, building, resource management implementation and policy development (district planning). Democracy 4b - 4

115 Iwi liaison IWI LIAISON Relationship building with Tangata Whenua Providing opportunity for Māori to contribute to decision-making Co-governance relationship structures Overview Our iwi liaison function is provided to facilitate input from Māori and iwi into democratic and community decision making processes. We recognise Māori and iwi as an important group within the community and we also have some responsibilities clarified in law regarding our relationships with Māori and iwi. This includes providing opportunities for Māori to be involved in decision making processes. We acknowledge the cultural and spiritual relationships that Māori and iwi have with ancestral lands and taonga. Our plans for iwi liaison While the Crown and various Hauraki Iwi continue to work through Te Tiriti o Waitangi (the Treaty of Waitangi) settlements, we ve included an additional $77,000 in our operational budgets in 2018/19 to ensure we are in a position to monitor and implement individual settlements and cogovernance arrangements. The details of any post settlement cogovernance arrangements are still not known. Developing Māori capacity to contribute to our decision-making processes We currently have four memoranda of partnership with Iwi and were seeking to develop two further memoranda. As a result of the Treaty of Waitangi settlement negotiations, Iwi holding mana whenua status in our district have all established post-settlement governance entities. We will be actively seeking to develop new partnership agreements to progress our obligations. What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our annual reports. How we will measure our performance Baseline Targets You can expect: the Council to establish formal relationships with Iwi holding mana whenua status in the district following the signing of Treaty Settlements. We will work with each Iwi with mana whenua status in the district to establish Memoranda of Partnerships as individual Iwi Treaty Settlements are signed. No Settlements signed as at 28 February Memoranda of Partnerships agreed and documented within 15 months of each signed Settlement. We will work with the Hauraki Collective post-settlement governance entity to establish a Forum following the signing the Hauraki Collective Treaty Settlement. No Hauraki Collective post Settlement governance entity established as at 28 February Forum established within 18 months of the Collective Treaty Settlement being signed. Iwi liaison 4b - 5

116 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure 200, , , , , ,000 80,000 60,000 40,000 20,000 - Where the money will come from rates 100% Iwi liaison cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Iwi Liaison REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates OPERATING SURPLUS/(DEFICIT) (2) (8) (6) Iwi liaison 4b - 6

117 Policy development POLICY DEVELOPMENT Development of: Local policies Community plans Local bylaws and other regulatory policy Resource management policy (our district plan). Overview Our policy development function involves establishing our strategic direction via policy, strategy, bylaw and planning. Whilst many of our policies are developed to address local issues or to achieve desired outcomes, we also have a responsibility by law to develop and review some policies, strategies and plans (and to report on these) under legislation. Our plans for policy development Our plans for policy development are particularly affected by new and proposed national as well as regional level policy and legislation. This will include a particular focus on planning to reduce natural hazards, including climate change mitigation and adaptation. At this point, we don t have clear plans in place to respond to these issues, however we ll be developing a work programme for the next 10 years that will focus on determining what it means for our communities and what decisions we ll need to make to respond to climate change. The need for community planning has been identified for our local communities with the Kaiaua and Pūkorokoro / Miranda Coast and Ngatea areas being the first we ll work on. This planning will look at a range of issues for these areas such as water and wastewater services, flood protection, economic development and land use planning, in a coordinated way that will deliver common objectives. The preparation of community plans is also a work stream of the Waikato Plan and will also tie in with local civil defence recovery plans that we need to start preparing. We ll start the Kaiaua community planning in 2018/19. We ve acknowledged that some changes need to be made to our district plan to ensure there is enough land appropriately zoned in the three main towns of Ngatea, Paeroa, and Waihi, as well as addressing more specific plan changes and private plan changes. We have allocated funding to ensure this work programme can occur over the next five years. Programme When How much Development of plans and reports required by law: Annual Plan Annual Report Ongoing Within existing budgets Long Term Plan Pre-election report Review of required policies and bylaws Ongoing Within existing budgets Annual resident satisfaction survey Annual Within existing budgets Community plans development Within existing budgets Waikato Plan implementation Ongoing $17,900 in year one, then reducing District Plan changes $357,000 Policy development 4b - 7

118 2017/ / / / / / / / / / /28 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our annual report. How we will measure our performance Baseline Targets You can expect: the Council to plan its policy development in accordance with relevant legislative requirements. All legislatively required policies, bylaws, plans and strategies are adopted within statutory timeframes, as recorded in the resolution database. 100% adopted within statutory timeframes (2016/17) 100% of all legislatively required documents are adopted within statutory timeframes You can expect: the Council to make decisions a transparent and democratically accountable way. Percentage of customers satisfied with the Council s consultation and engagement regarding major policies and strategies, as measured by customer satisfaction survey. 66% of customers satisfied (2016/17) 75% of customers satisfied You can expect: the Council to meet its statutory requirements under the Resource Management Act All Changes and Variations to the District Plan are processed within statutory requirements, as measured by Council records. 0 changes and variations (2017/18) There are no successful appeals or judicial reviews on any Change or Variation to the District Plan as a result of administrative or process matters. How much it costs Total projected operational expenditure 1,200,000 1,000, , , , ,000 - Policy development 4b - 8

119 Where the money will come from rates 100% Policy development cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Strategic Planning RMA Policy , , REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates , , , , , , OPERATING SURPLUS/(DEFICIT) (180) (77) (65) (5) (6) Policy development 4b - 9

120 Land transport LAND TRANSPORT Local roads and footpaths Bridges Road safety Amenities Contribution to public transport Cycle ways The land transport group mainly contributes to the following community outcomes Our land transport activity is one of our biggest spend areas. Our local transport network connects to the national state highways network. We maintain a range of assets including 633 kilometres of roads (518 kilometres sealed and 115 kilometres unsealed), 112 kilometres of footpaths, 160 bridges, street lights and signs and stock underpasses. The New Zealand Transport Agency provides subsidies for a lot of our road works. We promote road safety and having an increasing focus on improving how our residents with more limited transport options can get around, including children, the elderly and the mobility impaired. We have a small role in supporting public transport. Our plans for land transport services We re investing $625,000 more in operating costs to keep our sealed and unsealed roads to a standard our users expect. We ll be resealing at least kilometres more each year than we currently do, and increasing rebuild work from 2 kilometres per year to between 3 and 5 kilometres per year. Looking ahead we have a number of plans on the cards to ensure we are resilient to future natural events and weather events. We ll be having a look at what the forecasted effects of climate change will mean for our land transport services so that we can look at what we might need to do. Some of our roads are low lying and susceptible to rising sea levels and coastal erosion. Clearing roads after weather related events can be a big part of our land transport activity. We think it s sensible to budget an amount each year for emergency road works that are required after natural events. Future storm event forecasts are predicting that it will rain a lot more which will damage our roads. Taking this into account as well as looking at the amount we ve had to spend to date, we ve increased our annual emergency budget by $30,000 to $150,000 per annum and we ve removed a cap we had of $450,000. With our greater focus on helping our residents get around, we will be identifying key non-road transport corridors such as footpaths that will be used by a lot of people on mobility scooters or school kids. We will then prepare a programme for widening these routes within the next three years. We have a number of bridges that are ageing and may need to be replaced soon. We ll be investigating the condition of these bridges. We have allowed for new funding of $150,000 per year to financially support new road extensions. This will be distributed on a case by case basis. In the future we may contribute to a Karangahake Corridor project with the Department of Conservation and the New Zealand Transport Agency, but this initiative is still being scoped. Land transport 4c - 1

121 We are keeping an eye on the many technology changes happening that affect the way people travel, such as driverless car technology and electrical charging points. Planned projects Here s an overview of the major projects we ve planned for the next ten years for land transport. Project When How much Road resealing (resurfacing) Ongoing $11.8 million over 10 years (capital - renewals) Rebuilding roads (reconstruction/rehabilitation) Ongoing $9.5 million over 10 years (capital renewals) New and replaced footpaths Ongoing $1.4 million over 10 years (capital level of service) Access and mobility initiatives Ongoing $0.7 million over 10 years (capital level of service) New kerb and channelling for stormwater control in Paeroa, Waihi and the Plains Ongoing $1.1 million over 10 years (capital level of service) Road protection plan for the Kaiaua coastal roading Over the ten year life of this $0.2 million (operating) corridor plan Other road renewals Ongoing $6.6 million (capital renewals) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: a safe transport network provided for users and the community. The change from the previous financial year in the number of fatalities and serious injury crashes on the local road network, expressed as a number.* 2016/17: 1 fatal / 3 serious Reduce fatalities and serious injury crashes to 0. You can expect: footpath assets to be fit for purpose. Percentage of residents satisfied with the quality of footpaths, as measured by the annual customer satisfaction survey. New measure 75% The percentage of footpaths within the district that fall within the level of service or service standard for the condition of footpaths that is set out in the Council s relevant documents (e.g. the annual plan, asset management plan, annual works program or long term plan).* Unable to measure in 2016/17. 95% footpaths with defect rating >5 are isolated for safety and remedied within 7 days; You can expect: a roading network that addresses safety and amenity issues. Damaged, missing or leaning signs are remedied on District roads within specified timeframes. 95% (2016/17) 100% regulatory/ permanent/ warning signs within 7 days, safety connected signs within 2 days, all other signs within 6 weeks Land transport 4c - 2

122 How we will measure our performance Baseline Targets All reported potholes are repaired on District roads within specified timeframes. 93% (2016/17) 85% within 5 days for >100 vehicle per day (vpd) roads and within 14 days for <100 vpd roads You can expect: the preservation of the pavement life of sealed roads. The average quality of ride on a sealed local road network, measured by smooth travel exposure.* 97% (2016/17) :96% : >96% The percentage of the sealed local road network that is resurfaced.* 7% of network (36km completed) (2016/17) Percentage of the local road network resealed per year (as determined by the asset management plan): 2018/19: 8% resealed 2019/20: 8% resealed 2020/21: 8% resealed : 8% resealed Percentage of customers satisfied with the quality of roads in the District (excluding State Highways) as measured by the annual customer satisfaction survey. 64% (2016/17) 2018/19: 70% 2019/20: 73% 2020/21: 75% : 75% You can expect: customer service requests to be dealt with promptly and appropriately. The percentage of customer service requests relating to roads and footpaths to which Council responds within the time frame specified in the long term plan.* 98% (2016/17) 100% of service requests are responded to within 10 working days Issues reported to the Council regarding State Highways are forwarded to the New Zealand Transport Agency.* 85% (2016/17) : 95% of all reported issues are forwarded within one working day : 100% of all reported issues are forwarded within one working day You can expect: access to be provided to the network of local roads. Time for road access to be restored to communities following a 1 in 10 year climatic event. 100% arterial and collector, not achieved for other roads. 100% of Arterial and Collector roads open within 24 hours, all other roads within 72 hours. * Mandatory performance measure under section 261B of the Local Government Act Land transport 4c - 3

123 2017/ / / / / / / / / / /28 How much it costs Total projected expenditure $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- capital - improve the level of service capital - replace the asset operating Where the (operating) money will come from subsidies 41% rates 59% Land transport cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Pavement Maintenance 1,248 1,248 1,275 1,304 1,333 1,366 1,398 1,433 1,470 1,510 1,552 Amenity Maintenance Professional Services Other Subsidised 1,340 1,498 1,539 1,581 1,608 1,650 1,690 1,732 1,777 1,824 1,875 Administration Non-Subsidised Works Public Transport Depreciation/Assets written off 2,973 3,033 3,129 3,221 3,318 3,421 3,527 3,638 3,756 3,880 4,012 Interest ,152 8,363 8,593 8,902 9,043 9,266 9,556 9,689 9,894 10,177 10,297 REVENUE Fees, Charges and Other Income External Subsidies 3,511 3,919 4,017 4,167 4,225 4,340 4,505 4,581 4,712 4,902 4,999 Targeted Rates 4,306 4,593 4,997 5,467 5,827 6,217 6,651 7,093 7,562 8,085 8,626 General Rates ,817 8,512 9,014 9,634 10,052 10,557 11,156 11,674 12,274 12,987 13,625 OPERATING SURPLUS/(DEFICIT) (335) ,009 1,291 1,600 1,985 2,380 2,810 3,328 Land transport 4c - 4

124 Hauraki District Council: Funding impact statement for for Land Transport Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates 4,306 4,593 4,997 5,467 5,827 6,217 6,651 7,093 7,562 8,085 8,626 Subsidies and grants for operating purposes 2,115 2,320 2,366 2,467 2,473 2,534 2,643 2,660 2,729 2,853 2,881 Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 6,421 6,913 7,363 7,934 8,300 8,751 9,294 9,753 10,291 10,938 11,507 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 4,043 4,208 4,294 4,469 4,486 4,599 4,789 4,827 4,953 5,170 5,227 Finance Costs (9) (128) (279) Internal charges and overheads applied ,017 1,064 1,195 1,257 1,337 Other operating funding applications Total Applications of Operating Funding (B) 5,179 5,329 5,465 5,679 5,724 5,845 6,030 6,051 6,139 6,299 6,285 SURPLUS (DEFICIT) OF OPERATING FUNDING (A-B) 1,242 1,584 1,898 2,255 2,576 2,906 3,264 3,702 4,152 4,639 5,222 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure 1,396 1,599 1,651 1,700 1,751 1,806 1,862 1,921 1,983 2,049 2,118 Development and financial contributions Increase (decrease) in debt (52) (316) (589) (990) (1,403) (1,682) (2,062) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) 1,396 2,437 2,232 2,045 1,699 1,490 1, APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service ,013 - to replace existing assets 1,763 2,829 2,889 2,992 2,958 3,031 3,106 3,160 3,219 3,427 3,647 Increase (decrease) in reserves (68) Increase (decrease) of investments Total Applications of Capital Funding (D) 2,638 4,021 4,130 4,300 4,275 4,396 4,537 4,633 4,732 5,006 5,278 SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (1,242) (1,584) (1,898) (2,255) (2,576) (2,906) (3,264) (3,702) (4,152) (4,639) (5,222) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Land transport 4c - 5

125 Water Supply WATER SUPPLY Collecting, treating, storing and distributing water to our communities and rural areas We provide water to our urban and smaller communities as well as rural areas in our district. We treat water before it s used to ensure it s safe to drink. We also store bulk raw water and treated water so we are able to provide a continuous service. Nearly 80% of our water is used for agriculture (but not irrigation). We ve been investing a lot in improving the quality of our water so it meets drinking water standards. We ve also been increasing storage. This work is due to be completed in the next year. In the past we ve intended to provide water supply with enough pressure for firefighting purposes in our bigger townships (Ngatea, Kerepehi, Turua, Paeroa, Waikino and Waihi). The water supply group mainly contributes to the following community outcomes Our plans for water supply services We now need to focus on upgrading our water supply pipe network. We have a lot of pipes that are coming to the end of the life they were designed for. We re experiencing problems on the Hauraki Plains especially as our pipes tend to break and leak more as the peat ground around them shrinks and swells. Some of our pipes can deliver safe but discoloured water at times which means our customers are dissatisfied. Others break frequently and cause damage to other infrastructure. We are also losing more water from the network than is ideal about 30-35% on average - and we need to reduce this. We ve found that the costs of repairing pipes after they break isn t costeffective and it inconveniences our customers. We ll now be more proactive and replace pipes when they re wearing out and before they disrupt our supply service. This will come at a much higher cost than in the past. We re forecasting to spend $7.6 million on pipe replacement over the next ten years compared to $0.7 million forecast in our last plan. As a result, we are expecting to see a reduction in the number of complaints we receive about water look, taste, smell, pressure and disruption over the next ten years (see the what you can expect details below). We re aiming to get our water loss down to 30-20% of our supply by 2028, and a greater reduction in the longer term. Because most of our water pipes are underground, it s not easy to see where water is being lost. We ll be replacing older water metres in line with newer technology and installing other zone metering technology to help us identify where the losses are occurring. This will cost $2 million over the next ten years compared to $0.5 million forecast in our last plan. In some areas, we re not able to provide the level of water pressure required for firefighting services when they access water from our fire hydrants. We ll be investigating this over the next few years and identifying what we can do to fix it and what the cost would be. In the meantime, we are withdrawing our commitment to meeting firefighting water pressure requirements for hydrants in our networks. Water Supply 4d - 1

126 There are a number of potential future developments in the Kerepehi (mainly industrial) and Paeroa (mainly residential) areas which are expected to increase demand on water supply. The Kerepehi water supply is approaching capacity. This wasn t an issue when we last did an assessment of water and sanitary services in We don t know the timing of the potential developments, but will be monitoring when and how much additional capacity will be required. We are also having discussions with the Thames-Coromandel District Council about providing the townships of Hikutaia and Puriri with drinking water. We are reducing our target response times for water supply faults. Previously we aimed to resolve urgent call outs within an hour and non-urgent call outs within eight hours. We are now changing that to 95% of urgent callouts resolved within eight hours, and non-urgent callouts resolved within three days (see the what you can expect details below). Over the next three years we ll also be having a look at what the forecasted effects of climate change will mean for our water services so that we can look at what we might need to do. An inquiry into the Havelock North drinking water situation has recommended increased treatment standards be applied to drinking water supply across the country, including chlorination of supply. We will be assessing what changes may be required to our treatment processes. However, as we already have multiple barriers and chlorinate our supplies the cost may not be as significant for us as for other areas of New Zealand. We have not provided for any upgrades in this plan as a result of the inquiry. Planned projects We ve planned the following projects and programmes for the next ten years. Project When How much Water demand management 2018/ $208,000 (capital level of service) Zone metering to find out where water 2018/19 $80,000 (capital level of service) is being lost from our network Water meter replacements Ongoing $2.3 million over ten years (capital - renewals) Pipe renewals Ongoing $7.6 million over ten years (capital - renewals) Upgrade of Waitakaruru supply to meet 2018/19 $0.85 million (capital level of service) increased reporting on drinking water standards Other renewals Over ten years $4.3 million (capital - renewals) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: water that is safe to drink. The extent to which the Council s drinking water supply complies with: a) Part 4: Bacterial Compliance Criteria b) Part 5: Protozoal Compliance Criteria* To be provided once 2016/17 results known 100% compliance for: a) Bacteria b) Protozoa at all water plants. You can expect: losses from the water supply network to be minimised. Water Supply 4d - 2

127 How we will measure our performance Baseline Targets The percentage of real water loss from the Council s networked reticulation system 1 * You can expect: a reliable water supply. 2016/17: 33%. 2018/19: 32% 2019/20: 31% 2020/21: 30% : 30% aiming towards 20% The number of unplanned interruptions to the water supply system per 1000 properties per year The average consumption of drinking water per day per resident within the Hauraki District.* New measure < /17: Urban: 184 L/person/day Rural: 191 L/ha/day : <250 litres per resident per day (measured annually). You can expect: customer service requests to be dealt with promptly and appropriately. Where the Council attends a call-out in response to a fault or unplanned interruption to its networked reticulation system, the following median response times are measured: Urgent Call-outs: Attendance Resolution Non-Urgent Call-outs: Attendance Resolution* 2016/17: Urgent: Attendance 23 minutes Resolution 228 minutes Non-urgent: Attendance 63 minutes Resolution 261 minutes Urgent: Percentage attendance less than 2 hours 95% Percentage resolution less than 8 hours 95% Non-Urgent: Percentage attendance less than 4 hours 95% Percentage resolution less than 3 days 3 95% You can expect: potable water to be supplied to consumers. The total number of complaints received by Council about any of the following: drinking water clarity; drinking water taste; drinking water odour; drinking water pressure or flow; continuity of supply; and the Council s response to any of these issues, expressed per 1000 connections to the Council s networked reticulation system.* 2016/17: 18.2/1000 connections Water quality Service quality Water pressure / flow issues 2018/ 19 12/ / / / 20 12/ / / / 21 10/ / / / / / 1000 You can expect: the Council to provide its water supply services at agreed levels of service. Customers are satisfied with the water quality supplied by the Council. 74% (2016/17) : 80% You can expect: water supplies to be operated in compliance with regulatory requirements. Achieve a high level of compliance at all water treatment plants, as measured by the number of: abatement notices; and infringement notices; and enforcement orders; and prosecutions received by Council in relation those resource consents. 2016/17: Mandatory requirement includes a description of the methodology used to calculate this. 2 Method of measurement has been changed since our last LTP. Consumption will no longer be measured by urban/rural zone. 3 Excluding billing enquiries and new connections. Water Supply 4d - 3

128 How we will measure our performance Baseline Targets *Mandatory performance measure under section 261B of the Local Government Act How much it costs $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Total projected expenditure $0 2017/ / / / / / / / / / /28 capital - improving the level of service capital - replacing the asset Operating Where the (operating) money will come from rates 100% Water supply cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Treatment 1,391 1,643 1,656 1,726 1,716 1,810 1,801 1,852 1,965 1,962 2,089 Reticulation Intakes and Headworks Fixed Costs Overheads ,012 1,036 1,057 Pumpstations Major Maintenance Other Depreciation/Assets written off 1,330 1,710 1,813 1,866 1,917 1,965 2,016 2,071 2,129 2,190 2,258 Interest ,924 6,975 7,444 7,204 7,314 7,473 7,539 7,715 7,909 8,005 8,230 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates 6,255 6,537 6,929 7,345 7,492 7,642 7,795 7,950 8,109 8,272 8,437 General Rates ,362 6,591 6,984 7,401 7,550 7,701 7,856 8,013 8,173 8,338 8,505 OPERATING SURPLUS/(DEFICIT) 438 (384) (460) Water Supply 4d - 4

129 Hauraki District Council: Funding impact statement for for Water Supply Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates 6,255 6,537 6,929 7,345 7,492 7,642 7,795 7,950 8,109 8,272 8,437 Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 6,255 6,537 6,929 7,345 7,492 7,642 7,795 7,950 8,109 8,272 8,437 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 3,012 3,528 3,831 3,529 3,555 3,695 3,734 3,835 4,003 4,059 4,250 Finance Costs Internal charges and overheads applied ,012 1,036 1,057 Other operating funding applications Total Applications of Operating Funding (B) 4,595 5,266 5,631 5,338 5,396 5,508 5,522 5,644 5,779 5,815 5,973 SURPLUS (DEFICIT) OF OPERATING FUNDING (A-B) 1,660 1,271 1,298 2,007 2,096 2,134 2,273 2,306 2,330 2,457 2,464 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt 4, (173) 299 (877) (910) 27 (1,063) (880) (1,063) (987) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) 4, (173) 299 (877) (910) 27 (1,063) (880) (1,063) (987) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service 3,082 1, to replace existing assets 2,178 1,009 1,033 1,979 1,165 1,224 2,300 1,243 1,450 1,394 1,477 Increase (decrease) in reserves Increase (decrease) of investments Total Applications of Capital Funding (D) 6,160 2,197 1,125 2,306 1,219 1,224 2,300 1,243 1,450 1,394 1,477 SURPLUS (DEFICIT) OF CAPITAL FUNDING (C-D) (1,660) (1,271) (1,298) (2,007) (2,096) (2,134) (2,273) (2,306) (2,330) (2,457) (2,464) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Water Supply 4d - 5

130 Wastewater WASTEWATER (sewage) Collection Treatment Disposal Overview We collect the wastewater from homes and businesses their toilets, sinks, showers, washing machines and so on and transport it via pipes and pumps to treatment plants. At our treatment plants the wastewater is treated to clean it up before releasing it mostly to waterways. We also make sure that trade wastes are appropriately disposed of. We do this to keep our communities healthy and free from disease and protect our environment especially our waterways from pollution. About 5,500 properties are connected to our wastewater systems. The wastewater group mainly contributes to the following community outcomes Our plans for wastewater services National freshwater policy changes in 2016 and 2017 mean that while we already treat our wastewater to a high quality before disposal, the standards will be increasing. We ll have to show that we can improve the standard of our treated wastewater. This will require upgrades to all of our treatment plants at an estimated cost of around $38 million (capital spend) over 15 years. We agree that our waterways need to be improved but we think there are more effective ways of doing that. We ll be continuing to work with the Waikato Regional Council (which sets our discharge standards) to look for alternative options. Another challenge is that the capacity of existing wastewater treatment plants (especially in Kerepehi and Paeroa) will be stretched due to combination of population growth and the new discharge standard constraints. This wasn t an issue when we last did an assessment of water and sanitary services in We ll now be measuring our discharge to gain a better understanding of where we have capacity constraints. We would also look at providing some more capacity if we have to upgrade the plants. We are also making some capacity available by doing some remedial work at our treatment plants, and we plan to deal with any further requirements on a case by case basis. In the meantime, plenty of other work is programmed. At present we have too much groundwater and stormwater getting into our wastewater system which sometimes causes overflows and problems in our treatment plants. We have programmed the ongoing replacement of leaky and broken pipes to stop that. We have revised our service level to target a reduction in dry weather wastewater overflows. Over the next three years we ll also be having a look at what the forecasted effects of climate change will mean for our wastewater services so that we can look at what we might need to do. We have reduced our target of dealing with customer service overflow requests promptly by increasing the time we allow to resolve wastewater overflows (from less than 4 hours to 95% being resolved within 8 hours). This is a more realistic target. With that we are also reducing the number Wastewater 4e - 1

131 of complaints we think is acceptable from 30 complaints per 1,000 connections, to 12 in the first two years and 10 in the remaining 8 years. More detail is set out in the next section. Planned projects Here s an overview of the major projects we ve planned for the next ten years for wastewater. Project When How much Upgrades to improve wastewater treatment: Ngatea Kerepehi Turua Paeroa Whiritoa Upgrades in Waihi and Waitakaruru will occur over the 2028 to 2038 period. 2024/25 to 2027/ /25 to 2027/ /26 to 2028/ /27 to 2030/ /27 to 2029/30 $3.7 million (capital level of service) $10.7 million (capital level of service) $3.9 million (capital level of service) $5.2 million (capital level of service) $0.7 million (capital renewals) Above figures years 1 10 only. Additional upgrade costs will continue into the following ten years. 2019/20 $242,000 (capital level of service) Infrastructure for Ngatea North subdivision (stage 3) Other renewals Over the ten years $6.9 million (capital renewals) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: wastewater services that meet regulatory requirements. The number of dry weather wastewater overflows from the Council s wastewater system, expressed per 1000 wastewater connections to that wastewater system.* 2016/17: /19: <3 2019/20: <3 2020/21: < : <1 per 1000 connections You can expect: the risk of environmental and public health impacts to be mitigated. The frequency of dry weather overflows from pump stations will be minimized. 2016/17: 0.85 pump-station overflow per 20 pump stations per year <1 pump-station overflow per 20 pump stations per year. The frequency of dry weather overflows from the wastewater network will be minimized. 2016/17: 3.79 overflows per 100 km of wastewater pipe length per year <15 per 100 km of wastewater pipe length per year. Wastewater 4e - 2

132 How we will measure our performance Baseline Targets You can expect: the community and the environment to be provided with protection. Compliance with the Council s resource consents for discharge from its wastewater system. Measured by the number of: abatement notices; and infringement notices; and enforcement orders; and prosecutions received by Council in relation those resource consents.* 0 abatement notices 0 infringement notices; 0 enforcement orders; 0 prosecutions 0 abatement notices 0 infringement notices; 0 enforcement orders; 0 prosecutions received by the Council You can expect: customer service requests to be dealt with promptly and appropriately. Where the Council attends to wastewater overflows resulting from a blockage or other fault in the Council s wastewater system, the following median response times measured: Attendance Resolution* 2016/17: Attendance: 42 minutes Resolution: 209 minutes Attendance 95% within 2 hours Resolution 95% within 8 hours You can expect: a safe and reliable wastewater service. The total number of complaints received by Council about any of the following: wastewater odour; wastewater system faults; wastewater system blockages; and the Council s response to any of these issues, expressed per 1000 connections to Council s wastewater system. 2016/17: 9.45 / 1000 connections 2018/19: 12 per 1000 connections 2019/20: 12 per 1000 connections 2020/21: 10 per 1000 connections : 10 per 1000 connections Percentage of users satisfied with the quality of the wastewater services provided. 97% (2016/17) 95% * Mandatory performance measure under section 261B of the Local Government Act Wastewater 4e - 3

133 How much it costs Total projected expenditure $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2017/ / / / / / / / / / /28 capital - improving the level of service capital - replacing the asset Operating Where the (operating) money will come from Fees, charges and other income 7% Rates 93% Wastewater cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Treatment Reticulation Fixed Costs Overheads Pumpstations Major Maintenance Other Depreciation/Assets written off ,117 1,260 Interest ,188 3,259 3,358 3,412 3,489 3,605 3,654 3,781 3,970 4,376 4,847 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates 3,245 3,408 3,579 3,758 3,946 4,143 4,350 4,567 4,796 5,275 5,803 General Rates ,749 3,805 3,987 4,176 4,375 4,583 4,802 5,031 5,274 5,767 6,311 OPERATING SURPLUS/(DEFICIT) ,148 1,250 1,304 1,391 1,464 Wastewater 4e - 4

134 Hauraki District Council: Funding impact statement for for Wastewater Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates 3,245 3,408 3,579 3,758 3,946 4,143 4,350 4,567 4,796 5,275 5,803 Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 3,536 3,699 3,878 4,064 4,260 4,465 4,681 4,907 5,146 5,635 6,175 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 1,557 1,533 1,575 1,585 1,625 1,665 1,709 1,755 1,805 1,857 1,914 Finance Costs Internal charges and overheads applied Other operating funding applications Total Applications of Operating Funding (B) 2,341 2,524 2,598 2,627 2,683 2,759 2,773 2,849 3,013 3,259 3,585 SURPLUS (DEFICIT) OF OPERATING FUNDING (A-B) 1,195 1,175 1,280 1,437 1,577 1,706 1,908 2,058 2,133 2,376 2,590 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt (883) 373 1,994 3,564 5,071 2,942 Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) (883) 373 1,994 3,564 5,071 2,942 APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service ,790 3,483 4,862 6,380 4,288 - to replace existing assets 2,100 1,437 1,184 1,479 1, Increase (decrease) in reserves (1,369) Increase (decrease) of investments Total Applications of Capital Funding (D) 1,195 1,577 1,426 1,535 2, ,281 4,052 5,697 7,447 5,532 SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (1,195) (1,175) (1,280) (1,437) (1,577) (1,706) (1,908) (2,058) (2,133) (2,376) (2,590) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Wastewater 4e - 5

135 Stormwater STORMWATER Collecting or channelling excess rainwater that runs off urban properties and roads Overview Stormwater is rainwater runoff that usually results from heavy or prolonged periods of rain. Runoff flows from surfaces on urban properties, footpaths and roads. We use a series of drainage systems to remove rainwater runoff from urban areas in Waihi, Waikino, Karangahake, Mackaytown, Paeroa, Ngatea, Kerepehi, Turua, Kaiaua and Whiritoa. Redirecting stormwater so it doesn t pool and flood is important in protecting our residents properties. We collect stormwater through natural watercourses and built structures like drains and pipes. We have around 90 km of stormwater pipes and 40 km of open drains. As our network is limited in how much stormwater we can collect and dispose of, we are increasingly requiring new developments to provide their onsite options like ground soakage. The stormwater group mainly contributes to the following community outcomes Some of the stormwater we dispose of is treated first. Our plans for stormwater services We ll be investigating the condition and performance of our older stormwater assets in the next few years. This will help us prepare an effective asset replacement programme in future. We re also targeting a reduction in the number of habitable houses from flooding from < 3 per 1,000 per event to < 2 by replacing some of our pipes. We re expecting that the quality of stormwater entering waterways may need to be improved in future, but we don t know how much or when. It might mean that we need to retrofit some of our existing infrastructure. In the meantime, we ll continue to increase treatment levels across our schemes. The more frequent intense rainfall happening as temperature rises is expected to increase how often and how much surface water collects and ponds. Our newer stormwater infrastructure is large enough to deal with the forecast climate change effects. Our older infrastructure can t deal with it, but is due to be replaced by the time we ll see that change in temperature with future-proofed assets. Our network can physically accommodate the forecast population growth in our district, except in some parts of Waihi. Developers of property are required to provide their own stormwater discharge arrangements in those areas. Aside from that exception, our assumptions about this service are consistent with our assessment of water and sanitary services completed in Stormwater 4f - 1

136 Planned projects Our focus for the next ten years is on ongoing renewals and treatment improvements. Project When How much Stormwater network upgrades $890,000 (capital level of service) Stormwater network renewals $365,000 (capital renewals) Discharge consents for Plains, Paeroa and Waihi 2022/23 $143,000 (capital renewals) Catchment management plans 2022/23 $108,000 (operating) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: stormwater systems to protect houses from flooding in urban areas. The number of flooding events that occur in the Hauraki district. For each flooding event, the number of habitable floors affected. (Expressed per 1000 properties connected to the territorial authority s stormwater system.)* 2.3 (2016/17) 2018/19: <2 per /20: <2 per /21: <2 per : <2 per 1000 You can expect: the stormwater network to be reliable. The number of complaints received by Council about the performance of the stormwater system. Expressed per 1000 properties connected Council s stormwater system.* Number of reported stormwater blockages per 100km of pipeline per year Percentage of stormwater above ground assets in satisfactory condition (condition grades 1,2 or 3) Customers are satisfied with the stormwater service provided. 2016/17: 3.8 <5 / 1000 connections New measure <20 New measure 80% (2016/17) 80% 2018/19: NA 2019/20: NA 2020/21: 85% : 90% You can expect: the community and the environment to be provided with protection. Compliance with the Council s resource consents for discharge from its stormwater system. Measured by the number of: 1. abatement notices; and 2. infringement notices; and 3. enforcement orders; and prosecutions received by Council in relation those resource consents.* 2016/17: 0 0 Stormwater 4f - 2

137 2017/ / / / / / / / / / /28 How we will measure our performance Baseline Targets You can expect: customer service requests to be dealt with promptly and appropriately. The median response time to attend a flooding event, measured from the time that the Council receives notification to the time that service personnel reach the site.* 2016/17: no result. <2 hours. * Mandatory performance measure under section 261B of the Local Government Act How much it costs $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 Total projected expenditure $- capital - improve the level of service capital - replace the asset operating Where the (operating) money will come from Rates 100% Stormwater 4f - 3

138 Stormwater cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Vegetation Control Reticulation Maintenance/Fencing/Culverts Mechanical Cleaning Floodgates Pumps Overheads Other Depreciation/Assets written off Interest (65) (67) (82) (102) (122) (144) (154) (178) (202) (229) (256) REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates , ,051 1,074 1,097 1,120 1,145 1,169 1,195 1,221 1,248 OPERATING SURPLUS/(DEFICIT) Hauraki District Council: Funding impact statement for for Stormwater Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) ,002 1,024 1,045 1,067 1,089 1,112 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers Finance Costs (65) Internal charges and overheads applied Other operating funding applications Total Applications of Operating Funding (B) SURPLUS (DEFICIT) OF OPERATING FUNDING (A-B) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt - (308) (389) (398) (442) (198) (488) (488) (536) (535) (587) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) - (308) (389) (398) (442) (198) (488) (488) (536) (535) (587) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves Increase (decrease) of investments Total Applications of Capital Funding (D) SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (490) (433) (492) (520) (548) (471) (596) (628) (660) (693) (727) FUNDING BALANCE ((A - B) + (C - D)) Stormwater 4f - 4

139 The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Stormwater 4f - 5

140 Land Drainage LAND DRAINAGE Collecting water runoff from rural areas and redirecting it The land drainage group mainly contributes to the following community outcomes A large area of the Hauraki Plains lies at or below the Firth of Thames high tide levels. The rest of the area is only slightly higher. Protection against high water tables, extreme weather events, high tides and river floods is essential for land productivity. We work with the Waikato Regional Council to provide land drainage and flood protection for the Plains. The Regional Council provides stopbanks, flood gates and pump stations across the Plains - except the north western part from Waitakaruru to Pūkorokoro / Miranda which we manage - to provide protection from river and tidal flooding. We provide additional land drainage support by collecting water runoff from rural areas and redirecting it to the flood protection schemes through, for example, pumping water from one drain to another larger one. Drainage schemes are designed to ensure that water from a 1 in 10-year probability rainfall event does not lie on the ground for more than three days in order to protect pasture. We have 650 kilometres of land drains and 50 kilometres of stopbanks. Our plans for land drainage services We will continue to provide three drainage schemes in our western plains, eastern plains, Paeroa rural, and we ll continue to provide administrative support to the locally managed Taramaire drainage district. Like our other infrastructure activities, over the next three years we ll also be having a look at what the forecasted effects of climate change will mean for our land drainage services. It is likely that climate change will impact this activity over time. As peat shrinks and the land contour changes, we ll need to re-orientate some of our drainage network. In the next three years we ll be looking into raising stop bank levels in the north-western part to cope with 1 in 100-year probability flood events. This would bring it up to the regional tidal protection level of service (3 metres plus additional freeboard). This investigation will inform our next long term plan. Land Drainage 4g - 1

141 Planned projects We have planned the following projects for the next ten years. Project When How much Investigation into raising stopbanks 2018/ /21 Within operating budgets Survey of Tirohia-Kuaoiti stopbank 2018/ /21 Within operating budgets settlement rates Eastern Plains H Drain culverts 2018/ /21 $9,200 (capital level of service) Western Plains Pump screens Flume replacement Stopbank reconstruction Flood gates Pouarua Maukoro structures (Muggeridge) 2019/ / / /21 $381,000 (capital - renewals) $428,000 (capital - renewals) $1.1 million (capital - renewals) $304,000 (capital - renewals) $204,000 (capital level of service) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: pasture protection to be provided. The major flood protection and control works that are maintained, repaired and renewed to the key standards defined in the Council s relevant planning documents (such as this plan, annual works program or long-term plan).* Number of properties still ponding after 3 days from a 1 in 10-year event or less (impacting the pasture) Unable to measure in 2016/17 New measure 0 100% You can expect: reliable land drainage networks. Percentage of affected customers satisfied with the land drainage and flood protection services. 61% (2016/17) 2018/19: 72% 2019/20: 80% 2020/21: 80% : 80% You can expect: timely response to customer requests. Where the Council responds to a service request regarding the Council s land drainage and flood protection systems, the following median response times measured for: Urgent service requests and Non-urgent service requests 2016/17: Urgent: 1 hour Non-urgent: 2 working days * Mandatory performance measure under section 261B of the Local Government Act Urgent: 1 hour Non-urgent: 2 working days Land Drainage 4g - 2

142 2017/ / / / / / / / / / /28 How much it costs Total projected expenditure $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- capital - improve the level of service capital - replace the asset operating Where the (operating) money will come from rates 100% Land drainage cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Vegetation Control Maintenance/Fencing/Culverts Mechanical Cleaning Floodgates Pumps Overheads Other Depreciation/Assets written off Interest (150) (157) (147) (157) (153) (140) (147) (154) (160) (157) (152) 1,026 1,040 1,094 1,114 1,147 1,193 1,221 1,249 1,282 1,324 1,376 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates ,002 1,021 1,040 1,059 1,078 1,098 1,118 1,139 General Rates ,113 1,127 1,150 1,170 1,192 1,215 1,237 1,259 1,282 1,306 1,330 OPERATING SURPLUS/(DEFICIT) (18) (46) Land Drainage 4g - 3

143 Hauraki District Council: Funding impact statement for for Land Drainage Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates ,002 1,021 1,040 1,059 1,078 1,098 1,118 1,139 Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 1,113 1,127 1,150 1,170 1,192 1,215 1,237 1,259 1,282 1,306 1,330 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers ,011 Finance Costs (150) Internal charges and overheads applied Other operating funding applications Total Applications of Operating Funding (B) ,005 1,027 1,050 1,075 1,114 1,156 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt (196) (140) (135) (129) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) (196) (140) (135) (129) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves Increase (decrease) of investments Total Applications of Capital Funding (D) SURPLUS (DEFICIT) OF CAPITAL FUNDING (C-D) (319) (256) (230) (236) (229) (210) (210) (209) (207) (192) (174) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Land Drainage 4g - 4

144 Solid Waste SOLID WASTE Solid waste collection Recycling Waste minimisation education Closed refuse tips aftercare The solid waste group mainly contributes to the following community outcomes Overview Our solid waste services consist of the minimisation, collection, and disposal of solid waste. These services involve kerbside collection of refuse and recyclables, and the management of two refuse transfer stations located in Paeroa and Waihi. We aim to meet all legislative requirements relating to solid waste, and aim to reduce the environmental impact of waste. Our plans for solid waste services In an effort to reduce waste going to landfill, we re investing more in waste minimisation education in the next 10 years (an extra $2,000 more each year) and we ve reflected this in our service levels, aiming for two education campaigns to be provided each year. As part of this, we support Enviroschools and Keep New Zealand Beautiful in its quest to increase waste reduction education. We ve also allowed $10,000 for the investigation into providing a recycling station in Ngatea, and District wide options for the reduction and reuse of waste. This includes (but is not limited to) looking into the value of moving towards biodegradable refuse bags, and feasibility and support for a community recycling and resource recovery facility, similar to the Seagull Centre in Thames. We re also planning to do some work on the Kaihere closed refuse tip over the next five years. Our plans for this service are consistent with our waste management and minimisation plan. Solid Waste 4h - 1

145 Planned projects We have planned the following projects for the next ten years. Project When How much Investigation into waste minimisation 2018/19 $10,000 (operating) initiatives Waste minimisation education Ongoing $300,000 (operating) over 10 years Kaihere closed refuse tip aftercare 2018/ /23 $363,000 (operating) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: public education on waste minimisation to be increasing and the adverse effects of waste on the environment minimised. A waste minimisation education strategy is developed and implemented. Number of justified complaints that collection is not completed on the scheduled day, as per the service request database. The quantity of household waste collected from the kerbside per person is decreasing. The total quantity of waste sent to landfill per person per annum is reducing. New measure New measure New measure New measure Two education campaigns are undertaken each year. 3 complaints (that collection was not completed) per 1000 customers per annum. A 5% decrease in kerbside household waste to landfill from approx. 78 kg per person per annum to 74 kg per person by A 13% reduction in the total quantity of waste sent to landfill from 363 kg per person per annum to 316 kg per person by You can expect: reliable solid waste collection. Percentage of users satisfied with the kerbside collection service in our annual customer satisfaction survey. 91% (2016/17) 85% of users satisfied. Solid Waste 4h - 2

146 How much it costs Total projected operational expenditure 1,000, , , , , , , , , , / / / / / / / / / / /28 Where the (operating) money will come from other 9% user fees 5% rates 86% Solid waste cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Refuse Collection Closed Tip Sites Transfer Stations Other REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates OPERATING SURPLUS/(DEFICIT) (52) (28) (21) Solid Waste 4h - 3

147 Hauraki District Council: Funding impact statement for for Solid Waste Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties Targeted rates Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers Finance Costs Internal charges and overheads applied Other operating funding applications Total Applications of Operating Funding (B) SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) (1) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt - 8 (2) (3) (3) (3) (3) (3) (3) (2) (1) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) - 8 (2) (3) (3) (3) (3) (3) (3) (2) (1) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves (1) Increase (decrease) of investments Total Applications of Capital Funding (D) (1) SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) 1 (22) (32) (63) (64) (73) (71) (75) (74) (70) (71) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Solid Waste 4h - 4

148 Community Services COMMUNITY SERVICES Community recreation Community facilities Our community services group involves the provision of recreation services such as libraries, parks, reserves, and facilities like public toilets, cemeteries, pensioner housing and the Waihi event centre. We provide a number of services intended to enhance our communities needs for recreation and enjoyment. We provide these services to meet our district s recreational, sporting and educational expectations. In addition to this we provide facilities for public use, such as public toilets, halls, cemeteries and pensioner housing. We do this to help make our communities a vibrant place to live and visit. The community services group mainly contributes to the following community outcomes Community Services 4i - 1

149 Community services cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Recreation 4,122 4,479 4,716 4,641 4,761 4,823 4,946 5,056 5,179 5,244 5,431 Community Facilities 1,772 1,890 1,996 2,013 2,003 2,010 1,988 1,984 1,971 2,007 1,998 5,894 6,369 6,712 6,654 6,764 6,833 6,934 7,040 7,150 7,251 7,429 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates 1,843 2,032 2,161 2,219 2,249 2,268 2,309 2,333 2,361 2,375 2,395 General Rates 2,982 3,516 3,763 3,889 4,021 4,117 4,171 4,267 4,348 4,363 4,522 5,423 6,214 6,627 6,848 7,033 7,172 7,292 7,436 7,570 7,624 7,829 OPERATING SURPLUS/(DEFICIT) (471) (155) (85) Hauraki District Council: Funding impact statement for for Community Services Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties 2,982 3,516 3,763 3,889 4,021 4,117 4,171 4,267 4,348 4,363 4,522 Targeted rates 1,843 2,032 2,161 2,219 2,249 2,268 2,309 2,333 2,361 2,375 2,395 Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 5,418 6,209 6,622 6,843 7,028 7,167 7,287 7,431 7,565 7,619 7,823 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 3,579 3,702 3,903 3,821 3,919 3,983 4,077 4,170 4,270 4,355 4,528 Finance Costs Internal charges and overheads applied 1,302 1,417 1,425 1,450 1,477 1,505 1,536 1,565 1,596 1,632 1,665 Other operating funding applications Total Applications of Operating Funding (B) 5,151 5,449 5,747 5,664 5,751 5,798 5,881 5,960 6,045 6,117 6,266 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) ,179 1,277 1,369 1,406 1,471 1,520 1,502 1,557 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt - 1,777 (511) (767) (888) (841) (866) (920) (986) (1,133) (1,187) Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) 5 1,782 (506) (762) (883) (836) (861) (915) (981) (1,128) (1,181) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service 1, to replace existing assets 141 1, Increase (decrease) in reserves (1,030) (208) (352) (1) 101 Increase (decrease) of investments Total Applications of Capital Funding (D) 272 2, SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (267) (760) (875) (1,179) (1,277) (1,369) (1,406) (1,471) (1,520) (1,502) (1,557) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the noninclusion of depreciation and the inclusion of internal charges. Community Services 4i - 2

150 Community recreation COMMUNITY RECREATION Libraries Swimming pools Waihi events centre Sports fields and recreational reserves A district sports coordinator Overview Our community recreation services include: providing public libraries in Ngatea, Paeroa and Waihi which lend a variety of resources, deliver education programmes and free internet access through our libraries, support of community-operated libraries at Kaiaua, Turua and Whiritoa, operating three community pools in Ngatea, Paeroa and Waihi, providing sports fields in Paeroa, Ngatea, Waihi and Whiritoa, maintaining a number of recreation reserves, including playgrounds, furniture, walkways and other amenities two jetties/boat ramps on the Waihou River available for community use, providing Waihi events centre facility for indoor sporting and some non-recreational use, provision of sports co-ordination services to foster residents participation in sports, recreation and leisure. Our plans for community recreation Libraries Our library services are changing, and libraries are no longer somewhere to just borrow books. In the past few years we ve been changing up our district libraries to meet more modern needs of libraries as community spaces. After seeing how successful the facilities in Waihi and Paeroa are, we re now looking at making changes to Ngatea s facility. The Ngatea library space is currently operated with our customer service centre and doesn t meet modern standards. We think our broader community needs could be better met through combining our library with our customer service centre and other community spaces and activities. We asked for feedback on a number of options for the future of the library in March and April We think a joint community space with the Haurakian Trust or other newly formed trust would provide the most value to our communities. This is proposed to be located at 11 Orchard Road, Ngatea. After considering the feedback received, we ve allowed for further investigation into this project. We d like to provide more information to the public on how the governance structure would work, how access and parking at the site would be made safe, how we would protect our investment in the project, and what would happen to the current library building if the project did go ahead. Following the investigation into these matters, we ll consult with you about whether we continue with the project or work towards improving the existing library. As well as the Ngatea library upgrade, we re currently undertaking a number of new programmes in our libraries and we plan to enhancing these and provide more services similar to this. You can expect to see more library-led learning programmes available over the next three years. We re planning on installing a radio frequency identification system (RFID) in our district libraries in 2020/21 to provide self-service and return of books for our customers and ensure books are not taken from the library without being accounted for. The RFID system is expected to free up staff time to focus on more specific queries such as reference services, computer assistance and delivering education programmes. We also believe it will create efficiency with our library staff through the automation and semi-automation of book returns, stock take and making books shelf ready. Community recreation 4i - 3

151 Streetscapes We re planning on upgrading the main street of Ngatea to improve the appeal of the town centre, and provide a more welcoming village type feel, a place people feel comfortable to stop and stay a while. This will include an upgrade of the main street section between the 70 kmph speed limit sign at the western end of the town to the 70 kmph speed limit sign at the eastern end of the town. We ve included capital spend of $1.5 million in 2018/19 to complete this work, and we ll consult with the local community around the plans before the project begins. We ve also allowed for $500,000 to be used in 2018/19 for the development of Wharf Street in Paeroa. This development will include plantings, improved pedestrian access to the town centre and a link to the Hauraki Rail Trail which is located on the bank of the Ohinemuri River. Waihi Event Centre We re planning for the Waihi Event Centre to be business as usual for the next three years, with general renewals such as security lighting, replacement of the drinking fountain and ceiling fans. We ve reviewed our fees against our costs and have made some increases to the hourly hire rates for the centre to meet the costs of operating the venue. This has increased our expected income by around $26,400 in the next three years. Swimming pools In principle we support sub-regional swimming facilities and in the next 10 years we re planning on developing an aquatic strategy to consider our role in providing funding for future regional pool services, including what level our communities would like and be willing to pay for. We ll be doing this from existing budgets. We ve also levelled out the swimming pool entry fees to be $2 all season for all pools in our district, rather than our previously reduced rate offered in January. We ve investigated the cost of covering of our existing pools and due to the high cost, we haven t added this as a project for the next ten years. We have however allocated $35,000 to extend the swimming season. The location of the season extension and the timing of this is yet to be determined. We ve allowed for $11,000 to complete various improvement works at the Waihi pool prior to the 2018/19 swimming season. Over the next year we re doing some assessment of our community pool in Waihi, which is located on the Waihi College grounds. We ll be looking further into the condition of the pool and thinking about the future of the pool, buildings and surroundings with Waihi College. We ll update you on any progress or future plans through our annual planning documents, and our next long term plan. We ve included an operating budget of $7,500 for various works needed before the 2018/19 swimming season begins at the Ngatea pool. We re also planning to spend $55,000 in 2018/19 to relocate the dive blocks and pool cover mechanism to the deep end of the pool due to health and safety concerns. We ve allowed for $9,000 to complete various improvement works at the Paeroa pool prior to the 2018/19 swimming season. Sports co-ordination We ll continue to provide a similar level of funding to Sport Waikato for a district sports coordinator to facilitate sports initiatives in our district. Sport Waikato, in conjunction with the other councils in the Waikato Region have developed a Waikato Regional Facilities Plan which is a guiding document identifying future sports facility needs for the Waikato region and identifying cross border funding opportunities. The Waikato Mayoral Forum has signed off a funding framework to help decide who should pay for regional facilities. At this stage we don t know what the implications of supporting this plan will be, and we ll assess the benefits of providing any funding when we know more. Community recreation 4i - 4

152 Our reserves Dudding reserve We ve committed to giving Dudding Reserve in Ngatea a revamp, in a project that will be done with help from the local community. We need to secure some external funds to assist with this project. We ll fund $20,000 from the Community Facilities and Recreation Development Fund in 2018/19. Mackaytown recreation reserve In the next 10 years we ll be looking into development of the Mackaytown Recreation Reserve, as we know this area has potential and could be better used. We think this area would be great to support the Hauraki Rail Trail users, however, a bridge over the river connecting to the trail would need to be built. We think this has the potential to be a major project but with the challenges we re facing with costs in the next 10 years, we haven t made any plans for this, and a project would need to be fully scoped and discussed with our communities before going ahead. Paeroa Domain We ll be upgrading the Paeroa Domain entrance gates and driveways in 2019/20 at a cost of $73,100, and developing some amenity gardens at the Domain in 2020/21 at a cost of $20,800. We ve had a request for a power source to be installed at the Paeroa Domain band rotunda. At this stage we haven t included any budget for this project, however this may be reviewed in the next three years. Playgrounds We want to provide playground facilities that attract young families to our district, and keep the families already living here fulfilled. We value our young families and want to make our district a fun place to work and play. To meet required safety levels on our playgrounds, a number of projects have been planned, including improvements at Pioneer Park in Ngatea, Railway Reserve in Paeroa and Victoria and Gilmour Parks in Waihi. Many of these upgrades are planned for 2018/19. We ve planned for some improvements to Railway Reserve in 2022/23 at a cost of $77,000. These improvements are likely to include a basketball court and additional parking. We ll assess whether this project is needed earlier when we look at our programme for 2019/20. Whiritoa tennis courts We ve allocated $25,000 in 2019/20 towards resurfacing the Whiritoa tennis courts. We ll work with the Whiritoa Tennis Club to look at the options for the playing surface, more detailed costs, and will review whether this project will be provided for in our 2019/20 programme. Walkways We ll be constructing a new walkway in Turua for safety reasons in 2018/19. This walkway will provide a dedicated pedestrian access as a safer alternative to walking on the road side. To complete this $40,000 project, we ll use $20,000 from the Community Facilities and Recreation Development Fund and $20,000 from rates. We ll need to secure some external funds to complete this project. The existing walkway connecting Olga Street and Primrose Hill needs a bit of extra care as it s overgrown, uneven and could be unsafe. We ve allowed for $20,000 to improve this walkway in 2018/19. We ve committed to construct a trail around Hugh Hayward Domain in 2018/19 for use as an all-weather walking and cycling confidence course at a cost of $20,000. We re funding this from the Community Facilities and Recreation Development Fund. Motorhomes We ll be extending the overnight campervan carpark in Marshall Street, Paeroa due to year-round increased use. The estimated cost for the extension is $35,000 in 2018/19. Community recreation 4i - 5

153 Berm mowing We re changing what we mow in Waihi to align with the rest of our district. From 2018/19 we will stop mowing normal width streets (20 metres wide or less). This reduction in mowing will result in a cost saving of $50,000 per year. We ll continue to mow our parks and reserves, council-owned land and road berms bordering these sites. We ll also keep mowing the main routes such as Parry Palm Avenue, Tauranga Road and Kenny Street as well as the road berms in the following Waihi streets: Barry Road Galbraith Street Mataura Road Canon Street Victoria Street Wrigley Street Queen Street For those on a low income or unable to mow their berm for health or disability reasons, Work and Income New Zealand (WINZ) assistance may be available, and we encourage you to investigate this option with WINZ. Planned projects Here s an overview of the major projects we ve planned for the next ten years for community recreation. We ve split them into projects that are funded by district rates and ward rates, so you can see what you re paying for. District projects When How much A new or upgraded library service for Ngatea $1.5 million (capital level of service) New radio-frequency identification (RFID) system 2019/20 $62,200 (capital level of service) New library projects or programmes 2018/ /21 Met within existing budgets. Library books and resources Replace pool covers and giant inflatable pool toys at all pools Ongoing 2018/19, 2020/21, 2022/23 and 2026/27 $1.6 million for 10 years (capital renewals) $175,500 (capital renewals) Various improvements to all community pools 2018/19 $27,500 (capital level of service) Paeroa swimming pool renewals Ongoing $121,400 for 10 years (capital renewal) Waihi Events Centre improvements and renewals 2025/26 $67,200 (capital renewals) Plains projects When How much Ngatea main street renewal 2018/19 $1.75 million (capital renewals) Pioneer Park playground upgrade 2019/20 $45,900 (capital renewals) Turua walkway project 2018/19 $40,000 (capital level of service) Plains recreation renewals Ongoing $73,900 over 10 years Dudding reserve development 2018/19 $20,000 (capital level of service) Hugh Hayward Domain cycleway 2018/19 $20,000 (capital level of service) Paeroa projects When How much Marshall Street motorhome carpark extension 2018/19 $35,000 (capital level of service) Wharf Street development 2018/19 $500,000 (capital level of service) Community recreation 4i - 6

154 Paeroa projects When How much Olga Street walkway improvements 2018/19 $20,000 (capital renewals) Railway Reserve improvements 2022/23 $77,000 (capital renewals) Railway Reserve carpark repairs 2018/19 $25,000 (capital renewals) Paeroa Domain playground upgrade 2018/19 $35,000 (capital renewals) Paeroa Domain entrance upgrade 2019/20 $73,100 (capital renewals) Paeroa Domain gardens improvements 2020/21 $20,800 (capital level of service) Paeroa recreation renewals Ongoing $73,500 over 10 years Waihi projects When How much Victoria Park (rocket park) playground upgrade 2018/19 $45,000 (capital - renewals) Gilmour Park (duck pond) playground safety surface 2019/20 $46,000 (capital renewals) Whiritoa tennis courts resurfacing 2019/20 $25,000 (capital renewals) Waihi recreation renewals Ongoing $158,100 over 10 years What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets Libraries You can expect: modern and relevant library spaces to support community needs. Percentage of library users satisfied with library services, as measured by the customer satisfaction survey. The number of library members is increasing, as measured by the Library Management System. 95% of customers satisfied (2016/17) 55% of District population were members (2016/17) 95% of customers satisfied 50% of District population are members You can expect: opportunities to learn, meet and grow in a friendly library environment. The number of Library-led community based learning programmes available, as measured by monthly library report to Council. Swimming pools 10 (2016/17) New measure 15 programmes across the district per year. You can expect: Council operated swimming pool facilities to be safe for users and staff. Community recreation 4i - 7

155 How we will measure our performance Baseline Targets Daily safety and maintenance audits are carried out at each Council pool during the public swimming season, as measured by the monthly reports prepared by the Pool Supervisor. Percentage of pool users satisfied with the operation of Council swimming pools, as measured by customer satisfaction survey. New measure 100% of safety and maintenance audits completed during swimming season with all safety and maintenance issues addressed, investigated and actioned within: 1. High risk addressed within 24 hours 2. Medium risk addressed within one week 3. Low risk - addressed as soon as is practical 90% (2016/17) 90% of customers satisfied. Parks and reserves You can expect: sports fields and recreational reserves that meet the requirements of users. Percentage of users satisfied with services and facilities provided at the district s sports fields, parks and reserves, as measured by customer satisfaction survey. 92% (2016/17) 90% of customers satisfied. You can expect: safe playground facilities. Playground facilities are regularly inspected to ensure they are safe, and compliant with national playground safety standards, as measured by Playground audit reports completed by Construction & Maintenance (C&M) staff. 2016/17: 86%. 100% of playground inspections are completed as per scheduled frequency and identified safety issues are addressed. Community recreation 4i - 8

156 2017/ / / / / / / / / / /28 How much it costs Total projected expenditure $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- capital - improving the level of service capital - replacing the asset Operating Where the (operating) money will come from user fees 4% rates 96% Community recreation cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Libraries 1,155 1,192 1,200 1,229 1,252 1,276 1,302 1,328 1,355 1,385 1,414 Sportsfields Recreation Reserves 1,537 1,615 1,694 1,702 1,767 1,774 1,846 1,855 1,931 1,942 2,026 Events Centre Swimming Pools Sports Co-ordinator ,122 4,479 4,716 4,641 4,761 4,823 4,946 5,056 5,179 5,244 5,431 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates 1,559 1,674 1,714 1,795 1,860 1,920 2,007 2,076 2,154 2,225 2,309 General Rates 2,069 2,502 2,745 2,786 2,908 2,952 3,016 3,086 3,162 3,139 3,269 3,756 4,341 4,632 4,761 4,950 5,057 5,210 5,352 5,509 5,560 5,777 OPERATING SURPLUS/(DEFICIT) (366) (138) (84) Community recreation 4i - 9

157 Community facilities COMMUNITY FACILITIES Halls Pensioner housing Public toilets Cemeteries Passive reserves Overview Our community facilities services provide a range of facilities to meet public health, social and cultural, pensioner housing and amenity needs. We own 57 pensioner housing units across Waihi, Paeroa and Ngatea. We provide memorial halls (Paeroa, Ngatea and Waihi) and 10 rural community halls some of which are owned and managed by hall committees or incorporated societies (those being Kaihere, Karangahake, Netherton, Kaiaua, Kopuarahi, Patetonga, Waikino and Waitakaruru halls). We also own or manage 22 public toilets over the district, 3 cemetery sites, and 1 ashes and memorial wall site. Our community facilities also include numerous small reserves provided for a range of purposes including protecting vegetation, landforms, historic/archaeological sites and buildings or they have a specific purpose that excludes recreational use (e.g. drainage, plantation and segregation). Our plans for community facilities Public toilets We ve noticed the need for improvements to the public toilets at Kaiaua, particularly since the Rail Trail from Kaiaua to Kopu was opened. We ve allowed for $184,000 in 2019/20 to build new toilet facilities at the future terminus of the Hauraki Rail Trail. For safety and security of users, we ve planned for the installation of lights at the Haszard Street toilets in Waihi, Orchard Road toilets in Ngatea and the Waitakaruru public toilets at a total cost of $17,000. Cemeteries We ll be developing a new burial area in the Pukerimu Cemetery in Paeroa at a cost of $112,000 in 2018/19 and we ll consult with the public regarding the concept plans for this expansion. We ve also increased our operating budget to keep the weeds down and keep the area looking tidy. We ve found that drainage work needs to be done at Pūkorokoro / Miranda Cemetery, so we ve allocated $12,000 to address this. In addition, we need more capacity in the ashes burial area of the Waihi Cemetery so we ve included $15,000 to add a new ashes garden. This is all consistent with the cemetery needs identified in our 2014 assessment of water and sanitary services. Pensioner housing We ll be undertaking a review of the future management and provision of our housing for the elderly (pensioner housing) in 2018/19, with any changes taking place from 1 July This will be timely as it is unknown at this stage what future support central government will be offering local authorities involved in providing housing for the elderly. Halls We ve increased our fees for hiring the memorial halls in Waihi, Paeroa and Ngatea to meet the rising costs of operating them. We ve also introduced a new rating area in Kaiaua to collect $10 per property in rates on behalf of the Kaiaua Hall Committee for the maintenance of the Kaiaua Hall. Planned projects Here s an overview of the major projects we ve planned for the next ten years for community facilities. Community facilities 4i - 10

158 Project When How much Paeroa War Memorial Hall renewals 2018/19, 2025/26 and 2026/17 $14,500 (capital renewals) Ngatea War Memorial Hall renewals 2022/ /27 $34,600 (capital renewals) Waihi Memorial Hall renewals 2025/ /27 $34,800 (capital renewals) Pensioner housing renewals in Waihi, Paeroa and Ngatea Ongoing $793,800 over 10 years (capital renewals) Kaiaua toilets upgrade 2019/20 $183,600 (capital level of service) Pūkorokoro / Miranda cemetery drainage 2019/20 $12,200 (capital level of service) Pukerimu/Paeroa cemetery development 2018/19 $112,000 (capital level of service) Waihi cemetery additional ashes garden 2018/19 $15,000 (capital level of service) Public toilet lighting in Ngatea, Waihi and Waitakaruru 2018/19 $17,000 (capital level of service) What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Reports. How we will measure our performance Baseline Targets Halls You can expect: Council-managed halls to be clean and well maintained to meet the needs of the community. Number of justified complaints from hall users regarding the cleanliness and maintenance standard of the halls, as measured by the service request database. 2016/17: 37 complaints 2018/19: 36 complaints per year 2019/20: 35 complaints per year 2020/21: 34 complaints per year Pensioner housing You can expect: pensioner units to be maintained to a comfortable and safe standard. Percentage of tenants satisfied with the comfort and safety of the unit, as measured by the annual tenant satisfaction survey. 2016/17: 94% 85% of tenants satisfied with the comfort and safety of the units. Public toilets You can expect: clean and maintained public toilets which meet the needs of the public. Number of justified complaints regarding whether public toilets are clean, maintained and sufficiently stocked with consumables, as measured by service request database. 2016/17: complaints per year. Community facilities 4i - 11

159 2017/ / / / / / / / / / /28 Cemeteries You can expect: efficiently serviced and well maintained cemeteries. Number of justified complaints regarding grounds maintenance at all Council cemeteries, as measured by the service request database. 2016/17: 5. A total of 10 complaints regarding grounds maintenance across all Council cemeteries per year. How much it costs Total projected expenditure $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- capital - improving the level of service capital - renewal Operating Community facilities 4i - 12

160 Where the (operating) money will come from other 1% user fees 29% rates 70% Community facilities cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Cemeteries Community Halls Pensioner Housing Public Toilets Interest ,772 1,890 1,996 2,013 2,003 2,010 1,988 1,984 1,971 2,007 1,998 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates 913 1,014 1,018 1,103 1,113 1,165 1,155 1,181 1,186 1,224 1,253 1,667 1,873 1,995 2,087 2,083 2,115 2,082 2,084 2,061 2,064 2,052 OPERATING SURPLUS/(DEFICIT) (105) (17) (1) Community facilities 4i - 13

161 Community development COMMUNITY DEVELOPMENT What this group includes: Community growth Community initiatives We work with communities and agencies to promote a better quality of life. We have a strong focus on helping our communities to help themselves and an emphasis on community initiatives and community growth through economic development programmes. We aim to achieve balanced and sustained growth in our district. The community development group mainly contributes to the following community outcomes Community development 4j - 1

162 Community development cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Community Growth 1, ,006 1,030 1,051 1,075 1,101 Community Initiatives 1,062 1,603 1,215 1,230 1,243 1,270 1,297 1,327 1,358 1,389 1,425 2,103 2,563 2,121 2,153 2,207 2,256 2,303 2,357 2,409 2,464 2,526 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates 1,360 1,824 1,661 1,794 1,827 1,897 1,866 1,918 1,951 1,956 2,009 1,854 2,354 2,212 2,363 2,415 2,511 2,468 2,543 2,600 2,622 2,703 OPERATING SURPLUS/(DEFICIT) (249) (209) Hauraki District Council: Funding impact statement for for Community Development Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties 1,360 1,824 1,661 1,794 1,827 1,897 1,866 1,918 1,951 1,956 2,009 Targeted rates Subsidies and grants for operating purposes Fees and charges Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 1,854 2,354 2,212 2,363 2,415 2,511 2,468 2,543 2,600 2,622 2,703 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 1,428 1,656 1,200 1,215 1,253 1,280 1,311 1,339 1,370 1,404 1,439 Finance Costs Internal charges and overheads applied Other operating funding applications Total Applications of Operating Funding (B) 1,819 2,280 1,834 1,860 1,909 1,948 1,993 2,035 2,080 2,128 2,180 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves Increase (decrease) of investments Total Applications of Capital Funding (D) SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (35) (74) (378) (503) (506) (563) (475) (508) (520) (494) (523) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Community development 4j - 2

163 COMMUNITY GROWTH Economic development facilitation Development assistance District and town promotion Community growth Overview The community growth activity involves: progressing economic development strategically across the District including strategic initiatives, plans or actions maximising opportunities for new industry, commercial development and existing businesses supporting visitor information services and tourism promotion supporting township promotion. Our plans for community growth We ve reduced the amount of funding provided for development assistance to $50,000 and we ll be using $20,000 of this for the operation of a regional economic development agency for years one to three. We ve reduced the funding provided to Positively Promoting the Plains, Positive Paeroa and Go Waihi by 25% in 2018/19 for a six-month contract term. At the end of this term, we ll consider continuing the funding after a review of performance. We will also consider the employment of a district coordinator. We ve included service statements to more accurately measure our performance in supporting developments of scale, and measuring how well we support business and provide for tourism. Our projects We ve planned the following projects for the next ten years. Project When How much Contributing to town promotion Ongoing $2.2 million over 10 years Supporting Destination Coromandel Ongoing $1.6 million over 10 years Replacing our Welcome to the Hauraki District signs Funding our digital enablement plan following the roll out of ultra-fast broadband in the district Providing funds to our information centre in Paeroa and i-site in Waihi 2018/19 $20, / /28 $171, / / /28 $209,000 $1.6 million over 9 years Community growth 4j - 3

164 2017/18 (Current) 2018/ / / / / / / / / /28 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Reports. How we will measure our performance Baseline Targets You can expect: the community will be aware of economic development initiatives Percentage of customers satisfied with the Council s approach to Economic Development, as measured by our customer satisfaction survey. 74% (2016/17) 70% of customers satisfied with approach Number of regular economic development updates provided to the public, across various communications platforms, as measured by communication officer s records. Four updates provided (2016/17) Eight updates regarding economic development per year. You can expect: we will deliver information, advice and initiatives to attract and develop tourism, investment, businesses and a skilled workforce to the Hauraki District The total tourism expenditure in the Hauraki District is being maintained or increasing, as measured by total tourism expenditure. $76.3 million (2016) New measure Tourism expenditure is maintained or increasing on previous calendar years result. How much it costs Total projected expenditure $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Community growth 4j - 4

165 Where the money will come from rates 100% Community growth cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Economic Development District Promotions Information Centres Positive Paeroa Co-ordinator Positively Promoting the Plains Go Waihi Destination Coromandel , ,006 1,030 1,051 1,075 1,101 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates ,018 1,082 1,111 1,154 1,087 1,120 1,147 1,161 1,197 OPERATING SURPLUS/(DEFICIT) (181) Community growth 4j - 5

166 COMMUNITY INITIATIVES Community events Grants and donations and awards Social initiatives Hauraki Rail Trail Sister city relationship CCTV cameras Community initiatives Overview We undertake a number of projects to help ensure that we have a positive climate that encourages social and cultural wellbeing throughout our District. We support a number of agencies with grants and funding. We also help to coordinate community events such as the ANZAC parades and citizen awards to recognise valuable members of our communities. We also deliver other initiatives and work with a number of external agencies. These initiatives include: working towards a social strategy for the Hauraki District, including opportunities for youth and positive ageing participating in Better Futures Hauraki administering the Creative NZ Creative Community Scheme. Our plans for community initiatives We re generally focusing on our business as usual for the next ten years. We re planning to reduce our contestable social fund by $20,000 as part of prioritising where the money is best spent. In 2017 we adopted a social strategy and will be working towards implementing initiatives from this strategy in the next ten years, as well as continuing to foster our sister city relationship and deliver our usual services such as award ceremonies and district events. In 2018/19 we re also planning to provide a grant of $400,000 to the Paeroa-based Historic Maritime Park which will go towards future park development, including wharf construction and the construction of a new community jetty at the end of Wharf Street in Paeroa. This grant will provide base funding, and we understand that the Historic Maritime Park team will be applying to other community funding agencies to gain the required funds to complete the project. We re also planning to contribute to the cost of staff to manage the archives at The Treasury in Thames. The Coromandel Heritage Trust operates The Treasury which provides safe storage for the records and stories of the people of the old goldfields regions which include Waihi, Waikino, Karangahake, Paeroa, and the Hauraki Plains. We ve allowed for $30,000 in 2018/19, $20,000 in 2019/20 and $10,000 in 2021/22 to assist with The Treasury operations. We ll also be funding around $175,000 per year to provide maintenance and servicing of the Hauraki Rail Trail, which includes replacement of the course when it needs it. We also pay a grant of around $117,000 per year to the Hauraki Rail Trail Charitable Trust towards their costs, and the daily operation of the Trail is the responsibility of the Hauraki Rail Trail Charitable Trust. We have allocated $2,000 from the district social discretionary fund to go towards Creative Waikato s Waikato Arts Navigator, and we ll work with Creative Waikato to develop an arts plan. We re donating three water tanks to the Whiritoa community so that they have access to a supply of water for firefighting purposes. We have allowed for a $5,000 grant to the Whiritoa Voluntary Rural Fire Force towards a fourth tank and fittings for all tanks. Community initiatives 4j - 6

167 2017/ / / / / / / / / / /28 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: that the Council will work towards achieving improved social outcomes for its community through the implementation of its Social Strategy. Each year a councillor working party will prioritise and update the actions contained within its Social Strategy action plan. New measure 90% of the actions identified within the Social Strategy for the given year have been progressed or completed. How much it costs Total projected operational expenditure $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Where the money will come from rates 100% Community initiatives 4j - 7

168 Community initiatives cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Social Initiatives Discretionary Social fund Grants and Donations Rail Trail Conservation Initiatives Whiritoa Beachcare Whiritoa Lifesaving Grant Other ,062 1,603 1,215 1,230 1,243 1,270 1,297 1,327 1,358 1,389 1,425 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates 834 1,193 1,029 1,111 1,128 1,172 1,188 1,222 1,243 1,246 1, ,355 1,194 1,281 1,304 1,357 1,381 1,423 1,453 1,461 1,506 OPERATING SURPLUS/(DEFICIT) (68) (248) (21) Community initiatives 4j - 8

169 Regulatory Services REGULATORY SERVICES Resource management implementation Building control services Community protection Animal control We re involved in a number of regulatory services from preparing regulations to promoting compliance. Our focus areas include supporting: appropriate land use management safe building development (including building consent) community health and safety (including food and alcohol safety, civil defence, animal control) animal welfare. We aim to ensure our processes promote safely constructed buildings so people can have confidence that buildings within our district are safe to use. Our animal control and community protection services ensure a safe environment for the public and ensures we are prepared for natural hazards. Some of our regulatory services are provided so that we continue to meet our legal responsibilities to ensure the protection of the environment and the community. The regulatory services group mainly contributes to the following community outcomes Regulatory Services 4k - 1

170 Regulatory services cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE RMA Implementation 1,029 1,096 1,121 1,142 1,162 1,183 1,207 1,230 1,255 1,282 1,308 Building Services 1,243 1,423 1,443 1,470 1,481 1,508 1,540 1,570 1,602 1,638 1,673 Community Protection ,018 Animal Control ,666 3,967 4,036 4,112 4,172 4,249 4,338 4,424 4,514 4,615 4,715 REVENUE Fees, Charges and Other Income 1,543 1,719 1,754 1,792 1,829 1,869 1,912 1,955 2,003 2,050 2,102 External Subsidies Targeted Rates General Rates 1,859 2,159 2,225 2,418 2,453 2,537 2,564 2,625 2,658 2,656 2,714 3,402 3,878 3,979 4,210 4,282 4,406 4,476 4,580 4,661 4,706 4,816 OPERATING SURPLUS/(DEFICIT) (264) (89) (57) Hauraki District Council: Funding impact statement for for Regulatory Services Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties 1,859 2,159 2,225 2,418 2,453 2,537 2,564 2,625 2,658 2,656 2,714 Targeted rates Subsidies and grants for operating purposes Fees and charges 1,543 1,719 1,754 1,792 1,829 1,869 1,912 1,955 2,003 2,050 2,102 Internal charges and overheads recovered Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 3,402 3,878 3,979 4,210 4,282 4,406 4,476 4,580 4,661 4,706 4,816 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers ,007 1,025 1,051 Finance Costs Internal charges and overheads applied 2,781 3,072 3,123 3,180 3,237 3,295 3,364 3,429 3,498 3,575 3,650 Other operating funding applications Total Applications of Operating Funding (B) 3,661 3,960 4,027 4,101 4,160 4,238 4,326 4,411 4,505 4,600 4,701 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) (259) (82) (48) SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure Development and financial contributions Increase (decrease) in debt Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service to replace existing assets Increase (decrease) in reserves (259) (82) (48) Increase (decrease) of investments Total Applications of Capital Funding (D) (259) (82) (48) SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (109) (122) (168) (150) (169) (156) (106) (115) FUNDING BALANCE ((A - B) + (C - D)) The funding impact statement is required under the Local Government Act 2002 Schedule 10 and conforms to clause 7 of the Local Government (Financial Reporting and Prudence) Regulations It covers the 10-year period from 2018/2019 to 2027/2028 and outlines the Council s sources of funding and its plan to apply them. Generally accepted accounting practice does not apply to the preparation of the funding impact statements as stated in section 111(2) of the Local Government Act The key divergences from generally accepted accounting practice are the non-inclusion of depreciation and the inclusion of internal charges. Regulatory Services 4k - 2

171 REGULATORY SERVICES Administering the District Plan Processing Monitoring Issuing consents and certificates Enforcement Resource management implementation Overview The resource management implementation service includes processing applications that are subject to District Plan or other regulatory legislative requirements. That includes applications for subdivision consent, land use consent, certificates of compliance, outline plans, notices of requirement, and other planning approvals or information. We also monitor that customers are adhering to consent conditions, as well as provides technical advice on mining matters. Our plans for resource management implementation We ve changed the level of service we provide for some resource consents; specifically, a ten working day timeframe is now applicable for some simple applications and resource consent exemptions. We ve also made some changes to our resource consent fees, which includes introducing some new fees and increasing existing fees. Our schedule of fees and charges available on our website lists these fees. Other than this the activity is largely business as usual for the next 10 years. Planned projects We ve planned a number of projects for the next 10 years within our existing budgets. Project When How much Consideration of provision of an E Plan an interactive District Plan 2018/19 Within existing budgets to assist with public enquiries Resource management implementation 4k - 3

172 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: resource consents to be decided and issued within Resource Management Act 1991 timeframes. Notified resource consent decisions issued within statutory timeframes, as measured by the resource consent database. 2016/17: 100% of decisions issued on time 100% of decisions issued within statutory timeframes Non-notified resource consent decisions are issued within statutory timeframes, as measured by the resource consent database. 2016/17: 100% of decisions issued on time. 100% of decisions issued within statutory timeframes Permitted boundary activity certificates are issued within statutory timeframes, as measured by the resource consent database. New measure 100% of decisions issued within statutory timeframes You can expect: a monitoring service which ensures compliance with consent conditions. All land use consents issued during the previous financial year are monitored within 12 months of being granted, as measured by the resource consent database. 2016/17: 78% of consents granted are monitored 80% of consents granted in the previous financial year are monitored within the next 12 months You can expect: Land Information Memoranda (LIM) to be issued within agreed timeframes. Non-urgent LIMs issued within 10 working days (statutory), as measured by the applications database 2016/17: 100% issued on time 100% issued on time Urgent LIMS* are issued within 3 working days, as measured by the applications database. 2016/17: 99% issued on time 100% issued on time You can expect: public satisfaction with the Council s administering of the Resource Consent services. Percentage of customers satisfied with the service they receive during the resource consent process, as measured by the customer satisfaction survey 74% (2016/17) 75% of customers satisfied. *Note only urgent LIMs with an electronic address will be issued within 3 days. Resource management implementation 4k - 4

173 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Where the (operational) money will come from user fees 45% rates 55% Resource management implementation cost of service Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE RMA Implementation 1,029 1,096 1,121 1,142 1,162 1,183 1,207 1,230 1,255 1,282 1,308 1,029 1,096 1,121 1,142 1,162 1,183 1,207 1,230 1,255 1,282 1,308 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates ,063 1,096 1,157 1,181 1,214 1,233 1,260 1,282 1,294 1,323 OPERATING SURPLUS/(DEFICIT) (143) (33) (25) Resource management implementation 4k - 5

174 Building control BUILDING CONTROL Assessing and processing building consent applications Monitoring and enforcement Inspections of private swimming pools Overview We implement building regulations to ensure our buildings are safe for use. Our plans for building control services As a result of changes to the Building Act 2004, we ve introduced compulsory inspections and certification of all pools on a three yearly basis, to ensure the ongoing safety of private pools. We have reflected these changes into our performance targets below, and our fees and charges schedule. We also need to be sure that non-residential buildings are safe for the public in the event of an earthquake. To do this, we ve allowed for some additional expenditure of $15,000 each year for the first three years of our plan to assess buildings that may be earthquake prone. We re working with other councils in the Waikato Region to get the full building consent process available online. This would mean you can apply, track and receive the consent online. We intend to make the whole process available online in the next two years. This has meant we ll need to increase our building fees to reflect the charges we re incurring to make the online consenting process run smoothly. Planned projects Here s an overview of the major projects we ve planned for the next 10 years. Project When How much Full building consent process available online 2018/19 and 2019/20 Within existing budgets Assessment of earthquake-prone buildings 2018/ /21 $15,000 (operating) per year Building control 4k - 6

175 What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Reports. How we will measure our performance Baseline Targets You can expect: building consent applications to be processed within the statutory timeframes of the Building Act Building consent applications are processed within 20 working days, as measured by the Building Consent Tracking Database. 2016/17: 99% processed within 20 working days 100% are issued within 20 working days of receiving the application, providing the application is complete. You can expect: that known privately owned swimming pools comply with the Building Act All private swimming pools on Council s pools register will be inspected at least every three years. 33% inspected in 2016/17. 33% (134) of all pools to be inspected annually. You can expect: satisfactory service to our building consent customers. Percentage of customers satisfied with the service they receive during the building consent process, as measured by the customer satisfaction survey. 68% (2016/17) 2018/19: 75% of customers satisfied : 80% of customers satisfied 1 As a result of the Building (Pools) Amendment Act 2016, the Fencing of Swimming Pools Act 1987 was repealed and requirements incorporated into the Building Act Building control 4k - 7

176 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Where the money will come from user fees 51% rates 49% Building control cost of services Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Building Services 1,243 1,423 1,443 1,470 1,481 1,508 1,540 1,570 1,602 1,638 1,673 1,243 1,423 1,443 1,470 1,481 1,508 1,540 1,570 1,602 1,638 1,673 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates ,201 1,413 1,444 1,521 1,536 1,577 1,604 1,640 1,669 1,689 1,727 OPERATING SURPLUS/(DEFICIT) (42) (10) Building control 4k - 8

177 Community protection COMMUNITY PROTECTION Emergency management Noise control Regulatory policies Mine hazard zone monitoring Environmental health, including food safety and alcohol licensing Overview We provide services to protect our communities from health and safety issues including preparing for and responding to and recovering from civil defence emergencies. Civil Defence Emergency Management (CDEM) is a function and responsibility of regional, city and district councils. Our Civil Defence role includes community, organisational and business readiness, including public education and awareness, training and exercises, and local response planning. We are part of the Waikato CDEM Group, which includes the Waikato Regional Council and all 10 district/city councils, as well as emergency services, welfare agencies and utility providers. This group works closely with research institutions, utility operators and central government to reduce risks and improve community resilience. We are also part of the Thames Valley emergency operating area, which provides Civil Defence services at the local level. The Civil Defence activity focuses on preparedness for emergencies, both internally by having sufficiently trained staff and externally by educating the wider community on the need for being prepared. Our planning is shaped by both the National and Regional plans but with a local emphasis on the communities within our district. We also work in partnership with other councils around us to ensure we have well integrated civil defence planning. If an emergency happens in our district we need to know that our neighbouring councils are also well prepared to help us and viceversa. Additionally, we ensure adequate alcohol licensing controls are in place, control the density of gambling venues and legal high retailers, and ensure the safety of public places (including eating areas and public pools). We support this role with our monitoring and enforcement functions in a number of areas which include notifiable disease investigations under the Health Act 1956; implementing our policy on the number of gaming machines allowed for in the District, and regulation, monitoring and host responsibility education through our local alcohol policy, District Licensing Committee, and Local Approved Products (Legal Highs) Policy. We also provide noise control services to ensure that our communities are free from nuisance noise. Our plans for community protection services It ll be largely business as usual for community protection over the next ten years. There are a number of focus areas beyond our control that have not been progressed enough for us to include concrete plans for. These include rethinking our approach to civil defence, with less focus on responding to events, and more focus on reducing the risks of a natural event harming us and our environment. This is a result of New Zealand s commitment to the international Sendai Framework for Disaster Risk Reduction. The government has committed to the framework however has not released the National Resilience Strategy yet. We will continue to watch this space. Over the next ten years we ll be engaging with our local communities to develop strategic recovery plans to enable Council to prepare for the recovery phase after any emergency arising from hazards and risks. The Thames Valley Civil Defence Emergency Operating area has undertaken a review of how emergency management is provided in the future; this may result in some changes to how this service is delivered. We ll be sure to include anything that impacts our district into our future plans. Community protection 4k - 9

178 Over the next two years we ll be looking at providing generator points at both the Whiritoa Emergency Centre and Whiritoa Life Saving Club. We ll continue to monitor hazard zones in Waihi associated with old underground mines and stopes from the late nineteenth and early twentieth century and prior to the consenting of the Martha Pit operation. We ll continue to monitor activity at certain locations to ensure we get early warning of any unusual settlement patterns that may occur. What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Reports. How we will measure our performance Baseline Targets You can expect: that the Council and the community will be ready for a Civil Defence emergency. Community response and recovery plans are developed and maintained as measured by reports to the Council. We will have a sufficient number of key management civil defence emergency positions filled by trained staff, as measured by staff training records. (2016/17) New measure 90% of positions filled (2016/17) New measure Four community response plans are developed and maintained each year One recovery plan developed each year in 2019/20 and 2020/21. 90% positions filled by trained staff. You can expect: that the Council will carry out its role in public food safety by enforcing the Food Act All known food premises are monitored for compliance with relevant legislation as measured by the food premises database. 100% monitored (2016/17) 100% of all food premises are assessed annually You can expect: that the Council will carry out its role in public safety by implementing the Sale and Supply of Alcohol Act New and renewed On/Off and Club Liquor Licences are issued within three months of receiving the application, providing there are no objections and the application is complete, as measured by audit(s) of application records 100% issued within three months (2016/17) 100% are issued within three months. You can expect: Excessive noise complaints will be responded to by the Council. All complaints regarding excessive noise are investigated within two hours of the complaint being received, as measured by contractor s monthly report (from service request database). 100% investigated within two hours (2016/17) 100% investigated within two hours. Community protection 4k - 10

179 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Where the money will come from user fees 15% rates 85% Community protection cost of services Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Rural Fires Emergency Management Health Abandoned Mine Workings Monitoring Liquor Licensing Ground Settlement ,018 REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates ,000 1,017 1,021 1,046 OPERATING SURPLUS/(DEFICIT) (75) (32) (21) Community protection 4k - 11

180 Animal control ANIMAL CONTROL Dog registration Owner education Animal control Control of wandering dogs and stock Overview We play a role in protecting public safety from nuisance animal behaviours as well as promoting animal control. Our plans for animal control We re expecting our animal control services to be business as usual over the next 10 years. We have made some increases to dog registration and impounding fees, and this has been included in our fees and charges schedule. What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Reports. How we will measure our performance Baseline Targets You can expect: that the Council will ensure compliance with the Dog Control Act 1996 and bylaw, and the Impounding Act 1955, to provide for public safety. Known dogs in the District are registered annually, as measured by registration records. 100% registered (2016/17) 97% of known dogs are registered Complaints about wandering stock on public roads are responded to within two hours, as measured by the contractor s monthly report. 100% within three hours 100% of complaints responded to within two hours Dog attack complaints are responded to within two hours, as measured by the contractor s monthly report. 100% responded to in time (2016/17) 100% of complaints responded to within two hours Animal control 4k - 12

181 2017/ / / / / / / / / / /28 How much it costs Total projected operational expenditure $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Where the money will come from user fees 61% rates 39% Animal control cost of services Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Dog Registration Animal Control REVENUE Fees, Charges and Other Income External Subsidies Targeted Rates General Rates OPERATING SURPLUS/(DEFICIT) (4) (14) (12) Animal control 4k - 13

182 Significant negative effects Our services are provided to maintain or improve the wellbeing of our communities. While our services and activities generally make positive contributions, sometimes they can also cause negative effects on our communities. The following table provides an outline of the significant negative effects we ve identified for our activities. Activity Significant negative effects All activities Governance and leadership Policy development Ongoing expenditure and increasing costs of service, compliance with national standards and policy initiatives are invariably passed onto the ratepayer. The difficulty of balancing the needs and wants of differing sectors of the community, including residents versus out-of-district ratepayers. Policy can sometimes be of advantage to some individuals or groups at the expense of others. Land transport There can be conflict between the use of the environment for the construction, maintenance and ongoing use of the roading network and cultural values. During construction, physical works will generate dust, noise, vibration and inconvenience through delays, having a negative effect on the community and users. Pollutants and sediments can wash off roads into the neighbouring ecosystems, having a negative effect on the receiving environment. Water supply The public water supply draws water from the rivers and streams within our district. This reduces the flow in the streams and can be perceived to have negative environmental effects on this resource. Wastewater There is the potential for conflict between wastewater discharges into the receiving environment and cultural values. Negative effects on the environment, such as from spills, could occur as a result of non-compliance with consent conditions, or natural disasters. Possible wastewater overflows during rain events can result in contamination of stormwater systems and downstream waterways. Land drainage Intensive farming made possible by the land drainage activity leads to loss of natural wetland habitat thereby reducing biodiversity and potential pollution from fertiliser runoff and chemical sprays conveyed through the drainage network negatively impacts water quality. Some productive land is lost to drainage channels. Over drainage of sensitive soils. Land drainage leads to more ground settlement. Stormwater Potential conflict between discharge to water and cultural values. Potential sewage cross-contamination which could adversely affect water quality. Water quality could potentially be affected by stormwater runoff from roads and land contains contaminants and sediments which eventually reach waterways. Solid waste There are potential negative effects on the environment as waste is deposited to landfills. The landfill we use to deposit our refuse is fully consented and must meet the environmental standards that are set out in those consents. Closed landfills can potentially have negative effects on the environment and public health and require long term monitoring and control which has ongoing cost implications. Community services Location and design of community facilities can attract anti-social behaviour such as vandalism, graffiti and bullying as well as litter, traffic congestion, and noise effects for surrounding residents. Community growth Increased visitor numbers to scenic and heritage sites can have a negative impact on the environment. Significant negative effects 4l - 1

183 Activity Significant negative effects Regulatory Some members of our communities may perceive the interpretation and delivery of rules and regulations/legislation to be restrictive. Community protection The requirements of alcohol and food licensing may be cost-restrictive to small businesses. Significant negative effects 4l - 2

184 Capital projects list Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Land transport - Levels Of Service Minor Improvements 474, , , , , , , , , ,428 5,623,318 New Footpaths - Paeroa 62,200 74,708 70,607 86,335 98, , , , , , ,431 New Footpaths - Plains - - 7, ,938 New Footpaths - Waihi 21,900 36,281 29,507 36,757 38,295 39,214 40,195 41,240 42,353 43, ,281 New Road Extensions 150, , , , , , , , , ,596 1,669,549 New Kerb Channel Stormwater Control - Paeroa 52,700 77,672 57,447 58,768 60,178 61,623 63,163 64,805 66,555 68, ,330 Access and Mobility 70,000 71,540 73,114 74,795 76,591 78,429 80,389 82,480 84,707 87, ,123 New Kerb Channel Stormwater Control - Waihi 46,800 29,638 57,447 58,768 60,178 61,623 63,163 64,805 66,555 68, ,396 New Kerb Channel Stormwater Control - Plains - 5, ,110 Land transport - Levels Of Service 877, , ,952 1,007,816 1,051,261 1,081,197 1,108,226 1,137,040 1,167,740 1,200,437 10,586,475 Land transport - Renewals Footpath Renewal - Paeroa 10,000 10,220 10,445 10,685 10,942 11,204 11,484 11,783 12,101 12, ,303 Footpath Renewal - Plains 5,000 5,110 5,222 5,343 5,471 5,602 5,742 5,891 6,050 6,220 55,652 Footpath Renewal - Waihi 5,000 5,110 5,222 5,343 5,471 5,602 5,742 5,891 6,050 6,220 55,652 Minor Improvements 158, , , , , , , , , ,476 1,874,439 Unsealed Roading Renewals 100, , , , , , , , , ,398 1,113,032 Sealed Road Resurfacing 1,234,000 1,261,148 1,288,893 1,234,126 1,263,745 1,294,075 1,326,426 1,360,914 1,397,658 1,436,793 13,097,777 Pavement Rehabilitation 910, , ,370 1,004,397 1,028,502 1,030,778 1,056,548 1,060,452 1,185,892 1,368,374 10,556,553 Drainage Renewals 140, , , , , , , , , ,157 1,558,245 Structures Component Replacement 112, , , , , , , , , ,325 1,246,596 Traffic Services Renewal 135, , , , , , , , , ,937 1,502,594 Dust Coat Seals 20,000-20, , ,202-87,500 Land transport - Renewals 2,829,000 2,889,194 2,992,447 2,957,628 3,031,456 3,105,779 3,160,455 3,219,061 3,426,985 3,647,339 31,259,344 Land transport - Total 3,706,600 3,846,399 3,990,399 3,965,444 4,082,716 4,186,976 4,268,682 4,356,102 4,594,726 4,847,776 41,845,819 Water - Levels of Service District Water Demand Management 50,000 51,350 52,634 53, ,881 Kerepehi Fencing 20, ,000 PaeroaFencing 42, ,250 Plains Pipiroa RD Pumpstation - 41, ,080 Plains Zone Metering 80, ,000 Kerepehi Working Platform 12, ,600 Waihi Fencing 40, ,000 Waitakaruru Fencing 72, ,600 Plains Waitakaruru Upgrade to DWS 850, ,000 Waihi Ohinemuri Intake Building Sealing 4, ,000 Ohinemuri Pipeline Encasement , ,896 Capital projects list 4m - 1

185 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Waihou Pump 1 VSD 16, ,100 Waikino Pukekauri Network Extension , ,852 Water - Levels of Service 1,187,550 92, ,382 53, ,661,259 Water - Renewals District Cast Iron Pipe Renewal 70, , , , , , , , , ,417 1,494,635 District Treatment Asset Renewals 112, , , , , , , , , ,845 1,549,410 District Upgrading and Replacing of SCADA Equipment 2,000 2,054 2,105 2,156 2,208 2,826 2,894 2,963 3,034 3,728 25,968 District Water Meter Renewals 143, , , , , , , , , ,411 2,299,746 District Wide Pipe Renewal Programme (Service Continuity) 550, , , , , , , , , ,529 6,154,935 Karangahake Mackaytown Resealing Pumphouse 4, ,000 KarangahakeMackaytown PRV Refurbishments 3, , ,652 Kerepehi Heat Pump Paeroa UV Lamps - 4, , , ,264 Waitakaruru Caustic Dose Pump - 6, ,162 Kerepehi Membrane Renewals , ,405 Kerepehi Reservoir Sealing - 23, ,621 Kerepehi Reticulation Pump 1 VSD , ,935 Kerepehi Tanners Pond Desludging , , ,579 Kerepehi Treated Water Flowmeter ,350-13,350 Kerepehi UPS Kerepehi UV Lamps Renewal - 4,437-4,743 4,967-5,208 5,393 55,828 5,717 86,293 Kerepehi Waihou Pump 1 VSD ,009 20,009 Paeroa Ballast 10, ,000 Paeroa Intake Screen 15, ,000 Paeroa Membrane Renewals , ,053 Paeroa Raw Water Pumps 62,180-65, ,972 Waihi Membrane Renewals , ,908 Waihi Plant Outflow Meter , ,433 Waihi Treatment Plant Roof 20, ,000 Waihou Intake Consents , ,521 Waitakaruru Backwash VSD , ,246 Waitakaruru Caustic Storage Tank ,069 31,069 Waitakaruru Dose Pump Renewals ,779-22, ,385 Waitakaruru Filter Media Renewal ,567 74,567 Waitakaruru Mud Pump , ,111 Waitakaruru Recycle Pump , ,111 Waitakaruru Retic 1 VSD , ,246 Waitakaruru Reticulation Flowmeter , ,142 Waitakaruru Suicide Flowmeter , ,142 Waitakaruru Suicide VSD , ,142 Waitakaruru Turbidimeter 9, ,300 Waitakaruru UV Lamps Renewal 8, , ,680-28,983 Water - Renewals 1,009,180 1,033,491 1,978,503 1,164,606 1,224,346 2,299,598 1,243,078 1,449,567 1,393,636 1,477,292 14,273,295 Water - Total 2,196,730 1,125,921 2,305,885 1,218,502 1,224,346 2,299,598 1,243,078 1,449,567 1,393,636 1,477,292 15,934,554 Capital projects list 4m - 2

186 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Wastewater Levels of Service Kerepehi Fencing , ,581 Ngatea External Pump Station and Rising Main for Ngatea North Stage 3-242, ,372 District Wide SCADA Upgrade , ,351 Turua Upgrading WWTP , ,449 2,639,663 3,913,457 Kerepehi Upgrade WWTP ,017,271 1,041,686 4,266,744 4,369,146-10,694,847 NgateaNew Pumpstation ,639 55, , ,930 Paeroa Chemical Phosphorus Removal Drum Filter etc 140, ,000 Paeroa Upgrading WWTP , ,676 2,075,344 2,125,153 5,201,973 NgateaNew Rising Main from Kerepehi to Ngatea , ,544 1,875, ,088,607 Wastewater Levels of Service 140, ,372 55, , ,667 1,988,765 3,869,862 5,402,765 7,088,939 4,764,816 24,768,118 Wastewater - Renewals District Wide Pipe Renewals Condition 21,727 22,189 25,094 29,352 37,219 46,192 54,982 68,978 80, , ,989 Waihi East - Pipe Renewals Hydraulic 65,000 66,755 68,424 70,066 60, ,954 Paeroa - Pipe Renewals Hydraulic 500, , , , ,310,564 District Wide Pond Desludging 163,000 25,675 73,687 53, ,259 District Wide Reactive Renewals Plants Pumpstations 35,000 35,945 36,844 37,728 38,633 39,561 40,510 41,482 42,478 43, ,678 District Wide Replacement Pumpstation Cabinets etc 100,000 81,647 34, ,343 District Wide Sewer Pump Renewals 75,000 77,025 26,317 26,948 27, ,030 28,936 29,630 30,341 31, ,892 Kerepehi Aerator Component Renewals - - 2, , ,595 Kerepehi Biobaffle Replacement FTW ,298-44,298 Kerepehi Resource Consents 120, ,000 Kerepehi Waveband Renewals ,208 93,208 Ngatea Aerator Component Renewals - 10, , ,122 Ngatea Outflow Meter Renewal Sewer Plant , ,527 Ngatea Screen Refurbishment - 15, ,405 Paeroa Aerator Component Renewals , ,137-13,240 Paeroa Flow Meter Renewals , ,936 Paeroa Meters , ,343 Paeroa Nitrifying Filter Renewals , ,580 Paeroa Resource Consents 120, ,000 Paeroa Storage Chamber Pump , ,595 Paeroa UV Lamp Renewals - - 6, , ,587 Paeroa UV Renewal , ,152 Paeroa VSD Renewals , ,317 Paeroa VSD renewals , ,038 Paeroa Waveband Renewals 50,000 51, ,350 Turua Aerator Component Renewals - - 5, , ,051 Turua Outflow Meter Renewal 8, ,000 Turua Repair Blanket 60, ,000 Waihi Aerator Component Renewals 10, , ,137-33,175 Waihi DAF Sludge Process 50, , , ,569 Waihi Resource Consents , ,321 Waihi Scada Instumentation Renewals ,830-15,047 15,408 15,777-55,062 Capital projects list 4m - 3

187 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Waitakaruru Prostep Onsite Set Renewals 44,800 46,010 17,685 13,280 4, ,102 Waitakaruru Resource Consents , ,845 Waitakaruru STP Component Renewals 14,560 27,606 29,475 30,182 16,071 8, ,756 Waitakaruru UV Disinfection Unit , ,106 Whiritoa Aerator Component Renewals - 5, , ,061 Whiritoa Irrigation Block Renewals ,951 80,845 82,786 84, ,354 Whiritoa Irrigation Pump Renewals , ,951 Whiritoa Upgrading WWTP , , , ,628 Wastewater - Renewals 1,437,087 1,183,911 1,479,322 1,193, , , , , , ,623 7,656,953 Waste Water - Total 1,577,087 1,426,283 1,534,903 2,056, ,110 2,281,182 4,051,698 5,696,339 7,446,806 5,531,439 32,425,071 Land Drainage - Levels Of Service EPDD H Drain Culverts 3,000 3,066 3, ,203 WPDD Central North Scada Installation - 5, ,110 WPDD Hopai West Scada Installation - 5, ,110 WPDD Martinovich Scada Installation - 5, ,110 WPDD Miranda Scada Installation - 5, ,110 WPDD Pouarua Maukoro Structures 204, ,000 WPDD Rawerawe Scada Installation - 5, ,110 Land Drainage - Levels Of Service 207,000 28,616 3, ,753 Land Drainage - Renewals WPDD Central NorthPump Screens , ,994 WPDD Hopai West Pump Screens - 5,110-65, ,353 WPDD Mangawhero Flume Replacement , ,821 WPDD MartinovichPump Screens , ,026 WPDD MirandaPump Screens , ,233 WPDD Rawerawe Pump Screens , ,679 WPDD SB Reconstruction Foreshore Indian to Karito , ,211 WPDD SB Reconstruction Hot Springs 250, ,000 WPDD SB Reconstruction Waitakarurru RB DS SH , ,053 WPDD SB Reconstruction Waitakaruru LB DS SH , ,465 WPDD Smythes Flood Gates , ,242 Land Drainage - Renewals 250,000 5, , ,064 70,026 74,994 80, , , ,211 2,209,077 Land Drainage - Total 457,000 33, , ,064 70,026 74,994 80, , , ,211 2,447,830 Stormwater - Levels Of Service Stormwater Kaiaua Upgrades 10,000 10,270 10,527 5,390 5, ,705 Stormwater kerepehi Upgrades - 2,054 1, ,633 Stormwater Ngatea Upgrades 15,000-18,948-23,180-25,463-27, ,506 Stormwater Paeroa Upgrades - 53,404-62,520-73,470-86, , ,579 Stormwater Turua Upgrades , ,390 Stormwater Waihi Upgrades 51,000-57,897-66,229-78,705-92, ,068 Capital projects list 4m - 4

188 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Stormwater Whirtoa Upgrades - 5, ,135 Stormwater - Levels Of Service 76,000 70,863 88,951 73,300 94,928 73, ,169 86, , , ,016 Stormwater - Renewals Stormwater Stormwater Waihi Comprehensive stormwater discharge consent , ,190 Stormwater Paeroa Comprehensive stormwater discharge consent , ,190 Stormwater Plains Comprehensive stormwater discharge consent , ,114 Stormwater Waihi Renewals 8,000 8,216 8,421 8,624 8,830 9,042 9,259 9,482 9,709 9,942 89,526 Stormwater Paeroa Renewals 6,000 8,216 8,421 8,624 8,830 9,042 9,259 9,482 9,709 9,942 87,526 Stormwater Ngatea Renewals 6,000 6,162 6,316 6,468 6,623 6,782 6,945 7,111 7,282 7,457 67,145 Stormwater Kerepehi Renewals 3,000 3,081 3,158 3,234 3,311 3,391 3,472 3,556 3,641 3,728 33,572 Stormwater Turua Renewals 3,000 3,081 3,158 3,234 3,311 3,391 3,472 3,556 3,641 3,728 33,572 Stormwater Kaiaua Renewals 3,000 3,081 3,158 3,234 3,311 3,391 3,472 3,556 3,641 3,728 33,572 Stormwater Kaiaua Floodgates 20, ,000 Stormwater - Renewals 49,000 31,837 32,633 33, ,713 35,039 35,880 36,741 37,623 38, ,410 Storm Water - Total 125, , , , , , , , , ,191 1,397,426 Community Facilities - Levels of Service Kaiaua Toilets - 183, ,600 Miranda Cemetery Drainage - 12, ,240 Ngatea Orchard Rd Public Toilet Lighting 4, ,500 Pukerimu Cemetery Major Development 112, ,000 Waihi Cemetery Ashes 15, ,000 Waihi Public Toilet Lighting 8, ,000 Waitakaruru Public Toilet Lighting (solar) 4, ,500 Community Facilities - Levels of Service 144, , ,840 Community Facilities - Renewals Ngatea Hall Replace Blinds ,770-4,770 Ngatea Hall Replace Fridge Dishwasher , ,823 Ngatea Hall Replace LED Lights , ,921 Ngatea Hall Replace Zip , ,890 Ngatea Memorial Hall Water Units , ,260 Paeroa Hall Replace Blinds ,174-4,174 Paeroa Hall Replace Formica Bench in Toilets , ,823 Paeroa Hall Replace Heaters 4, ,500 Paeroa Pensioner Housing Renewals 25,000 27,540 22,911 26,582 33,687 23,345 28,431 29,113 59,624 30, ,822 Plains Pensioner Housing Renewals 18,000 36,720 19,787 20,203 42,381 23,345 28,431 17,468 17,887 18, ,574 Waihi Hall Kitchen Benchtop ,596-14,596 Waihi Hall Replace Fluorescent Lights ,887-17,887 Waihi Hall Replace Hot Water Cylinder , ,329 Waihi Pensioner Housing Renewals 25,000 29,580 27,077 18,076 34,774 15,563 22,745 23,291 23,850 24, ,425 Community Facilities - Renewals 72,500 93,840 69,775 64, ,992 62,254 95,529 83, ,788 73, ,795-2 Capital projects list 4m - 5

189 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Community Facilities - Total 216, ,680 69,775 64, ,992 62,254 95,529 83, ,788 73,410 1,217,635 Recreation - Levels of Service Ngatea library and service centre - 255,000 1,301, ,556,775 District Libraries - Radio Frequency Identification - 62, ,220 Marshall St Motor Home Car Park Extension 35, ,000 Paeroa - Wharf Street upgrade 500, ,000 Paeroa Domain Amenity Gardens , ,828 Turua Walkway 40, ,000 Waihi Event Centre Drinking Fountain , ,549 Recreation - Levels of Service 575, ,220 1,322, , ,219,372 Recreation - Renewals District Libraries - Book Budget 144, , , , , , , , , ,653 1,594,119 District Pools - Covers 52, , ,507 District Pools - Pool Toys , ,775-67,017 District Pools - Pool Toys 55, ,000 Kaiaua Boat Ramp Playground , ,828 Ngatea - Hugh Hayward domain walkway/cycleway 20, ,000 Ngatea - Dudding Reserve development 20, ,000 Ngatea - Main Street renewal 1,500, ,500,000 Paeroa - Olga St Walkway 20, ,000 Paeroa - Railway Reserve Car Park Upgrade 25, ,000 Paeroa - Railway Reserve Skate Park , ,068 Paeroa - Renewals Recreation 9,000 5,100 5,207 5,316 9,780 15,563 5,686 5,823 5,962 6,117 73,556 Paeroa Domain Entrance Upgrade - 73, ,114 Paeroa Domain Playground Upgrade 35, ,000 Paeroa Swimming Pools Annual Allowance 20,000 5,100 5,207 5,316 27,167 27,792 11,372 5,823 5,962 6, ,858 Pioneer Park Playground Upgrade - 45, ,900 Plains - Renewals Recreation 5,000 6,120 10,414 6,380 5,433 5,558 17,059 5,823 5,962 6,117 73,867 Waihi Event Centre Replace Security Lighting , ,734 Waihi - Gilmour Park Playground Poured Surface - 45, ,900 Waihi - Renewals Recreation 8,000 15,300 5,207 5,316 5,433 57,807 43,215 5,823 5,962 6, ,182 Waihi - Victoria Park Playground Upgrade 45, ,000 Waihi Event Centre Replace Hot Water Cylinder , ,823 Whiritoa Tennis Court Resurface - 25, ,500 Waihi Event Centre Replace Ventilation Fans , ,582 Recreation - Renewals 1,958, , , , , , , , , ,122 4,263,554 Recreation - Total 2,533, ,525 1,551, , , , , , , ,122 6,482,927 Property - Renewals Abattoir House Refurbish Bathroom 8, ,000 Hauraki House Air Conditioning Unit Replacement 10,000 10,200 10, ,614 Waihi - Replace Windows Waihi Art Centre 5,000 10, ,200 Capital projects list 4m - 6

190 Proposal Description 2018/19 Total 2019/20 Total 2020/21 Total 2021/22 Total 2022/23 Total 2023/24 Total 2024/25 Total 2025/26 Total 2026/27 Total 2027/28 Total Plan Total Reroof Skate Leisure Centre 30,000 30, ,600 Croquet club renewals 10, ,000 Paeroa Dog Pound - 20, ,400 Ngatea Depot Reroof - - 8, ,331 Paeroa Depot Reroof - 20, ,400 Ngatea Service Centre Upgrade - 44,880 32, , ,956 Waihi Museum Replace Roof - 44, ,880 Miscellaneous Property Renewal 337, , , , , , , , , ,690 3,929,652 Property - Renewals 400, , , , , , , , , ,690 4,253,033 Property - Total 400, , , , , , , , , ,690 4,253,033 Corporate renewals Corporate system upgrade (Authority) ,704, ,704,196 Plant Renewals 300, , , , , , , , , ,688 3,309,948 Technology Renewals (incl CCTV) 250, , , , , , , , , ,574 2,758,290 Corporate renewals 550, , , , , ,823 2,329, , , ,262 7,772,433 Property - Total 550, , , , , ,823 2,329, , , ,262 7,772,433 Capital - Levels of service 3,207,150 1,904,546 2,795,606 1,997,364 1,498,855 3,143,431 5,086,806 6,626,325 8,376,831 6,065,918 40,702,833 Capital - Renewals 8,555,456 6,696,476 8,067,025 7,037,581 6,409,887 7,172,252 7,778,023 6,662,671 6,989,048 7,705,475 73,073,894 Capital-Total 11,762,606 8,601,022 10,862,631 9,034,945 7,908,742 10,315,683 12,864,829 13,288,996 15,365,879 13,771, ,776,728 Capital projects list 4m - 7

191 Our service providers Council-controlled organisations We appoint directors to two council-controlled organisations; Waikato Local Authority Shared Services Limited and New Zealand Local Government Funding Agency Limited. An organisation is considered to be a council-controlled organisation if a council, or multiple councils, have: 50% or more of the votes at any meeting of the members, or have the right to appoint 50% or more of the trustees, directors or managers. We have no significant policies or objectives about the ownership and control of Waikato Local Authority Shared Services Ltd. or New Zealand Local Government Funding Agency Ltd. Appointment of directors to these organisations is made in accordance with our Appointment and Remuneration of Directors Policy. Waikato Local Authority Shared Services Limited Waikato Local Authority Shared Services Ltd. (WLASS) is a CCO solely owned by the 12 Waikato local authorities Waikato Region, Hamilton City, Hauraki District, Matamata-Piako District, Otorohanga District, Rotorua District, South Waikato District, Taupo District, Thames-Coromandel District, Waikato District, Waipa District and Waitomo District. The company was established in 2005 to promote shared services between local authorities across the Waikato region. By encouraging and enabling the councils to work together, WLASS helps councils to reduce costs, achieves effectiveness and efficiency gains, reduces duplication of effort, eliminates waste through repetition, promotes and contributes to the development of best practice, and helps to improve customers experiences. Much of the work of WLASS is undertaken by working parties or advisory groups made up of staff from the shareholding councils, with expertise and interest in particular services. WLASS provides a legal entity representing all of the shareholding councils, and can enter into contracts and agreements with external suppliers. The WLASS chief executive officer facilitates and co-ordinates the various working parties. Member councils pay a small annual levy, depending on their size, to run the WLASS. Services obtained by members are funded on a user pays basis, whereby each council pays for and receives the financial benefit of its share of any particular service. The decisions about potential projects or services are made by the Directors, who make up the WLASS Board. The WLASS Board has 12 Directors; each Director being the Chief Executive, or nominee, of one of the local authorities representing the shareholding Councils. The Directors do not receive any fees or expenses for the work undertaken on behalf of WLASS. What they do There are currently nine major initiatives operating under the WLASS umbrella, plus a support role for collaborative work streams of the Waikato Mayoral Forum. The initiatives are: Shared Valuation Data Service. Waikato Regional Transportation Model. Joint procurement initiatives. The Waikato Regional Aerial Photography Service. Waikato Building Consent Group. Road Asset Technical Accord. Future Proof Growth Strategy for the Hamilton, Waipa and Waikato sub-region (we don t fund this). Energy Management. Historic Aerial Photos. Our service providers 4n - 1

192 How we measure their performance WLASS must produce a statement of intent each year, and we report its performance against these intentions every year in our annual report. The performance targets for 2017/18 were: Joint procurement initiatives for goods and services for WLASS councils will be investigated and implemented. Priorities for collaboration are identified, business cases are developed for the highest priority projects, and the projects are implemented. Existing WLASS contracts are managed and renegotiated as required. The company shall maintain a positive cashflow position. Administration expenditure shall be managed and monitored. Six monthly reports are provided to shareholders. The company shall provide administrative support to the Mayoral Forum work streams and to the Mayoral Forum. Shared Valuation Data Services is reliable, well maintained and available to all users. Achieve the relevant key performance indicators in Appendix 4 of the Insurance Brokerage contract with Aon. All stakeholders are kept informed about Road Asset Technical Accord s projects and achievements. Sub-regional data collection contracts deliver good quality data on roading assets. Waikato Regional Transport Model is reliable, well maintained and available to all users. Provide strategic direction and actively pursue improvements in building control across the Waikato region. All stakeholders are kept informed about Future Proof s projects and achievements. Shareholders are satisfied with the performance of WLASS an annual survey is undertaken. Shareholders are informed of the benefits being provided to shareholding councils. We report on their performance against these intentions every year in our annual report. If you want to find out more, see their website at New Zealand Local Government Funding Agency Limited The New Zealand Local Government Funding Agency Ltd. (LGFA) is enabled under the Local Government Borrowing Act LGFA is owned by the Crown and 30 local councils from across New Zealand. The Board of Directors includes independent and non-independent directors and are appointed by the councils and the Crown. What they do The primary purpose of the LGFA is to raise debt funding either domestically and/or offshore in either New Zealand dollars or foreign currency and provide debt funding to participating local authorities. The intention of this is to optimise the debt funding terms and conditions for participating councils, which can result in savings in annual interest costs. How we measure their performance The LGFA must produce a statement of intent each year, and we report its performance against these intentions every year in our annual report. The performance targets for 2017/18 were: The average margin above the Agency s cost of funds charged to the highest rated participating local authorities for the period to 30 June 2020 will be no more than 0.10%. The Agency s annual issuance and operating expenses for the period to: o 30 June 2018 will be less than $5.45 million. o 30 June 2019 will be less than $5.58 million. 30 June 2020 will be less than $5.70 million. Total lending to participating local authorities at: o 30 June 2018 will be at least $8,128 million. o 30 June 2019 will be at least $8,188 million. o 30 June 2020 will be at least $8,391 million. The Agency will demonstrate the savings to council borrowers on a relative basis to other sources of financing. This will be measured by maintaining or improving the prevailing secondary market spread between the Agency bonds and those bonds of a similar maturity issued by (i) registered banks and (ii) Auckland Council and Dunedin Council as a proxy for single name issuance of council financing. If you want to find out more, see their website at Our service providers 4n - 2

193 Exempt council-controlled organisations We can exempt small organisations from being council-controlled organisations, meaning they do not have to meet the same level of reporting. These exempt organisations are: Destination Coromandel Trust Hauraki Rail Trail Charitable Trust Martha Trust We do however need to ensure that these organisations have roles and responsibilities that are aligned with our objectives and outcomes for our communities. Civic Financial Services Limited (Civic) is exempt from being a council-controlled organisation under the Local Government Act Civic is owned by 72 of 78 local authorities. The Local Authority Protection Programme (LAPP) Disaster Fund was set up by Local Government New Zealand and Civic in Civic is the administration manager for LAPP. Council organisations We also appoint elected members or other representatives to a number of other smaller organisations. These organisations are classified as council organisations under the Local Government Act 2002 because we have the right to appoint one or more directors, or have a vote (but not 50% or more of the vote). Some of these organisations are required to have a Council representative due to their funding agreement with us, and some others invite us to appoint a member. We need to ensure these organisations have roles and responsibilities that are aligned with our objectives and outcomes for our communities. The town promotional organisations, Positive Paeroa and Go Waihi, are examples of council organisations. Our service providers 4n - 3

194 Section 5 Dollars and Cents section Revenue and financing policy 5a Financial statements 5b Funding impact statement rating implications 5c Rating changes 5d Balanced budget statement 5e Financial reporting and prudence regulations disclosure statement 5f

195 Revenue and Financing Policy Introduction Our Revenue and Financing Policy sets out the ways in which we intend to pay for each activity we re involved in, and why. We re required to have this Policy to provide predictability and certainty to our customers about the sources and levels of funding. This Policy is set out in six parts, with an appendix, as follows: 1. Revenue and Funding Direction 2. Overview of the Policy Development 3. Types of Expenditure 4. Funding Mechanisms Operating Expenditure 5. Funding Mechanisms Capital Expenditure 6. Rating Type Classifications 7. Appendix A: Activity funding rationale This Policy should be read in conjunction with our Funding Impact Statement. The Funding Impact Statement puts the Revenue and Financing Policy into practice. It details the revenue requirement for each of our activities and provides examples of rates for sample properties. The Funding Impact Statement also details payment due dates and penalties for late payments. Revenue and Financing Policy 5a - 1

196 Revenue and funding direction Throughout the preparation of this Policy, we ve been guided by the following directions with regard to the funding of our activities: to minimise and smooth rates increases (this is a direction in our Financial Strategy) to not assume that rates are the only available funding source (this is a component of minimising rates) to explore alternative funding sources in the first instance, where possible and appropriate (endeavours in this area have been and will continue to be made). An alternative source of funding to rates is user fees and charges. User fees and charges are generally applied where there is an identified direct benefit to an individual. We also have a number of targeted rates also for this purpose to appropriately charge those that directly benefit from or use the service. The funding arrangement of our activities requires careful consideration. User fees and charges (and targeted rates) cannot be utilised to a point where the cost becomes prohibitive and could potentially impact the community s use of the service. The use of user fees and charges and targeted rates is therefore balanced with other funding sources. To smooth rates increases, we use borrowing. We have an obligation to appropriately balance the funding of our activities over the life of our assets. For example, the life of a water treatment plant is approximately 50 years. We consider the funding mix for this asset so that today s ratepayers pay their fair share, as do tomorrow s ratepayers. This is known as intergenerational equity. We aim to be balanced and fair and also endeavour to uphold suitable transparency, as well as administrative efficiency. Policy development We ve developed this policy in line with the Local Government Act 2002 which specifies how the Revenue and Financing Policy must be developed. We must first identify the activities that we re involved in. We use the term activity to describe goods or services provided by us or on our behalf. In relation to each activity to be funded, we then must consider: the community outcomes to which the activity primarily contributes the distribution of benefits between the community as a whole, any identifiable part of the community and individuals the period in or over which those benefits are expected to occur the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities. This consideration is included in Appendix A. After considering how each activity should be funded we must then consider the overall impact of the funding allocation on the community for both today s ratepayers and the ratepayers of the future, to ensure that decisions aren t made today that inappropriately disadvantage future ratepayers, and also different and identifiable parts of the community. Revenue and Financing Policy 5a - 2

197 Types of expenditure Broadly speaking we have two types of expenditure: Operating expenditure: This is the spend required for the day-to-day functioning of the Council as a business. It includes things like maintenance, electricity and wages. Capital expenditure: This is the money spent on acquiring, building, upgrading or renewing physical assets, such as buildings, or water treatment plants. Operating expenditure and capital expenditure are funded differently. The details of the different funding mechanisms used are outlined in this Policy. Legislation requires that we make adequate provision in our Long Term Plan to meet our identified expenditure needs. Generally, this will mean that all expenditure is funded. However, we do make a number of exceptions to this. Whilst we do seek to fully fund our operating expenditure in each year, there may be occasions when this is not practical. Operating expenditure may be funded by prior years surpluses or anticipated future years surpluses. This approach aligns to a direction in our Financial Strategy to minimise and smooth rate increases. We make decisions not to fund depreciation expenditure where it is financially prudent not to do so. Details of assets where the depreciation is not funded are listed in our Financial and General Assumptions, which can be found on our website. When making decisions not to fund depreciation expenditure, we ve had regard to: whether at the end of its useful life, the replacement of the asset will be funded by way of a grant or subsidy from a third party whether we ve decided not to replace an asset at the end of its useful life whether the original cost of constructing the asset has been fully funded whether fully funding depreciation in the short-term will result in an unreasonable burden on ratepayers. In some activities we take over ownership of assets from developers when subdivisions are completed. For accounting purposes this needs to be shown as income in the cost of service statements and funding impact statements for those activities. We don t take this income into account as a funding source in this Policy. Revenue and Financing Policy 5a - 3

198 Funding mechanisms operating expenditure The mechanisms for funding applied under this policy are limited to those set out under section 103(2) of the Local Government Act A brief evaluation of appropriateness of each funding mechanism for funding different activities is presented in the table below. Funding source Grants and subsidies User fees and charges Investment fund income Rates Special funds Internal borrowing Definition Funding received from other agencies, usually for a specific purpose. Fees charged to individuals or groups who are directly using our services. Income received from our Investment Fund. Includes the Uniform Annual General Charge (UAGC), General Rates and Targeted Rates. See under Rating Type Classifications heading for further description. Revenue received in the past set aside for a particular purpose. We operate an internal treasury function. This means that we use the cash surpluses from some activities to lend to other activities that need to borrow. We do this to reduce our overall cost of borrowing. We charge interest on the funds lent to the borrowing activities, and receive interest on the funds borrowed from the lending activities. Rationale for application We ll use grants or subsidies from central government or other organisations where available, usually for a specific purpose. This approach minimises the cost to the community of undertaking projects and activities. In analysing the benefits and costs to the community of various project and activity options, we ll consider the availability of grants and subsidies. The use of fees and charges may be balanced with other funding sources. Generally used to reduce the amount of Uniform Annual General Charge required. Where the above listed funding sources are not available, we will fund its expenditure requirements by rates. There are a variety of rating types to recognise the different circumstances. Special funds may be used to fund specific community projects that we have selected. We will fund short term deficits with internal borrowing that we have deemed prudent. We have applied the above rationale to each of our activities. The target funding proportions for the operating expenditure of each activity are outlined in the table below. This table provides information, at a glance, about how each activity is funded, and which ratepayers (through different rating types) pay for the costs associated with an activity. Revenue and Financing Policy 5a - 4

199 Activity Group Activity Funding mix Governance and Leadership Activity Group Democracy 1 Rate Capital Value District (100%) Iwi Liaison UAGC (100%) Policy Development Private Plan Changes Rate Capital Value District (100%) Fees and Charges (100%) Land Transport Activity Group Land transport carriageways NZ Transport Agency Subsidy (59-60%) Rate Capital Value Roading (remainder) 1 Land transport footpaths Rate Uniform Annual Charge Ward (100%) Land transport safety Land Transport Subsidy (59-60%) Rate Capital Value Roading (remainder) 1 Land transport amenities Land Transport Subsidy (59-60%) Fees and charges 1% Rate - Capital Value Roading (remainder) 1 Water Supply Activity Group Water Supply Rate Targeted annual charge and volume charge (100%) Wastewater Activity Group Wastewater Rate Targeted pan charge (85-100%) Trade waste fees and charges (0-15%) Land Drainage and Flood Protection Activity Group Land Drainage Rate Targeted Land Value (85%) Rate Capital Value District (15%) Stormwater Activity Group Urban Stormwater Rate Capital Value District (15%) Rate Targeted Capital Value (85%) Solid Waste Activity Group Solid waste minimisation Grants and subsidies (100%) Community Services Activity Group Community Recreation Community Services Activity Group - Community Facilities Solid waste collection services kerbside collection Solid waste collection services transfer stations Rate Targeted - Annual Charge (100%) Rate Capital Value District (100%) Landfill aftercare Rate Capital Value District (100%) Libraries UAGC (93-95%) Fees and Charges (4-7%) with a target of 5% Swimming pools UAGC (93-96%) Fees and Charges (4-7%) with a target of 4% Events Centre UAGC (40-45%) Fees and Charges (10-20%) Rate Uniform Annual Charge Ward (40-45%) Sports fields UAGC (47-50%) Rate Uniform Annual Charge Ward (47-50%) Fees and Charges (0-6%) Recreation Reserves Rate Uniform Annual Charge Ward (98-100%) Fees and Charges (0-2%) Travellers Reserves Rate Capital Value Roading (100%) Town centres 1 Rate Uniform Annual Charge Ward (60%) Rate Capital Value Ward Business (20%) Rate Annual Charge Ward Business (20%) Sports Coordinator UAGC (100%) Cemeteries - burials Fees and Charges (100%) Cemeteries - reserves UAGC (100%) Town halls UAGC (80%-90%) target 90% Fees and Charges (10%-20%) target 10% 1 This proposed funding mix is planned to be phased in over three years. See Appendix A for details on phasing. Revenue and Financing Policy 5a - 5

200 Activity Group Activity Funding mix Rural hall assistance Rate Targeted Community Hall Rates (100%) Public toilets Rate Capital Value Roading (80%) Rate - UAGC 20% Pensioner housing Fees and Charges (100%) Passive Reserves UAGC (100%) Community Development Activity Group Community Growth Community Development Activity Group community initiatives Regulatory Services Activity Group Economic Development Information Centres District 2 (local) Information Centres i-site 2 (regional) Rate Capital Value District differential on commercial/industrial (100%) Rate - Capital Value District (40%) Rate - Annual Charge Ward (30%) Rate - Capital Value Ward Business (15%) Rate Annual Charge Ward Business (15%) Rate - Capital Value District (60%) Rate - Annual Charge Ward (20%) Rate Capital Value Ward Business (10%) Rate Annual Charge Ward Business (10%) Township coordinators 2 Rate - Annual Charge Ward (50%) Rate - Capital Value Ward Business (25%) Rate Annual Charge Ward Business (25%) Destination Coromandel Grants and donations District UAGC (100%) Rate Capital Value District (100%) differential on commercial and industrial Grant and Donations Ward Rate targeted ward annual charge (100%) Cycleway Rate UAGC (75%) Rate capital value district differential on commercial and industrial (25%) Discretionary social fund Investment fund income (100%) Social initiatives Rate capital value district (100%) CCTV UAGC (100%) Sister cities UAGC (100%) Animal Control UAGC (85%-95%) target 95% Fees and Charges (5%-15%) target 5% Dog Registration Fees and Charges (100%) Health UAGC (75%-90%) target 85% Fees and Charges (10%-25%) target 15% Alcohol Licensing UAGC (40%-60%) target 50% Fees and Charges (40%-60%) target 50% Building Services Rate- Capital Value District (45%-55%) Fees and Charges (45%-55%) Resource Management Implementation Civil Defence UAGC (100%) Rate Capital Value District (40-70%) target 55% Fees and Charges 30%-60% target 45% We set our fees and charges annually to reflect increases in costs or changes to charging structures. The Fees and Charges schedule is available on our website. The fees and charges revenue targets set out in this policy are subject to influences beyond the Council s control. Therefore, they are by their nature variable and subject to change. Any drop in anticipated revenue from them will be compensated by rates. 2 This proposed funding mix is planned to be phased in over three years. See Appendix A for details on phasing. Revenue and Financing Policy 5a - 6

201 Funding Mechanisms Capital Expenditure As with operating expenditure, the mechanisms for funding applied under this Policy are limited to those set out under section 103(2) of the Local Government Act Our policy on funding capital expenditure is to utilise sources of funds in the following order: 1. Grants and Subsidies 2. Financial Contributions/Development Contributions 3. Depreciation 4. Asset Sales 5. Reserves - Past Surpluses 6. Borrowing Internal 7. Borrowing External. A brief evaluation of appropriateness of each funding mechanism for funding different activities is presented in the table below. Funding source Priority of application Rationale for application Grants and subsidies 1. We will use grants or subsidies from central government or other organisations where available and usually for a specific purpose. This approach minimises the cost to the community of undertaking projects and activities. In analysing the benefits and costs to the community of various project and activity options, we will consider the availability of grants and subsidies. Financial Contributions/Development Contributions 2. Where available, we may charge Development Contributions in accordance with our Development Contributions Policy, to recover previous capital expenditure or to seek contributions toward future capital expenditure that is intended to create additional capacity. We may charge Financial Contributions in accordance with our District Plan. Depreciation 3. Depreciation is set to allow for the replacement of our capital assets. We will use depreciation from current and prior years that has not already been applied to fund asset replacements. Proceeds from asset sales 4. Funding received from selling physical assets will initially be used to repay debt associated with the activity that funded it. Following this, any remaining funds will be used to fund other capital expenditure within that same activity. Reserves - past surpluses 5. Where past surpluses are available these may be used to fund capital expenditure. Borrowing internal 6. Where the options 1 5 are not available to fund capital expenditure it will be necessary to borrow the sum required. We operate an internal treasury function. We use the cash surpluses from some activities to lend to other activities that need to borrow. We do this to reduce our overall cost of borrowing. We charge interest on the funds lent to the borrowing activities, and pays interest on the funds borrowed from the lending activities. Borrowing external 7. We may need to borrow funds externally to ensure there are adequate funds to meet our overall operational and capital cash flow requirements. External borrowing is not linked or tied to specific capital projects or activities. Revenue and Financing Policy 5a - 7

202 Rating Type Classifications Different rating type classifications are described in detail below. Separately Used or Inhabited Part of a Rating Unit (SUIP) Rating units, parts or portions of rating units are terms used to define separately used or inhabited rating units and include any part of a rating unit used or inhabited by the owner or any other person who has the right to use or inhabit that part by virtue of tenancy, lease or other agreement. At a minimum, the land or premises intended to form the separately used or inhabited part of the rating unit must be capable of actual habitation, or actual separate use. For the avoidance of doubt, a rating unit that has only one use (i.e. does not have separate parts or is vacant land) is treated as being one separately used or inhabited part. Farms A farming unit with one dwelling will be treated as one use/part, with each additional dwelling counting as an additional used part of the rating unit. Each additional dwelling will be assessed as a separate unit for the purposes of assessing any rate calculated on the basis of a SUIP. We use the SUIP in the following rates: Community Halls Refuse Collection Targeted Rates. Uniform Annual General Charge (UAGC) The UAGC is a fixed charge per rating unit. It is used to fund activities that deliver benefit to the whole District. General Rate Capital Value - District The General Rate is assessed on all rating units in the District based on capital value. It is used to fund activities where we believe the activity delivers a public benefit to the whole of the community and where a fixed charge per rating unit is not considered appropriate. We apply a capital value general rate differentially. The differential is based on land use, using the categories below: Differential General Rate Residential/Rural Commercial/Industrial Mineral Extraction Land Use Mining Land Use Description Means all rating units used primarily for residential, recreational, cultural use or primarily or predominately for the purposes of agriculture, viticulture, horticulture or silviculture. Means all rating units used for commercial or industrial purposes, including utility networks. Means all mineral value rating units that are not used in gold mining. Means all mineral value rating units that are used in gold mining. Targeted Rates We use targeted rates (as defined in the Local Government (Rating Act) 2002) to collect funds over areas of benefit. Targeted rates are chosen where the services provided are specific to a particular community or area within the District and it is not considered fair to charge all ratepayers. Details of our targeted rates, how the targeted rates are calculated, and revenue to be generated by targeted rates is detailed in our Funding Impact Statement. Uniform Annual Charge Ward (UAC) A Ward uniform annual charge is a targeted rate calculated as a fixed charge, which is applied to all rating units in a particular ward area. It is used to fund activities that deliver benefit to that particular ward. Revenue and Financing Policy 5a - 8

203 Ward Business Rate We set targeted rates for each ward, based on a differential capital value rate, and a differential annual charge per separately used or inhabited part of a commercial and industrial rating unit, or part of a rating unit, that is being used for a commercial or industrial activity. The capital value rate and the annual charges are set on a differential basis based on location. Properties in the rural areas of the Paeroa and Waihi Wards will be assessed an annual charge equivalent to half the annual charge assessed on urban rating units. In the Plains Ward the annual charge assessed on rural rating units is equivalent to 56% of the annual charge assessed on urban rating units. This is due to Positively Promoting the Plains being funded equally by urban and rural rating units. Revenue and Financing Policy 5a - 9

204 Appendix A: Activity Funding Rationale The activities are presented in table format with details of each activity being in a separate table. An example of an activity table is below with an explanation of what the considerations were. Activity template Activity definition Public benefit % What percentage of benefit does the public gain from the Council undertaking this activity? Private benefit % What percentage of benefit is gained by an individual from the Council undertaking this activity? Community Outcomes Which Community Outcomes does this activity contribute to? Benefit to the community as a whole Yes/No Does this activity generate benefits to the entire community? Benefit to an identifiable part of the community Yes/No Is there a part of the community that benefits from this activity? Benefit to an individual Yes/No Do any individuals benefit from this activity? Exacerbator Yes/No Do the actions of any particular individuals, or a group, contribute to the need for the Council to undertake the activity? Benefit period Current year/ Future periods Are the benefits largely achieved in the current year or over many years? Capital funding required Yes/No Is there capital expenditure to fund? Funding sources are: Grants and subsidies Financial Contributions/Development Contributions Depreciation reserves Asset sales Reserves - past surpluses Borrowing internal Borrowing - external funding % Rate - Uniform Annual General Charge (UAGC) Rate - Uniform Annual Charge - Ward Rate - Annual Charge - Ward Business Rate - Capital Value - District Rate - Capital Value - District (business differential) Rate - Targeted Subsidies Fees and charges Revenue and Financing Policy 5a - 10

205 Governance and Leadership Activity Tables Democracy Governance of the Hauraki District by the District s residents through their elected representatives. Public benefit 100% Private benefit 0% Community Outcomes Interactive Hauraki, Lifestyle Hauraki and Sustainable Hauraki. Benefit to the community as a whole Yes The governance and direction of the District, including the setting of policy that the Council operates for the entire community. Benefit to an identifiable part of the community Benefit to an individual Exacerbator Benefit period Capital funding required No No No Current year and future periods funding 100% Rate Capital Value District No Iwi liaison For building relationships with Māori community groups and individuals. Public benefit 90% Private benefit 10% Community Outcomes Kotahitanga Hauraki and Sustainable Hauraki. Benefit to the community as a whole Yes Benefit to Māori benefits the whole community. Benefit to an identifiable part of the community Benefit to an individual Exacerbator Benefit period Capital funding required Yes No No No Tangata Whenua Current year funding 100% Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 11

206 Policy development Provide policy analysis and development to support the Council in meeting its community and statutory requirements including the Long Term Plan and District Plan. Public benefit 100% Private benefit 0% Community Outcomes Interactive Hauraki, Prepared Hauraki and Sustainable Hauraki. Benefit to the community as a whole Yes Provides a base for sound decision-making, good governance, and sustainability. Benefit to an identifiable part of the community Benefit to an individual Exacerbator Yes Plan change requests. Benefit period Capital funding required funding No No No District Plan: undefined length of time Long Term Plan: 3 years Other (Annual Plan and Annual Report): 1 year Policy development 100% Rate Capital Value - District Private plan changes 100% Fees and Charges Revenue and Financing Policy 5a - 12

207 Land Transport Activity Tables Land transport - carriageways The development, maintenance and management of the physical road surface and structure, whether sealed or unsealed, including markings. Public benefit 100% Private benefit 0% Community Outcomes Interactive Hauraki, Lifestyle Hauraki and Prepared Hauraki Benefit to the community as a whole Yes The community needs roading to function and roading is available to all members of the community. Benefit to an identifiable part of the community Benefit to an individual Yes Exacerbator Yes Road users Benefit period No Vehicle owners and/or operators e.g. taxis and buses Current year and future periods Capital funding required Yes Land Transport Subsidy Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 59-60% 41-40% Subsidies Rate - Capital Value Roading 3 Land transport - footpaths The development, maintenance and management of footpaths. Public benefit 100% Private benefit 0% Community Outcomes Lifestyle Hauraki and Prepared Hauraki. Benefit to the community as a whole Yes Safer environment to live and work in. Benefit to an identifiable part of the community Benefit to an individual Exacerbator Benefit period Yes No No Businesses in close proximity to walkways/footpaths and general town improvements benefit from better access to their businesses and from the more pleasant surroundings. Current year Capital funding required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 100% Rate Uniform Annual Charge Ward 3 We are proposing to change from a differential capital value roading rate to a flat capital value roading rate, and we plan to phase this in over three years. Revenue and Financing Policy 5a - 13

208 Land transport - safety The development, maintenance and management of safety initiatives for the benefit of the community. Public benefit 100% Private benefit 0% Community Outcomes Lifestyle Hauraki and Prepared Hauraki. Benefit to the community as a Whole Yes Safer environment to live and work in. Benefit to an identifiable part of the community Benefit to an individual Exacerbator Benefit period No No No Current year Capital funding required Yes Land Transport Subsidy Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 59-60% 41-40% Land Transport Subsidy Rate - Capital Value Roading 4 Land transport - amenities The development, maintenance and management of all activities outside the trafficable road surface, which includes kerbing and channelling, culverts, street lights, road signs, traffic islands, retaining walls and stock underpasses. Public benefit 100% Private benefit 0% Community Outcomes Lifestyle Hauraki and Prepared Hauraki. Benefit to the community as a whole Yes Safer environment to live and work in. Benefit to an identifiable part of the community Benefit to an individual No No Exacerbator Yes Development triggers the need for vehicle crossings and stock underpasses. Benefit period Current year Capital funding required Yes Land Transport Subsidy Development Contributions/Financial Contributions Depreciation Reserves Borrowing Internal funding 59-60% 0-1% 39-41% Land Transport Subsidy Fees and Charges Rate - Capital Value Roading 4 4 We are proposing to change from a differential capital value roading rate to a flat capital value roading rate, and we plan to phase this in over three years. Revenue and Financing Policy 5a - 14

209 Water Supply Activity Table Water supply Supply of water for community purposes. Public benefit 10% Private benefit 90% Community Outcomes Interactive Hauraki, Lifestyle Hauraki, Prepared Hauraki and Sustainable Hauraki. Benefit to the community as a whole Yes Public health through improved water quality and supply. Benefit to an identifiable part of the community Benefit to an individual Yes Water users Exacerbator Benefit period Yes No Properties that are connected to the Council water supply. Current year Capital funding required Yes Grants and subsidies Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 100% Rate Targeted (annual charge and volume charge) Wastewater Activity Table Wastewater Collection, treatment and disposal of wastewater. Public benefit 10% Private benefit 90% Community Outcomes Interactive Hauraki, Prepared Hauraki and Sustainable Hauraki. Benefit to the community as a whole Yes Improving public health and environmental quality. Benefit to an identifiable part of the community Yes Properties that are connected to the Council wastewater system. Benefit to an individual Yes Properties that are connected to the Council wastewater system. Exacerbator Yes Wastewater producers Benefit period Current year and future periods Capital funding required Yes Grants and subsidies Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 85%-100% 0-15% Rate - Targeted (pan charge) Trade Waste Fees and Charges Revenue and Financing Policy 5a - 15

210 Land Drainage Activity Table Land drainage Removal of water runoff in rural areas resulting from rainfall, by conveying to water courses, without depleting ground water. Public benefit 15% Private benefit 85% Community Outcomes Interactive Hauraki and Prepared Hauraki. Benefit to the community as a whole Yes Drainage is important in the development of all land including roading and community/public facilities such as parks. Benefit to an identifiable part of the community Benefit to an individual Yes No Rural properties within the drainage scheme benefit from the systems to minimise the effects of flooding. Exacerbator Yes Properties that discharge into the drainage District catchment Benefit period Current year Capital funding required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 85% 15% Rate Targeted Land Value Rate - Capital Value District Stormwater Activity Table Urban stormwater Removal of water runoff in urban areas resulting from rainfall by conveying to water courses. Public benefit 15% Private benefit 85% Community Outcomes Interactive Hauraki and Prepared Hauraki. Benefit to the community as a whole Yes Stormwater is important in development of and access to the urban areas. Benefit to an identifiable part of the community Benefit to an individual Yes No Urban community. Exacerbator Yes Developed properties increase the intensity of the water runoff with impervious surfaces. Benefit period Current year and future periods. Capital funding required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal funding 15% 85% Rate - Capital Value District Rate Targeted Capital Value Revenue and Financing Policy 5a - 16

211 Solid Waste Activity Tables Solid waste minimisation Reduction of District wide waste stream to provide environmental and economic benefits. Public Benefit 100% Private Benefit 0% Community Outcomes Sustainable Hauraki. Benefit to the Community as a Whole Yes Reduction of refuse throughout the District. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required No No No Current year and future periods Funding 100% Grants and Subsidies. No Solid waste collection services kerbside collection Collection of refuse. Public Benefit 10% Private Benefit 90% Community Outcomes Interactive Hauraki, Prepared Hauraki and Sustainable Hauraki. Benefit to the Community as a Whole Yes Maintain the attractiveness of the area with a reduction of refuse. Protects public health and assists in fostering a clean and tidy environment. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes No Properties provided with a collection service. Exacerbator Yes People that indiscriminately dispose of their rubbish. Benefit Period Capital Funding Required No Current year and future periods Funding 100% Rate Targeted Annual Charge Revenue and Financing Policy 5a - 17

212 Solid waste collection service transfer stations Ownership of transfer stations. Public Benefit 55% Private Benefit 45% Community Outcomes Sustainable Hauraki. Benefit to the Community as a Whole Yes The transfer stations are available to be used by all members of the public. Benefit to an Identifiable Part of the Community No Benefit to an Individual Yes Users can dispose of their refuse. Exacerbator Benefit Period No Current year and future periods. Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 100% Rate Capital Value District Landfill care Closed refuse tip aftercare. Public Benefit 100% Private Benefit 0% Community Outcomes Sustainable Hauraki. Benefit to the Community as a Whole Yes Long term environmental benefit with the management of old landfill sites. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period No No No Current year and future periods Capital Funding Required Yes Borrowing internal Funding 100% Rate Capital value - District Revenue and Financing Policy 5a - 18

213 Community Services (Community Recreation) Activity Tables Libraries Provide access to information, recreation, education and a place for the community to use. Public Benefit 80% Private Benefit 20% Community Outcomes Lifestyle Hauraki. Benefit to the Community as a Whole Yes Provides support for increasing education and recreation. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes Library users No Exacerbator Yes People who damage books and equipment. Benefit Period Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing - internal Funding 93-95% 4-7% Rate - Uniform Annual General Charge Fees and Charges Swimming pools Providing and maintaining swimming facilities in the District. Public Benefit 90% Private Benefit 10% Community Outcomes Benefit to the Community as a Whole Benefit to an Identifiable Part of the Community No Yes Benefit to an Individual Yes Pool users Exacerbator Benefit Period No Lifestyle Hauraki and Prepared Hauraki. Part of the community that uses the swimming facilities for education, safety and recreation. Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 4-7% 93-96% Fees and charges Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 19

214 Events centre Provision of a multi-purpose complex for regional and local sporting and community activities. Public Benefit 50% Private Benefit 50% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Social and recreational use. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Yes No No People who have a need to use the centre. Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 40-45% 10-20% 40-45% Rate - Uniform Annual General Charge Fees and charges Rate - Uniform Annual Charge Ward Sports fields Provision and maintenance of parks used principally for organised sport for the local and wider community. Public Benefit 50% Private Benefit 50% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Improved health and increased social recreation opportunities of the community with participation in active sports. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Yes No No Sporting groups Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 47-50% 47-50% 0-6% Rate - Uniform Annual General Charge Rate - Uniform Annual Charge Ward Fees and Charges Revenue and Financing Policy 5a - 20

215 Recreation reserves Provision and maintenance of parks and recreational uses for the local and wider community. Public Benefit 100% Private Benefit 0% Community Outcomes Prepared Hauraki and Sustainable Hauraki. Benefit to the Community as a Whole Yes Improved health and increase social recreation opportunities for the community. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Yes No No People that have a need to use the facilities. Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding % 0-2% Rate - Uniform Annual Charge Ward Fees and Charges Travellers reserves Providing rest areas for people travelling through and around the District. Public Benefit 100% Private Benefit 0% Community Outcomes Progress Hauraki. Benefit to the Community as a Whole Yes People have a more pleasant trip and are safer more rested drivers. Benefit to an Identifiable Part of the Community Benefit to an Individual No No Exacerbator Yes People needing to use the facilities. Benefit Period Current year and future periods Capital Funding Required Yes Depreciation Reserves Borrowing internal Funding 100% Rate Capital value - Roading Revenue and Financing Policy 5a - 21

216 Town centres Development and maintenance of town centres. Public Benefit 100% Private Benefit 0% Community Outcomes Lifestyle Hauraki and Progress Hauraki. Benefit to the Community as a Whole Yes Improved economic benefit with an updated and modern town centre. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required Yes No No No Funding 60% 20% 20% Local businesses This funding mix is planned to be phased in over three years as follows Current year and future periods. Rate Uniform Annual Charge Ward Rate Capital Value Ward Business Rate Annual Charge Ward Business Rate type 2018/ / /21 Rate capital value Ward Business 6.7% 13.3% 20% Rate Annual Charge Ward Business 33.3% 26.7% 20% Sports coordinator To encourage and support the community to participate in sporting activities. Public Benefit 100% Private Benefit 0% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Social and health benefits by encouraging people to play active sports. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required No No No No Current year and future periods Funding 100% Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 22

217 Community Services (Community Facilities) Activity Tables Cemeteries burials Providing locations and interment services for caskets and ashes. Public Benefit 10% Private Benefit 90% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Health and environmental benefits by burials performed properly. Benefit to an Identifiable Part of the Community No Benefit to an Individual Yes Person is able to be buried locally. Exacerbator Yes People wanting to be buried in the District. Benefit Period Current year and future periods Capital Funding Required Yes Reserves Borrowing internal Funding 100% Fees and charges Cemeteries reserves Maintaining the area where caskets and ashes have been interred. Public Benefit 100% Private Benefit 0% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes People that have a need to use the facilities. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period No No No Current year and future periods Capital Funding Required Yes Depreciation Reserves Borrowing internal Funding 100% Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 23

218 Town halls Provision of Council halls in Paeroa, Ngatea and Waihi. Public Benefit 90% Private Benefit 10% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Social and recreational use. Benefit to an Identifiable Part of the Community Yes Benefit to an Individual Yes Hall users Being able to use a hall in the local area. Exacerbator Yes People wanting to book a hall. Benefit Period Current year and future periods Capital Funding Required Yes Depreciation Reserves Borrowing internal Funding 80-90% 10-20% Rate - Uniform Annual General Charge Fees and Charges Rural hall assistance Assistance to and support of community halls in the District. Public Benefit 90% Private Benefit 10% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes Social and recreational use. Benefit to an Identifiable Part of the Community Yes Benefit to an Individual Yes Hall users. Being able to use a hall in the community area. Exacerbator Yes People wanting to book a hall. Benefit Period Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 100% Rate -Targeted Community Hall Rates Revenue and Financing Policy 5a - 24

219 Public toilets Public toilet facilities are provided by the Council throughout the District. Public Benefit 100% Private Benefit 0% Community Outcomes Prepared Hauraki and Progress Hauraki. Benefit to the Community as a Whole Yes Health, environmental and convenience. Benefit to an Identifiable Part of the Community No Benefit to an Individual Yes Facilities available when travelling through and around the District. Exacerbator Yes People needing to use the facilities. Benefit Period Current year and future periods Capital Funding Required Yes Development Contributions/Financial Contributions Depreciation Reserves Borrowing internal Funding 80% 20% Rate Capital Value Roading Rate Uniform Annual General Charge Pensioner housing Maintaining existing Council-owned housing for the elderly in the District. Public Benefit 20% Private Benefit 80% Community Outcomes Lifestyle Hauraki and Prepared Hauraki. Benefit to the Community as a Whole Yes Social benefit of helping the elderly in the community. Benefit to an Identifiable Part of the Community Yes Pensioners Benefit to an Individual Yes Residents of the pensioner flats Exacerbator Yes Pensioners that need accommodation Benefit Period Current year and future periods Capital Funding Required Yes Depreciation Reserves Borrowing internal Funding 100% Fees and charges Revenue and Financing Policy 5a - 25

220 Passive reserves Provision and maintenance of reserves for District beautification and other minor reserves. Public Benefit 100% Private Benefit 0% Community Outcomes Lifestyle Hauraki and Sustainable Hauraki. Benefit to the Community as a Whole Yes Improve the attractiveness of the District. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period No No No Current year and future periods Capital Funding Required Yes Depreciation Reserves Borrowing internal Funding 100% Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 26

221 Community Development Activity Tables Economic development Providing leadership to stimulate growth and development within the District. Public Benefit 80% Private Benefit 20% Community Outcomes Progress Hauraki. Benefit to the Community as a Whole Yes Improvement in the economy of the District. Benefit to an Identifiable Part of the Community Yes Support for local businesses and organisations. Benefit to an Individual Yes Local businesses and organisations. Exacerbator Yes Organisations that are assisted in setting up their business in the District. Benefit Period Capital Funding Required No Current year and future periods Funding 100% Rate - Capital Value District differential on commercial/industrial. Information centres district (local) Provision of a centralised and easily recognised repository for information about local attractions and visitor events. Public Benefit 80% Private Benefit 20% Community Outcomes Progress Hauraki. Benefit to the Community as a Whole Yes Improved economy because of support for tourism. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes People who visit the centres. Exacerbator Benefit Period Capital Funding Required No No No Funding 40% 30% 15% 15% This funding mix is planned to be phased in over three years as follows Current year and future periods Rate - Capital Value - District Rate - Annual Charge Ward Rate - Capital Value Ward Business Rate Annual Charge Ward Business Rate type 2018/ / /21 Rate capital value Ward Business 5% 10% 15% Rate Annual Charge Ward Business 25% 20% 15% Revenue and Financing Policy 5a - 27

222 Information centres i-site (regional) Provision of a centralised and easily recognised repository for information about local attractions and visitor events. Public Benefit 80% Private Benefit 20% Community Outcomes Progress Hauraki. Benefit to the Community as a Whole Yes Improved economy because of support for tourism. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes People who visit the centres. No Exacerbator Benefit Period No Current year and future periods Capital Funding Required No Funding 60% 20% 10% 10% This funding mix is planned to be phased in over three years as follows Rate - Capital Value - District Rate - Annual Charge Ward Rate Capital Value Ward Business Rate Annual Charge Ward Business Rate type 2018/ / /21 Rate capital value Ward Business 3.3% 6.7% 10% Rate annual charge Ward Business 16.7% 13.3% 10% Revenue and Financing Policy 5a - 28

223 Township coordinators The fostering of business growth in the towns and the coordination of events and promotional activities for the benefit of the community. Public Benefit 50% Private Benefit 50% Community Outcomes Lifestyle Hauraki and Progress Hauraki. Benefit to the Community as a Whole Yes Revitalisation of communities. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required Yes No No No Funding 50% 25% 25% This funding mix is planned to be phased in over three years as follows Specifically supporting local communities. Current year and future periods. Rate - Annual Charge Ward Rate - Capital Value Ward Business Rate Annual Charge Ward Business Rate type 2018/ / /21 Rate capital value Ward Business 8.3% 16.7% 25% Rate Annual Charge Ward Business 41.7% 33.3% 25% Destination Coromandel The marketing of Hauraki (the Southern Coromandel) to both domestic and international tourism markets through regional branding, destination management, events management and the development of the Information Centre. Public Benefit 60% Private Benefit 40% Community Outcomes Progress Hauraki. Benefit to the Community as a Whole Yes Increase in general economic well-being of the District. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes Not identifiable. Exacerbator Benefit Period Capital Funding Required Yes No No Businesses involved in tourism and supporting services. Current year and future periods Funding 100% Rate - Capital Value District differential on commercial/industrial Revenue and Financing Policy 5a - 29

224 Community initiatives Provide leadership to social, cultural & environmental initiatives throughout the District. Public Benefit 100% Private Benefit 0% Community Outcomes Lifestyle Hauraki and Progress Hauraki. Benefit to the Community as a Whole Yes Support through social, cultural and environmental projects. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required Funding: No No No No Current year and future periods Grants and donations District 100% Rate - Uniform Annual General Charge Grants and Donations Ward 100% Rate - Targeted Annual Charge Ward Cycleway 75% 25% Rate - Uniform Annual General Charge Rate Capital Value District differential on commercial/industrial Discretionary Social Fund 100% Investment fund income Social Initiatives 100% Rate Capital Value District CCTV 100% Rate Uniform Annual General Charge Sister Cities 100% Rate Uniform Annual General Charge Revenue and Financing Policy 5a - 30

225 Regulatory Services Activity Tables Animal control To assist the health and safety and well-being of the public by the control of animals in the District. Public Benefit 100% Private Benefit 0% Community Outcomes Interactive Hauraki and Lifestyle Hauraki. Benefit to the Community as a Whole Yes Safer environment for our communities. Benefit to an Identifiable Part of the Community Benefit to an Individual No No Exacerbator Yes People who allow their animals to be a hazard to the community. Benefit Period Capital Funding Required No Funding 85-95% 5-15% Current year and future periods Rate - Uniform Annual General Charge Fees and charges Dog registration To ensure dogs are registered in the District as per the Dog Control Act Public Benefit 75% Private Benefit 25% Community Outcomes Interactive Hauraki and Lifestyle Hauraki. Benefit to the Community as a Whole Yes Community has the knowledge that dogs are registered in the District. The Council s legislative requirement is fulfilled. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes Registered dog owners. No Exacerbator Yes Owners with dogs that require registering. Benefit Period Capital Funding Required Current year Funding 100% Fees and charges No Revenue and Financing Policy 5a - 31

226 Health To improve, promote and protect public health as required by the Food Act 2014, Public Health Act 1956 and the Resource Management Act Public Benefit 100% Private Benefit 0% Community Outcomes Lifestyle Hauraki and Sustainable Hauraki. Benefit to the Community as a Whole Yes Improving public health and community safety. Benefit to an Identifiable Part of the Community Benefit to an Individual No No Exacerbator Yes Properties that require licensing. People who cause nuisance situations that the Council has to manage. Benefit Period Capital Funding Required No Funding 75-90% 10-25% Current year Rate - Uniform Annual General Charge Fees and charges Alcohol licensing To control the sale and supply of alcohol as required by the Sale and Supply of Alcohol Act Public Benefit 100% Private Benefit 0% Community Outcomes Interactive Hauraki and Lifestyle Hauraki. Benefit to the Community as a Whole Yes Improving public health and community safety. Benefit to an Identifiable Part of the Community Benefit to an Individual No No Exacerbator Yes Properties that require licensing. Benefit Period Capital Funding Required No Funding 40-60% 40-60% Current year Rate - Uniform Annual General Charge Fees and charges Revenue and Financing Policy 5a - 32

227 Building services To ensure that buildings are safe and sanitary and to protect other property from physical damage. Public Benefit 35% Private Benefit 65% Community Outcomes Interactive Hauraki, Lifestyle Hauraki and Prepared Hauraki. Benefit to the Community as a Whole Yes The monitoring and enforcement of building and health standards protects the rights and quality of life of all residents and visitors. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes No Building owners and occupiers Exacerbator Yes People that require building consents. Benefit Period Capital Funding Required No Funding 45%-55% 45%-55% Current year and future periods Rate Capital Value - District Fees and charges Resource management implementation To ensure the growth and development of the District is in accordance with the provisions of the District Plan and the Resource Management Act Public Benefit 80% Private Benefit 20% Community Outcomes Interactive Hauraki and Sustainable Hauraki. Benefit to the Community as a Whole Yes Protects community from potential negative environmental impacts. Benefit to an Identifiable Part of the Community Benefit to an Individual Yes Consent holder Yes Neighbouring properties of the consent property. Exacerbator Yes People who are required to apply for a consent Benefit Period Capital Funding Required No Funding 40-70% 30-60% Current year Rate Capital Value District Fees and charges Revenue and Financing Policy 5a - 33

228 Civil defence To provide for planning and preparation for emergencies and for response and recovery in the event of an emergency. Public Benefit 100% Private Benefit 0% Community Outcomes Prepared Hauraki. Benefit to the Community as a Whole Yes People are better protected in the event of a civil defence emergency. Mandatory requirement under current legislation. Benefit to an Identifiable Part of the Community Benefit to an Individual Exacerbator Benefit Period Capital Funding Required No No No No Current year Funding 100% Rate - Uniform Annual General Charge Revenue and Financing Policy 5a - 34

229 Financial statements Hauraki District Council funding impact statement for (whole of council) SOURCES OF OPERATING FUNDING Annual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Plan 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 General rates, uniform annual general charges, rates penalties 9,349 10,268 10,787 11,333 11,614 11,844 12,077 12,315 12,558 12,805 13,058 Targeted rates 17,681 18,692 19,869 21,039 21,813 22,624 23,476 24,371 25,311 26,538 27,853 Subsidies and grants for operating purposes 2,176 2,381 2,429 2,531 2,539 2,601 2,711 2,730 2,801 2,927 2,956 Fees and charges 2,449 2,693 2,774 2,856 2,925 2,998 3,074 3,152 3,234 3,318 3,407 Interest and dividends from investments Local Authorities fuel tax, fines, infringement fees, and other receipts Total Operating Funding (A) 32,103 34,416 36,249 38,157 39,297 40,483 41,763 43,003 44,350 46,045 47,742 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 24,645 27,551 28,220 27,954 28,370 29,176 29,851 30,428 31,370 32,331 33,096 Finance Costs 1,736 2,057 2,331 2,387 2,463 2,413 2,283 2,234 2,273 2,312 2,417 Other operating funding applications Total Applications of Operating Funding (B) 26,381 29,608 30,551 30,341 30,833 31,589 32,134 32,662 33,643 34,643 35,513 Financial SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) 5,722 4,808 5,698 7,816 8,464 8,894 9,629 10,341 10,707 11,402 12,229 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure 1,401 1,603 statements 1,655 1,707 1,757 1,810 1,865 1,927 1,988 2,054 2,124 Development and financial contributions Increase (decrease) in debt 4,500 5,483 1,120 1,526 (998) (2,609) (983) ,100 (390) Gross proceeds from sale of assets Lump sum contributions Other dedicated capital funding Total Sources of Capital Funding (C) 5,901 7,086 2,775 3, (799) 882 2,710 2,775 4,154 1,734 APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand to improve the level of service 6,728 3,304 1,770 2,625 2,069 1,541 3,028 4,790 6,183 7,773 5,703 - to replace existing assets 7,127 8,308 6,436 7,844 6,806 6,169 6,920 7,515 6,388 6,702 7,405 Increase (decrease) in reserves (2,232) 132 (128) Increase (decrease) of investments Total Applications of Capital Funding (D) 11,623 11,894 8,473 11,049 9,223 8,095 10,511 13,051 13,482 15,556 13,963 SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (5,722) (4,808) (5,698) (7,816) (8,464) (8,894) (9,629) (10,341) (10,707) (11,402) (12,229) FUNDING BALANCE ((A - B) + (C - D)) Financial statements 5b - 1

230 Reconciliation of Comprehensive Income Statement to Funding Impact Statement Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 OPERATING SURPLUS/(DEFICIT) 162 (1,478) (828) 1,060 1,547 1,803 2,296 2,809 2,986 3,278 3,779 Depreciation/Assets written off 7,813 8,173 8,472 8,759 8,978 9,214 9,521 9,787 10,049 10,527 10,935 Subsidies and grants for capital expenditure (1,704) (1,604) (1,656) (1,705) (1,756) (1,811) (1,867) (1,926) (1,988) (2,054) (2,124) Development and financial contributions Less Doubtful Debts Vested Asset Income (533) (267) (274) (281) (288) (295) (303) (311) (321) (330) (341) Gains and Losses (16) (16) (16) (17) (17) (17) (18) (18) (19) (19) (20) SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) 5,722 4,808 5,698 7,816 8,464 8,894 9,629 10,341 10,707 11,402 12,229 Financial statements 5b - 2

231 Prospective statement of financial position Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 ASSETS Current Assets 93 Cash and cash equivalents ,134 1,304 1,473 1,640 1,805 5,455 Exchange transaction receivables 4,907 5,028 5,155 5,290 5,435 5,593 5,763 5,946 6,146 6,363 1,796 Non-Exchange transaction receivables 3,739 3,831 3,928 4,030 4,141 4,261 4,391 4,531 4,683 4,848 1,200 Non-current assets held for resale Inventories Other Financial Assets ,782 Total Current Assets 9,547 9,623 10,020 10,429 10,857 11,307 11,777 12,269 12,788 13,335 Current Liabilities 6,202 Trade and other payables 5,263 5,393 5,529 5,673 5,829 5,999 6,181 6,378 6,592 6, Landfill Aftercare Provision Borrowings , ,698 Employee Entitlements 1,853 1,901 1,948 1,998 2,053 2,107 2,175 2,244 2,324 2,409 7,983 Total Current Liabilities 7,116 7,294 8,475 10,280 8,865 8,106 8,356 8,622 9,306 9, Working Capital 2,431 2,329 1, ,992 3,201 3,421 3,647 3,482 4,101 Non-Current Assets 568,340 Property, Plant & Equipment 555, , , , , , , , , , Biological Assets (Forestry) 1,558 1,558 1,558 1,558 1,558 1,558 1,558 1,558 1,558 1, Intangible Assets - Computer Software Investments in CCO's and similar entities 11 - Investments in Associates Investments in Joint Ventures Investments in Other Entities Financial statements 5b - 3

232 Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $ Total Investments in CCO's and similar entities Derivative Financial Instruments Other Financial Assets ,660 Total Non-Current Assets 559, , , , , , , , , ,837 Non-Current Liabilities 394 Employee Entitlements Landfill Aftercare Provision ,000 Derivative Financial Instruments ,003 Borrowings 46,625 47,745 48,273 45,664 44,681 44,681 45,464 46,251 47,961 47,961 50,103 Total Non-Current Liabilities 47,186 48,315 48,852 46,254 45,282 45,294 46,090 46,891 48,616 48, ,356 NET ASSETS 514, , , , , , , , , ,305 Represented by: EQUITY 412,286 Accumulated Funds 410, , , , , , , , , ,522 3,188 Other reserves 3,040 3,183 3,326 3,469 3,612 3,755 3,898 4,041 4,184 4, ,882 Asset revaluation reserve 101, , , , , , , , , , ,356 TOTAL EQUITY 514, , , , , , , , , ,305 Financial statements 5b - 4

233 Prospective statement of changes in net assets/equity Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 TOTAL EQUITY 510,422 As at 1 July 514, , , , , , , , , ,505 10,934 Comprehensive Revenue & Expense for the year ,426 13,070 3,778 18,910 15,691 5,408 22,863 18,803 6, ,356 As at 30 June 514, , , , , , , , , ,305 TOTAL EQUITY CONSISTS OF: Accumulated Funds 412,302 As at 1 July 411, , , , , , , , , ,886 Transfers from/(to): 357 Restricted Reserves (143) (143) (143) (143) (143) (143) (143) (143) (143) (143) 162 Surplus/(Deficit) for the year (1,478) (828) 1,060 1,547 1,803 2,296 2,809 2,986 3,278 3, ,821 As at 30 June 410, , , , , , , , , ,522 Other Reserves 3,010 As at 1 July 2,897 3,040 3,183 3,326 3,469 3,612 3,755 3,898 4,041 4, Transfers to Retained Earnings (56) (56) (56) (56) (56) (56) (56) (56) (56) (56) (500) Transfers from Retained Earnings ,653 As at 30 June 3,040 3,183 3,326 3,469 3,612 3,755 3,898 4,041 4,184 4,327 Financial statements 5b - 5

234 Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Other Reserves consists of: 0 Trusts & Bequests ,830 Financial Contributions 1,447 1,447 1,447 1,447 1,447 1,447 1,447 1,447 1,447 1, Council Created Reserves 1,593 1,736 1,879 2,022 2,165 2,308 2,451 2,594 2,737 2,880 2,653 As at 30 June 3,040 3,183 3,326 3,469 3,612 3,755 3,898 4,041 4,184 4,327 Asset Revaluation Reserves 95,110 As at 1 July 99, , , , , , , , , ,435 10,772 Revaluation gains/(losses) 1,779 14,254 12,010 2,231 17,107 13,395 2,599 19,877 15,525 3, ,882 As at 30 June 101, , , , , , , , , ,456 Asset Revaluation Reserves consist of: Operational Assets 23,410 Land 25,189 25,189 25,189 27,420 27,420 27,420 30,019 30,019 30,019 33,040 12,240 Buildings 11,152 11,152 12,799 12,799 12,799 14,782 14,782 14,782 17,056 17,056 Infrastructural Assets 10,639 Wastewater System 7,996 7,996 10,752 10,752 10,752 13,788 13,788 13,788 17,312 17,312 11,480 Water System 6,940 6,940 10,720 10,720 10,720 14,881 14,881 14,881 19,714 19,714 4,960 Drainage Network 2,459 2,459 6,286 6,286 6,286 10,502 10,502 10,502 15,396 15,396 43,153 Land Transport Network 47,701 61,955 61,955 61,955 79,062 79,061 79,061 98,938 98,938 98, ,882 Total 101, , , , , , , , , , ,356 As at 30 June 514, , , , , , , , , ,305 Financial statements 5b - 6

235 Prospective statement of comprehensive revenue and expense Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 REVENUE 27,032 Rates 28,960 30,657 32,372 33,427 34,468 35,553 36,685 37,869 39,344 40,910 3,577 Subsidies and Grants 3,984 4,084 4,235 4,295 4,412 4,578 4,656 4,789 4,981 5,080 0 Development/Financial Contributions ,430 Other Revenue 3,357 3,454 3,551 3,636 3,726 3,820 3,917 4,019 4,124 4,236 0 Other Gains/(Losses) ,039 TOTAL REVENUE 36,301 38,195 40,158 41,358 42,606 43,951 45,258 46,677 48,449 50,226 EXPENDITURE 11,278 Employee Benefit Expenses 12,131 12,325 12,534 12,760 12,990 13,236 13,488 13,758 14,033 14,327 7,815 Depreciation and Amortisation 8,173 8,472 8,762 8,978 9,215 9,520 9,791 10,049 10,528 10,935 1,736 Finance Costs 2,057 2,331 2,387 2,463 2,413 2,283 2,234 2,273 2,312 2,417 0 (Gains)/Losses ,064 Other Expenses 15,418 15,895 15,415 15,610 16,185 16,616 16,936 17,611 18,298 18,768 33,893 TOTAL EXPENDITURE 37,779 39,023 39,098 39,811 40,803 41,655 42,449 43,691 45,171 46, Share of Joint Venture Surplus/(Deficit) Share of Associates Surplus/(Deficit) SURPLUS/(DEFICIT) BEFORE TAX (1,478) (828) 1,060 1,547 1,803 2,296 2,809 2,986 3,278 3,779 0 Income Tax Expense SURPLUS/(DEFICIT) AFTER TAX (1,478) (828) 1,060 1,547 1,803 2,296 2,809 2,986 3,278 3,779 OTHER COMPREHENSIVE REVENUE & EXPENSE 10,772 Gain/(Loss) on Revaluation 1,779 14,254 12,010 2,231 17,107 13,395 2,599 19,877 15,525 3,021 0 Movement in fair value of available for sale financial instruments ,934 TOTAL COMPREHENSIVE REVENUE & EXPENSE ,426 13,070 3,778 18,910 15,691 5,408 22,863 18,803 6,800 Financial statements 5b - 7

236 Prospective cash flow statement Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash Flows from operating activities 27,237 Receipts from rates revenue 28,787 30,444 32,148 33,190 34,211 35,276 36,386 37,545 38,992 40,529 0 Interest received Dividends received ,948 Receipts from other revenue 7,341 7,538 7,787 7,931 8,138 8,398 8,573 8,808 9,105 9,316 (24,504) Payments to suppliers and employees (27,670) (28,308) (28,037) (28,452) (29,246) (29,919) (30,473) (31,409) (32,351) (33,101) (1,736) Interest paid (2,057) (2,331) (2,387) (2,463) (2,413) (2,283) (2,234) (2,273) (2,312) (2,417) 0 Goods and services tax (net) ,945 Net cash from operating activities 6,401 7,343 9,511 10,206 10,690 11,472 12,252 12,671 13,434 14,327 Cash Flows from investing activities 101 Proceeds from sale of property, plant & equipment Community Loan payments received Purchase of intangible assets (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (18,098) Purchase of property, plant & equipment (11,662) (8,500) (10,764) (8,936) (7,809) (10,217) (12,765) (13,189) (15,267) (13,672) 0 Purchase of other financial assets (600) Purchase of other financial assets (100) Community Loan payments received (70) Forestry asset development Investment in Associates (18,757) Net cash from investing activities (11,762) (8,600) (10,864) (9,036) (7,909) (10,317) (12,865) (13,289) (15,367) (13,772) Financial statements 5b - 8

237 Annual Plan Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/ / / / / / / / / / /28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash Flows from financing activities 9,000 Proceeds from borrowings 5,483 1,120 1, , Receipts from Finance Lease Liabilities Repayment of borrowings (998) (2,609) (983) (390) 0 Repayment of Finance Lease Liabilities ,000 Net cash from financing activities 5,483 1,120 1,526 (998) (2,609) (983) ,100 (390) Net (decrease) increase in cash, cash (1,812) equivalents and bank overdrafts 122 (137) Cash, cash equivalents and bank overdrafts 1,905 at the beginning of the year ,134 1,304 1,473 1,640 Cash, cash equivalents and bank 93 overdrafts at the end of the year ,134 1,304 1,473 1,640 1,805 Financial statements 5b - 9

238 Reserve funds statement Opening balance Deposited into reserve Withdrawn from reserve Closing balance Activity that the reserve relates to $000 $000 $000 $000 Other Reserves District Community Recreation Plains Community Recreation Paeroa Community Recreation Waihi Community Recreation Dist. Community Projects Assistance 450 1,990 (560) 1,880 All activities Quarry Renewal 1, ,000 Corporate 2,897 1,990 (560) 4,327 Asset Revaluation Reserves Land 23,410 10, ,706 All activities Buildings 11,152 6, ,284 All activities Wastewater System 7,996 11, ,678 Wastewater Water System 6,940 16, ,958 Water Drainage Network 2,459 16, ,681 Land drainage Roading Network 47,701 47, ,749 Land transport 99, , ,056 District Community Projects Assistance Fund This reserve fund is to provide funding for community projects. District, Paeroa, Plains, and Waihi Community Recreational Funds These reserve funds are historic, and were used to accumulate Financial Contributions before changing to a Development Contributions regime. The balances will be used to fund Recreation and Community Facilities capital works. Quarry Renewal Fund This reserve fund is to provide funding for the cost of rehabilitating Tetley s Quarry post-closure. Asset Revaluation Reserves These reserve funds are to hold the net balances from gains/losses from asset revaluations. Financial statements 5b - 10

239 Notes supporting our financial statements Note 1: Statement of Accounting Policies for the Forecast Years Reporting entity The Hauraki District Council (HDC) is a territorial local authority governed by the Local Government Act 2002 (LGA) and is domiciled and operates in New Zealand. The relevant legislation governing the HDC s operations includes the LGA and the Local Government (Rating) Act HDC provides local infrastructure, local public services, and performs regulatory functions to our communities. HDC does not operate to make a financial return. HDC has designated itself as a public benefit entity (PBE) for financial reporting purposes. These prospective financial statements are for Hauraki District Council as a separate legal entity. Consolidated perspective financial statements comprising of the Council and its subsidiaries and associates have not been prepared. Basis of preparation The financial statements have been prepared on the going concern basis, and the accounting policies have been applied consistently throughout the period. Budget figures The budget figures are those approved by the Council in its 2017/18 annual plan. The budget figures have been prepared in accordance with PBE FRS 42, using accounting policies that are consistent with those adopted by the Council in preparing these financial statements. Standards issued and not yet effective that have been early adopted Standards and amendments issued but not yet effective that have been early adopted are: Impairment of Revalued Assets In April 2017, the XRB issued Impairment of Revalued Assets, which now scopes in revalued property, plant and equipment into the impairment accounting standards. Previously, only property, plant and equipment assets measured at cost were scoped into the impairment accounting standards. The Council has early adopted this amendment in preparing its 30 June 2017 financial statements and in preparing the financial statements for this LTP. From the 30 June 2017 year onwards, Council is required to assess at each reporting date whether there is any indication that an asset may be impaired. If any indication exists, the Council is required to assess the recoverable amount of that asset and recognise an impairment loss if the recoverable amount is less than the carrying amount. The Council can therefore impair a revalued asset without having to revalue the entire class-of-asset to which the asset belongs. Standards issued and not yet effective that have not been early adopted Standards and amendments, issued but not yet effective that have not been early adopted, and which are relevant to the Council and group are: Interests in other entities In January 2017, the XRB issued new standards for interests in other entities (PBE IPSAS 34-38). These new standards replace the existing standards for interests in other entities (PBE IPSAS 6-8). The new standards are effective for annual periods beginning on or after 1 January 2019, with early application permitted. The Council plans to apply the new standards in preparing the 30 June 2020 financial statements. The Council and group has not yet assessed the effects of these new standards. Financial statements 5b - 11

240 Financial instruments In January 2017, the XRB issued PBE IFRS 9 Financial Instruments. PBE IFRS 9 replaces PBE IPSAS 29 Financial Instruments: Recognition and Measurement. PBE IFRS 9 is effective for annual periods beginning on or after 1 January 2021, with early application permitted. The main changes under PBE IFRS 9 are: New financial asset classification requirements for determining whether an asset is measured at fair value or amortised cost. A new impairment model for financial assets based on expected losses, which may result in the earlier recognition of impairment losses. Revised hedge accounting requirements to better reflect the management of risks. The Council plans to apply this standard in preparing its 30 June 2022 financial statements. The Council and group has not yet assessed the effects of the new standard. Statement of compliance The prospective financial statements have been prepared in accordance with the requirements of the LGA, which includes the requirement to comply with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with PBE FRS42 Prospective Financial Statements, NZ PBE (Tier1) IPSAS and other applicable Financial Reporting Standards, as appropriate for New Zealand public benefit entities. It is a requirement of the LGA to present prospective financial statements that span 10 years as part of a Long Term Plan. This provides an opportunity for ratepayers and residents to review the prospective financial results and position of HDC. The information in these statements may not be appropriate for purposes other than those prescribed above. Prospective financial statements are revised annually to reflect updated assumptions and costs. These financial statements are for the period 1 July 2018 to 30 June 2028 and are presented in New Zealand dollars, and rounded to the nearest thousand ($000), unless otherwise stated. The accounting policies set out below have been applied consistently to all periods presented in these prospective financial statements. The prospective financial statements for each year of the LTP were authorised for issue by the Hauraki District Council on 27 June HDC is responsible for the prospective financial statements presented, including underlying assumptions underlying prospective financial statements and other disclosures. There is no intent to update the statements subsequent to presentation. To meet all requirements of the local government legislation we provide three sets of financial information as set out in the table below. Financial statements 5b - 12

241 Set of financial information Usual Generally Accepted Accounting Principles (GAAP) regulated statements of financial position, comprehensive revenue and expenses, etc. Non-GAAP compliant Funding Impact Statements (FIS s) Annual Plan disclosure statement as required by the Local Government (Financial Reporting and Prudence) Regulations Key differences between these three sets of information The GAAP regulated financial statements must adhere to GAAP requirements; The FIS is intended to make the sources and applications of HDC funds more transparent to its stakeholders than might be the case if only the usual GAAP financial statements were provided.the FIS is prescribed by the Local Government (Financial Reporting and Prudence) Regulations 2014 and is required by the LGA; and The Long Term Plan disclosure statement is to disclose HDC s planned financial performance in relation to various benchmarks to help our communities assess whether HDC is prudently managing its revenues, expenses, assets, liabilities, and general financial dealings. Measurement Base The financial statements have been prepared on a historical cost basis, except where modified by the revaluation of land and buildings, certain infrastructural assets, investment property, biological assets and financial instruments. Judgements and estimations The preparation of prospective financial statements using public benefit entity (PBE) standards requires the use of judgements, estimates and assumptions. Where material, information on the main assumptions is provided in the relevant accounting policy. The estimates and assumptions are based on historical experience as well as other factors that are believed to be reasonable under the circumstances. Subsequent actual results may differ from these estimates. The estimates and assumptions are reviewed on an ongoing basis and adjustments are made where necessary. Judgements that have a significant effect on the financial statements and estimates, with a significant risk of material adjustment in the next year, are discussed in the relevant notes within this section. Significant judgements and estimations include asset revaluations, impairments, certain fair value calculations and provisions. Subsidiaries HDC has no subsidiaries. Associates HDC s associate investment is accounted for in the financial statements using the equity method. An associate is an entity over which HDC has significant influence and that is neither a subsidiary nor an interest in a joint venture. The investment in an associate is initially recognised at cost and the carrying amount in the financial statements is increased or decreased to recognise HDC s share of the surplus or deficit of the associate after the date of acquisition. Distributions received from an associate reduce the carrying amount of the investment. HDC discontinues recognising its share of further deficits if the share of deficits of an associate equals or exceeds its interest in the associate. After HDC s interest is reduced to zero, additional deficits are provided for, and a liability is recognised, only to the extent that HDC has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports surpluses, HDC will resume recognising its share of those surpluses only after its share of the surpluses equals the share of deficits not recognised. Where HDC transacts with an associate, surpluses or deficits are eliminated to the extent of HDC s interest in the associate. Financial statements 5b - 13

242 Joint ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. HDC accounts for its interest in a jointly controlled operation using the equity method. HDC s share of joint venture net revenue is included in the surplus or deficit. Revenue Revenue is measured at the fair value of consideration received or receivable. Revenue may be derived from either exchange or non-exchange transactions. Exchange transactions Exchange transactions are transactions where HDC receives assets (primarily cash) or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services, or use of assets) to another entity in exchange. Non-exchange transactions Non-exchange transactions are transactions that do not fall within the above definition of exchange transactions. In a non-exchange transaction, HDC either receives value or gives value to another entity without directly giving or receiving approximately equal value in exchange. Rates revenue Rates are set by HDC annually by resolution and relate to a particular financial year. All ratepayers are invoiced within the financial year for which the rates have been set. Rates revenue is recognised proportionately throughout the year. Rates revenue is classified as non-exchange except for water by volume rates which are classed as exchange revenue. Late payment penalties arising from overdue rates are recognised as revenue when rates become overdue. Rates remissions are recognised as a reduction of rates revenue when HDC has received an application that satisfies its rates remission policy. Metered water rates revenue Water billing revenue is recognised on an accrual basis. Unbilled water usage, as a result of unread meters at year end, is accrued on an average usage basis. Roading subsidies HDC receives funding assistance from the New Zealand Transport Agency, which subsidises part of HDC s maintenance and capital costs of maintaining the local roading infrastructure. The subsidies are recognised as revenue upon entitlement as conditions pertaining to eligible expenditure have been fulfilled. Grants and reimbursements Grants and reimbursements are recognised as revenue at their fair value where there is reasonable assurance that the payment will be received and all conditions will be complied with. Where there is an obligation to return the funds if conditions of the grant are not net, the grants are recorded as grants received in advance and not recognised as revenue until the conditions of the grant are satisfied. Provision of Services Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction at balance date, based on the actual service provided as a percentage of the total services to be provided. Sales of Goods Sales of goods are recognised when a product is sold to the customer. The recorded revenue is the gross amount of the sale. Financial statements 5b - 14

243 Vested Assets Where a physical asset is acquired for nil or nominal consideration the fair value of the asset received is recognised as revenue. Assets vested in HDC are recognised as revenue when control over the asset is obtained. A liability is recognised only if HDC expects that it will need to return or pass the asset to another party. The fair value of vested or donated assets is usually determined by reference to the cost of constructing the asset. For assets received from property developments, the fair value is based on construction price information provided by the property developer. Commissions and Fees Where revenue is derived by acting as an agent for another party, the revenue that is recognised is the commission or fee on the transaction. Interest and Dividends Interest revenue is recognised using the effective interest method. Interest revenue on an impaired financial asset is recognised using the original effective interest rate. Dividends are recognised when the right to receive payment has been established. Development contributions Development contributions are recognised as revenue when HDC provides, or is able to provide, the service for which the contribution was paid. In cases where contributions are collected in advance to fund a service that is not currently provided in an area, the contribution is initially recognised as revenue in advance, until such time as the service is provided. Construction contracts During the life of the Long Term Plan, HDC does not foresee itself in engaging in construction contracts as a contractor, apart from minor public works. Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred. Grant expenditure Non-discretionary grants are those grants that are awarded if the grant application meets the specified criteria and are recognised as expenditure when an application that meets the specified criteria for the grant has been received. Discretionary grants are those grants where HDC has no obligation to award on receipt of the grant application and are recognised as expenditure when a successful applicant has been notified of HDC s decision. Taxation Goods and Services Tax (GST) The financial statements have been prepared on a GST exclusive basis with the exception of accounts receivable and accounts payable, which are stated with GST included. Where GST is not recoverable as input tax, it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position. The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST. Fringe Benefit Tax (FBT) Where a fringe benefit tax liability arises this has been charged to operating expenditure. Financial statements 5b - 15

244 Leases Finance leases A finance lease is a lease that transfers to the lessee substantially all the risks and rewards incidental to ownership of an asset, whether or not title is eventually transferred. At the commencement of the lease term, HDC recognises finance leases as assets and liabilities in the statement of financial position at the lower of the fair value of the leased item or the present value of the minimum lease payments. The amount recognised as an asset is depreciated over its useful life. If there is no certainty as to whether HDC will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life. The finance charge is charged to surplus or deficit, over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. Operating leases An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. Trade and other receivables Trade and other receivables are recorded at their face value, less any provision for impairment. Impairment of a receivable is established when there is objective evidence that HDC will not be able to collect amounts due according to the original terms of the receivable. The amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. Inventories Inventory held for use in the production of goods and services on a commercial basis is valued at the lower of cost and net realisable value. The cost of purchased inventory is determined using the first-in first-out (FIFO) method. Inventories held for distribution or consumption in the provision of services that are not supplied on a commercial basis are measured at cost (using the FIFO method), adjusted, when applicable, for any loss of service potential. Where inventory is acquired at no cost or for nominal consideration, the cost is the current replacement cost at the date of acquisition. The amount of any write-down for the loss of service potential or from cost to net realisable value is recognised in the surplus or deficit in the period of the write-down. When land held for development and future resale is transferred from investment property/property, plant, and equipment to inventory, the fair value of the land at the date of the transfer is its deemed cost. Costs directly attributable to the developed land are capitalised to inventory, with the exception of infrastructural asset costs which are capitalised to property, plant, and equipment. Financial statements 5b - 16

245 Financial assets HDC classifies its financial assets into four categories. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. Financial assets and liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through surplus or deficit in which case the transaction costs are recognised in the surplus or deficit. Purchases and sales of investments are recognised on trade-date, the date on which HDC commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and HDC has transferred substantially all the risks and rewards of ownership. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used is the current bid price. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. HDC uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The four categories of financial assets are as follows. 1. Financial assets at fair value through surplus or deficit Financial assets at fair value through surplus or deficit include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term or it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of short-term profittaking. Derivatives are also categorised as held for trading unless they are designated into a hedge accounting relationship for which hedge accounting is applied. Financial assets acquired principally for the purpose of selling in the short-term or part of a portfolio classified as held for trading are classified as a current asset. Derivatives are classified as current if they mature within 12 months of balance date, and are classified as non-current if they mature greater than 12 months after balance date. After initial recognition, financial assets in this category are measured at their fair values with gains or losses on remeasurement recognised in the surplus or deficit. 2. Loans and Receivables These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are included in non-current assets. After initial recognition, they are measured at amortised cost, using the effective interest method, less impairment. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit. Loans to community organisations made at nil or below-market interest rates are initially recognised at the present value of their expected future cash flows, discounted at the current market rate of return for a similar financial instrument. The loans are subsequently measured at amortised cost using the effective interest method. The difference between the face value and present value of the expected future cash flows of the loan is recognised in the surplus or deficit as a grant. 3. Held to maturity investments Held to maturity investments are assets with fixed or determinable payments and fixed maturities that HDC has the positive intention and ability to hold to maturity. After initial recognition they are measured at amortised cost using the effective interest method less impairment. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit. They are included in current assets, except for those with maturities greater than 12 months after balance date, which are included in non-current assets. Financial statements 5b - 17

246 HDC does not hold any assets in this category at present. 4. Financial assets at fair value through other comprehensive revenue and expense Financial assets at fair value through other comprehensive revenue and expense are those that are designated into the category at initial recognition or are not classified in any of the other categories above. They are included in noncurrent assets unless management intends to dispose of, or realise, the investment within 12 months of balance date. HDC includes in this category: investments that it intends to hold long-term but which may be realised before maturity; and shareholdings that it holds for strategic purposes. These investments are measured at their fair value, with gains and losses recognised in other comprehensive revenue and expense, except for impairment losses, which are recognised in the surplus or deficit. On derecognition, the cumulative gain or loss previously recognised in other comprehensive revenue and expense is reclassified from equity to the surplus or deficit. Impairment of financial assets Loans and receivables Impairment of a loan or a receivable is established when there is objective evidence that HDC will not be able to collect amounts due according to the original terms. Significant financial difficulties of the debtor/issuer, probability that the debtor/issuer will enter into bankruptcy, and default in payments are considered indicators that the asset is impaired. The amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. For debtors and other receivables, the carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the surplus or deficit. When the receivable is uncollectible, it is written off against the allowance account. Overdue receivables that have been renegotiated are reclassified as current (i.e. not past due). For term deposits, local authority stock, government stock and community loans, impairment losses are recognised directly against the instruments carrying amount. At each balance sheet date HDC assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in the surplus or deficit. Financial assets at fair value through other comprehensive revenue and expense For equity investments, a significant or prolonged decline in the fair value of the investment below its cost is considered objective evidence of impairment. For debt investments, significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default in payments are considered objective indicators that the asset is impaired. If impairment evidence exists for investments at fair value through other comprehensive revenue and expense, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the surplus or deficit) recognised in other comprehensive revenue and expense is reclassified from equity to the surplus or deficit. Equity instrument impairment losses recognised in the surplus or deficit are not reversed through the surplus or deficit. If in a subsequent period the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed in the surplus or deficit. Accounting for derivative financial instruments HDC uses derivative financial instruments to manage exposure to foreign exchange and interest rate risks arising from financing activities. In accordance with its Investment and Liability Management Policy, HDC does not hold or issue derivative financial instruments for trading purposes. HDC s interest rate swap portfolio was valued as at 30 June 2017 by Council staff using software provided by Hedgebook, and the Long Term Plan assumes no Financial statements 5b - 18

247 change to this valuation. The movement in fair value has been included in surplus/(deficit) in the Statement of Comprehensive Revenue and Expense. HDC did not hold any forward foreign exchange contracts at balance date. Non-current assets held for sale The only asset currently included in this category is property held for sale. The majority of property intended for sale relates to subdivisions that HDC has developed in Kerepehi and Ngatea. HDC has capitalised the cost of the land, design/survey fees, power and telephone reticulation, and other expenses directly associated with the project. HDC considers the amounts capitalised to be less than net realisable value. Expenditure incurred on the development of roading, including footpaths and kerb and channelling, wastewater and water reticulation and stormwater have not been included. The cost of these assets has been added to the appropriate infrastructural classification. Non-current assets held for sale are classified as held for sale if their carrying amount will be recovered principally through a sale transaction, not through continuing use. Non-current assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment losses for write-downs of non-current assets held for sale are recognised in the surplus or deficit. Any increases in fair value (less costs to sell) are recognised up to the level of any impairment losses that have been previously recognised. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Property, plant and equipment This category of assets includes: operational assets, being tangible assets such as land, buildings, library books, plant and equipment, and motor vehicles restricted assets, being property, owned by HDC which provide a benefit or service to the community and cannot be disposed of because of legal or other restrictions, such as parks and reserves, or landfill post closure infrastructure assets, being the fixed utility systems owned by HDC. Each infrastructural asset class includes all items that are required for the network to function, for example, wastewater reticulation includes reticulation piping and wastewater pump stations. These are generally not regarded as tradable. Land (operational and restricted) is measured at fair value, and buildings (operational and restricted), library books, and infrastructural assets (except land under roads) are measured at fair value less accumulated depreciation. All other asset classes are measured at cost less accumulated depreciation and impairment losses. Revaluation Land and buildings (operational and restricted), library books, and infrastructural assets (except land under roads) are revalued with sufficient regularity to ensure that their carrying amount does not differ materiality from the assets fair value and at least every three years. The carrying values of revalued assets are assessed annually to ensure that they do not differ materially from the assets fair values. If there is a material difference, then the off-cycle asset classes are revalued. Revaluations of property, plant and equipment are accounted for on a class of asset basis. The net revaluation results are credited or debited to other comprehensive revenue and expense and are accumulated to an asset revaluation reserve in equity for that class of asset. Where this would result in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive revenue and expense but is recognised in the surplus or deficit. Any subsequent increase on revaluation that reverses a previous decrease in Financial statements 5b - 19

248 value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then recognised in other comprehensive revenue and expense. Additions The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to HDC and the cost of the item can be measured reliably. In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired through a non-exchange transaction, it is recognised at fair value as at the date of acquisition. Work in progress is recognised at cost less impairment and is not depreciated. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to HDC and the cost of the item can be measured reliably. The costs of day to day servicing of property, plant and equipment are recognised in the surplus or deficit as they are incurred. Land All land was valued as at 30 June 2016 plus additions/development at cost, less disposals. Land valuations were completed by Quotable Value NZ, qualified independent valuers, and confirmed as being suitable for financial reporting. Over the tenure of the 2018 Long Term Plan it is assumed that land will be revalued on 30 June 2019; 2022; 2025; and Land is valued at fair value using market-based evidence based on its highest and best use with reference to comparable land values. Adjustments have been made to the unencumbered land value where there is a designation against the land or the use of the land is restricted because of reserve or endowment status. These adjustments are intended to reflect the negative effect on the value of the land where an owner is unable to use the land more intensely. Buildings All buildings were valued at 1 July 2014 plus additions/development at cost, less disposals. Building valuations were completed by independent valuers, and confirmed as being suitable for financial reporting. Over the tenure of the 2018 Long Term Plan it is assumed that buildings will be revalued on 1 July 2017; 2020; 2023; and Specialised buildings were valued by SPM Assets Ltd at fair value using depreciated replacement cost because no reliable market data is available for such buildings. Depreciated replacement cost is determined using a number of significant assumptions. Significant assumptions include: the replacement asset is based on the replacement with modern equivalent assets with adjustments where appropriate for obsolescence due to over-design or surplus capacity the replacement cost is derived from recent construction contracts of similar assets and Property Institute of New Zealand cost information the remaining useful life of assets is estimated straight-line depreciation has been applied in determining the depreciated replacement cost value of the asset. Non-specialised buildings (for example, residential buildings) were valued by Curnow Tizard Ltd at fair value using market-based evidence. Market rents and capitalisation rates were applied to reflect market value. The valuation of earthquake prone buildings does not include any adjustment for estimated building strengthening and costs or any association lost rental during the time to undertake the strengthening work. Financial statements 5b - 20

249 Infrastructural assets Roading assets were valued by the independent valuers, Beca Limited as at 30 June Land under roads was valued by the independent valuers, Opus International Consultants Ltd as at 30 June 2002 using the average market value of land by ward and land use category. Since the introduction of International Financial Reporting Standards, on 30 June 2007, land under roads has been recognised at deemed cost Over the tenure of the 2018 Long Term Plan it is assumed that roading assets will be revalued on 30 June 2020; 2023; and Water (with the exception of the Waihi water treatment plant), wastewater, stormwater and drainage assets were valued by internal staff which was peer reviewed by Waikato Local Authority Shared Services (WLASS) as at 1 July Over the tenure of the 2018 Long Term Plan it is assumed that water, wastewater, stormwater and drainage assets will be revalued on 1 July 2020; 2023; and Infrastructural assets are also carried at fair value, which is deemed to be depreciated replacement cost because the assets are of a specialised nature. The depreciated replacement costs are determined on the basis of valuations prepared every three years. The revaluation process involves assessing the current optimised replacement cost on a brownfields basis, using highest and best use basis and remaining useful lives. Library books These are valued annually and are valued at depreciated replacement cost by HDC staff. Estimates of the remaining useful life over which the asset will be depreciated have been determined based on HDC s policy on book replacement, as well as historical book replacement data. Vehicles, equipment and technology These assets are carried at cost less accumulated depreciation. Disposals Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the surplus or deficit. When re-valued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to retained earnings. Depreciation Land and assets under construction are not depreciated. All other assets are depreciated on a straight line basis that will spread the cost of the asset, less any residual value, over the expected useful life of the asset. The useful lives of assets have been identified on a component by component basis. A summary of the range of expected useful lives of assets follows: Roading: Seal (6-60 years) Base course ( years) Surface Water Channels (10-75 years) Retaining Walls (85 years) Railings (20-50 years) Culverts (75 years) Footpaths (15-75 years) Bridges ( years) Street lighting (25 years) Signs ( years) Buildings: Structure (80 years) Roof cladding (30 years) Electrical/Mechanical (25 years) Plumbing (30 years) Internal wall linings (25 years) Financial statements 5b - 21

250 Lifts (25 years) Air Conditioners (15 years) Site Improvements (25 years) Other Assets: Water Reticulation ( years) Water Treatment ( years) Wastewater ( years) Computer Hardware (3-5 years) Stormwater/Drainage ( years) Fixtures and Fitting (5-10 years) Communications Equipment (5 years) Heavy Plant and Machinery (8-15 years) Light Plant (2-5 years) Motor Vehicles Cars and Utilities (3-7 years) Library Books (10 years) Assets purchased during the financial year are depreciated on a remaining month s basis. Intangible assets Software acquisition and development Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software are recognised as an expense when incurred. Costs that are directly associated with the development of software for internal use by HDC, are recognised as an intangible asset. Direct costs include the software development employee costs and an appropriate portion of relevant overheads. Staff training costs are recognised in the surplus or deficit when incurred. Amortisation The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the surplus or deficit. The useful lives of major classes of intangible assets have been estimated as follows: computer software 3-10 years (10%-33%) Carbon Credits Purchased carbon credits are recognised at cost on acquisition. Free carbon credits received from the Crown are recognised at fair value on receipt. They are not amortised, but are instead tested for impairment annually. They are derecognised when they are used to satisfy carbon emission obligations. Forestry assets Forestry assets are independently re-valued by PF Olsen & Company, a registered forest valuer annually at fair value less estimated point of sale costs. Fair value is determined based on the present value of expected net cash flows discounted at a current market determined pre-tax rate. Gains or losses arising on initial recognition of biological assets at fair value less estimated point of sale costs and from a change in fair value less estimated point of sale costs are recognised in the surplus or deficit. The costs to maintain the forestry assets are included in the surplus or deficit. Investment property Properties leased to third parties under operating leases are classified as investment property unless the property is held to meet service delivery objectives, rather than to earn rentals or for capital appreciation. Financial statements 5b - 22

251 Investment property is measured initially at its cost, including transaction costs. After initial recognition, HDC measures all investment property at fair value as determined annually by an independent valuer. Gains or losses arising from a change in the fair value of investment property are recognised in the surplus or deficit. Impairment of property, plant and equipment, and intangible assets Intangible assets subsequently measured at cost that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Property, plant and equipment and intangible assets subsequently measured at cost that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. If an asset s carrying amount exceeds its recoverable amount the asset is impaired and the carrying amount is written down to the recoverable amount. The total impairment loss is recognised in the surplus or deficit. The reversal of an impairment loss is recognised in the surplus or deficit. For assets not carried at a revalued amount, the total impairment loss is recognised in the surplus or deficit. The reversal of an impairment loss on a revalued asset is credited to other comprehensive revenue and expense and increases the asset revaluation reserve for that class of asset. However, to the extent that an impairment loss for that class of asset was previously recognised in the surplus or deficit, a reversal of the impairment loss is also recognised in the surplus or deficit. For assets not carried at a revalued amount, the reversal of an impairment loss is recognised in the surplus or deficit. Value in use for non-cash generating assets Non-cash-generating assets are those assets that are not held with the primary objective of generating a commercial return. For non-cash-generating assets, value in use is determined using an approach based on either a depreciated replacement cost approach, restoration approach, or a service units approach. The most appropriate approach used to measure value in use depends on the nature of the impairment and availability of information. Value in use for cash-generating assets Cash generating assets are those assets that are held with the primary objective of generating a commercial return. The value in use for cash-generating assets is the present value of expected future cash flows. Trade and other payables Trade and other payables are recognised at face value. Employee benefits Short-term benefits Employee benefits that HDC expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months, and sick leave. HDC recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave Financial statements 5b - 23

252 entitlement that can be carried forward at balance date, to the extent that HDC anticipates it will be used by staff to cover those future absences. The liability and an expense are recognised for bonuses where HDC has a contractual obligation or where there is a past practice that has created a constructive obligation. Long-term benefits Long service leave and retirement leave entitlements that are payable beyond 12 months have been calculated on an actuarial basis. The calculations are based on: likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement and contractual entitlements information, and the present value of the estimated future cash flows. A discount rate of 6% and an inflation factor of 4% were used. The discount rate is based on expected interest rates for terms to maturity similar to those of the relevant liabilities. The inflation factor is based on the expected long-term increase in remuneration for employees. Presentation of employee entitlements Sick leave, annual leave, and vested long service leave are classified as a current liability. Non-vested long service leave and retirement gratuities expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as a non-current liability. Superannuation schemes HDC has not entered into a defined benefit scheme. Payments to defined contributions schemes are expensed in the surplus or deficit when incurred. Provisions HDC recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that an outflow of future economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense and is included in finance costs. Financial guarantee contracts A financial guarantee contract is a contract that requires HDC to make specified payments to reimburse the holder of the contract for a loss it incurs because a specified debtor fails to make payment when due. Financial guarantee contracts are initially recognised at fair value. If a financial guarantee contract was issued in a stand-alone arm's length transaction to an unrelated party, its fair value at inception is equal to the consideration received. When no consideration is received a provision is recognised based on the probability that HDC will be required to reimburse a holder for a loss incurred discounted to present value. The portion of the guarantee that remains unrecognised, prior to discounting to fair value, is disclosed as a contingent liability. Financial guarantees are subsequently measured at the initial recognition amount less any amortisation, however if HDC assesses that it is probable that expenditure will be required to settle a guarantee, then the provision for the guarantee is measured at the present value of the future expenditure. Borrowings Borrowings are initially recognised at their fair value. After initial recognition, all borrowings are measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the HDC has an unconditional right to defer settlement of the liability for at least 12 months after balance date or if the borrowings are expected to be settled within 12 months of balance date. Financial statements 5b - 24

253 Equity Equity is the community s interest in HDC and is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into a number of reserves. The components of equity are: accumulated funds other reserves asset revaluation reserves. Other reserves Other reserves are a component of equity generally representing a particular use to which various parts of equity have been assigned. Other reserves are those subject to specific conditions accepted as binding by HDC and which may not be revised by HDC without approval by HDC. Transfers from these reserves may be made only for certain specified purposes or when certain specified conditions are met. Asset revaluation reserves This relates to the revaluation of property, plant and equipment to fair value. Cost allocation The cost of service for each significant activity of HDC has been derived using the cost allocation system outlined below. Direct costs are those costs directly attributable to a significant activity. Indirect costs are those costs that cannot be identified in an economically feasible manner with a specific significant activity. Direct costs are charged directly to significant activities. Indirect costs are charged to significant activities using appropriate cost drivers such as actual usage, staff numbers, and floor area. Critical accounting estimates and assumptions In preparing these financial statements HDC has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Landfill aftercare provision HDC has responsibility under resource consents to provide ongoing maintenance and monitoring of three closed landfills. The cash outflows for landfill post closure are expected to occur over 20 years. The long-term nature of the liability means that there are inherent uncertainties in estimating costs that will be incurred. The provision has been estimated taking into account existing technology and using a discount rate of 7.5%. Infrastructural assets There are a number of assumptions and estimates used when performing depreciated replacement cost valuations over infrastructural assets. These include: The physical deterioration and condition of an asset, for example HDC could be carrying an asset at an amount that does not reflect its actual condition. This is particularly so for those assets, which are not visible, for example storm water, wastewater and water supply pipes that are underground. This risk is minimised by HDC performing a combination of physical inspections and condition modelling assessments of underground assets; Estimating any obsolescence or surplus capacity of an asset; and Estimates are made when determining the remaining useful lives over which the asset will be depreciated. These estimates can be impacted by the local conditions, for example weather patterns, ground condition and traffic growth. If useful lives do not reflect the actual consumption of the benefits of the asset, then HDC could be over or under estimating the annual depreciation charge recognised as an expense in the statement of comprehensive revenue and expense. To minimise this risk HDC s infrastructural asset useful lives have been determined with Financial statements 5b - 25

254 reference to the NZ Infrastructural Asset Valuation and Depreciation Guidelines published by the National Asset Management Steering Group and have been adjusted for local conditions based on past experience. Asset inspections, deterioration and condition modelling are also carried out regularly as part of HDC s asset management planning activities, which gives HDC further assurance over its useful life estimates. Experienced independent valuers perform/review HDC s infrastructural asset revaluations. Critical judgements in applying Council s accounting policies Classification of property The receipt of market-based rental from these properties is incidental to holding these properties. These properties are held for service delivery objectives as part of HDC s social housing policy. These properties are accounted for as property, plant and equipment. Financial statements 5b - 26

255 Funding impact statement: rating implications This statement should be read in conjunction with the HDC s Revenue and Financing Policy, available in our LTP document. All figures in this policy are GST exclusive and the revenue sought values exclude any rates that will be assessed on HDC owned properties. Separately Used or Inhabited Part of a Rating Unit (SUIP) Rating units, parts or portions of rating units are terms used to define separately used or inhabited rating units and include any part of a rating unit used or inhabited by the owner or any other person who has the right to use or inhabit that part by virtue of tenancy, lease or other agreement. At a minimum, the land or premises intended to form the separately used or inhabited part of the rating unit must be capable of actual habitation or actual separate use. For the avoidance of doubt, a rating unit that has only one use (i.e. does not have separate parts or is vacant land) is treated as being one separately used or inhabited part. In particular, for farms A farming unit with one dwelling will be treated as one use/part, with each additional dwelling counting as an additional used part of the rating unit. Each additional dwelling will be assessed as a separate unit for the purposes of assessing any rate calculated on the basis of a SUIP. In particular, for businesses Separately used and inhabited parts refers to the ability to use part or parts of the rating unit for independent commercial/industrial operations. A separately used and inhabited part will be classified where the property has been set-up to accommodate, or is accommodating, separate businesses The Council sets the following rates on the basis of Separately Used or Inhabited Parts of a Rating Units: community halls refuse collection targeted rates ward business targeted rates. Uniform Annual General Charge (UAGC) The UAGC is a fixed charge per rating unit. It is used to fund activities that deliver benefit to the whole district. In particular, for the purpose of funding the following activities: Iwi liaison, libraries, swimming pools, solid waste, animal control, health, liquor licensing, building services, civil defence, sports fields, events centres, passive reserves, sports co-ordinators, cemetery reserves, town halls, public toilets, community initiatives, HDC sets a Uniform Annual General Charge on each rating unit within the Hauraki District. In the 2018/19 year this charge is estimated to be $ (2017/18 $524.70). The revenue sought is approximately $5,105,000 (2017/18 $4,980,000). General rate capital value - district The General Rate is assessed on all rating units in the district based on capital value. It is used to fund activities where HDC believes the activity delivers a public benefit to the whole of the community and where a fixed charge per rating unit is not considered appropriate. In particular, for the purpose of funding the following activities: democracy, policy development, solid waste building services, resource management implementation, civil defence, land drainage, urban stormwater, economic development, information centres, Destination Coromandel, community initiatives, and other sundry activities. Funding impact statement rating implications 5c - 1

256 HDC applies a capital value general rate differentially. The differential is based on land use, based on the categories below: Residential/Rural - Means all rating units used primarily for residential, recreational, cultural or primarily or predominately for the purposes of agriculture, viticulture, horticulture or silviculture. Commercial/Industrial - Means all rating units used for commercial or industrial purposes, including utility networks. Mineral Extraction Land Use - Means all mineral value rating units that are not used in gold mining. Mining Land Use - Means all mineral value rating units that are used in gold mining. The 2018/19 estimated rates (in cents per dollar of capital value) per category are: Differential General Rate Estimated Rate in the Dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Residential/Rural $4,654,000 $4,179,000 Commercial/Industrial $539,000 $480,000 Mineral Extraction Land Use $37,000 $34,000 Mining Land Use $207,000 $153,000 Targeted rates HDC uses targeted rates (as defined in the Local Government (Rating Act) 2002) to collect funds over areas of benefit. Targeted rates are chosen where the services provided are specific to a particular community or area within our District and it is not considered fair to charge all ratepayers, or where it is more transparent to set a separate rate to fund a specific activity. Details of HDC s targeted rates, how the targeted rates are calculated and revenue to be generated by targeted rates is detailed below. Roading rate The Roading Rate is assessed on all rating units in the District based on capital value. It is used to fund the roading activity, travellers reserves, and public toilets. HDC is proposing to change from a differential capital value roading rate to a flat capital value roading rate, and plans to phase this in over three years. HDC applies a capital value targeted rate differentially. The differential is based on land use, based on the categories below: Residential/Rural - Means all rating units used primarily for residential, recreational, cultural or primarily or predominately for the purposes of agriculture, viticulture, horticulture or silviculture. Commercial/Industrial - Means all rating units used for commercial or industrial purposes, including utility networks. Mineral Extraction Land Use - Means all mineral value rating units that are not used in gold mining. Mining Land Use - Means all mineral value rating units that are used in gold mining. The 2018/19 estimated rates (in cents per dollar of capital value) is: Targeted Rate Estimated Rate in the Dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Residential/Rural $3,612,000 $3,234,000 Commercial/Industrial $373,000 $371,000 Mineral Extraction Land Use $20,000 $26,000 Mining Land Use $85,000 $116,000 Funding impact statement rating implications 5c - 2

257 Ward HDC sets targeted rates for each ward, based on an annual charge per rating unit for the purpose of fully and partially funding activities within the ward. These activities include footpaths and street-cleaning, information and visitors centres, town centres, sports fields and recreation reserves, events centres, township co-ordinators and other sundry activities. The charges will be set on a uniform basis per category with the categories based on the matter location. The categories are: Paeroa Ward all rating units situated within the Paeroa Ward. Plains Ward all rating units situated within the Plains Ward. Waihi Ward all rating units situated within the Waihi Ward. Annual charges For each rating unit within each of the wards annual charges are set, which for 2018/19 are estimated at: Category Annual Charge Revenue Sought 2018/19 Revenue Sought 2017/18 Paeroa Ward $ $862,000 $821,000 Plains Ward $ $668,000 $612,000 Waihi Ward $ $1,162,000 $1,135,000 Ward - business HDC sets targeted rates for each ward, based on a differential annual charge per separately used or inhabited part of a commercial and industrial rating unit for the purpose of partially funding activities within the ward. These activities include, information and visitor centres, township co-ordinators, town centre improvements, and economic development. The rate funding of these activities comes partly from this targeted rate, partly from the ward targeted rate and also from general rates. The charges will be set on a differential basis on categories based on location and land use. These rates will only be assessed on separately used or inhabited commercial and industrial parts of commercial and industrial rating units. HDC sets its Community Facilities Business Rate on the basis of separately used and inhabited parts. For the purposes of this rate separately used and inhabited parts refers to the ability to use part or parts of the rating unit for independent trading operations. A separately used and inhabited part will be classified where the property has been set-up to accommodate, or is accommodating, separate businesses. Separately used or inhabited commercial and industrial parts of commercial and industrial rating units in the rural areas of the Paeroa and Waihi Wards will be assessed a rate equivalent to half the rate assessed on urban rating units. In the Plains Ward the rural rate assessed is equivalent to 56% of the rate assessed on urban rating units. This is due to Positively Promoting the Plains being funded equally by urban and rural rating units. The categories are: Paeroa Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation rolls 5001, 5002, 5003 and Paeroa Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Paeroa Ward but outside the valuation rolls 5001, 5002, 5003 and Plains Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation roll Plains Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Plains Ward but outside the valuation roll Waihi Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation rolls 5020 and Waihi Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Waihi Ward but outside the valuation rolls 5020 and Funding impact statement rating implications 5c - 3

258 Annual charges On each separately used or inhabited part of a rating unit within each of the wards, HDC sets the following annual business rate charges. The 2018/19 estimated rates are: Category Paeroa Ward Plains Ward Waihi Ward Annual Charge Revenue Sought 2018/19 Revenue Sought 2017/18 - Urban $ $164,000 $182,000 - Rural $ $5,000 $6,000 - Urban $ $26,000 $16,000 - Rural $ $25,000 $15,000 - Urban $ $125,000 $147,000 - Rural $ $5,000 $9,000 Capital Value Rates HDC sets targeted rates for each ward, based on capital value on commercial and industrial rating units, for the purpose of partially funding activities within the ward. These activities include, information and visitor centres, township co-ordinators, town centre improvements, and economic development. The rate funding of these activities comes partly from this targeted rate, partly from the ward targeted rate and also from general rates. The charges will be set on a differential basis on categories based on location and land use. These rates will only be assessed on separately used or inhabited commercial and industrial parts of commercial and industrial rating units. HDC sets its Community Facilities Business Rate on the basis of separately used and inhabited parts. For the purposes of this rate separately used and inhabited parts refers to the ability to use part or parts of the rating unit for independent trading operations. A separately used and inhabited part will be classified where the property has been set-up to accommodate, or is accommodating, separate businesses. Separately used or inhabited commercial and industrial parts of commercial and industrial rating units in the rural areas of the Paeroa and Waihi Wards will be assessed a rate equivalent to half the rate assessed on urban rating units. In the Plains Ward the rural rate assessed is equivalent to 56% of the rate assessed on urban rating units. This is due to Positively Promoting the Plains being funded equally by urban and rural rating units. The categories are: Paeroa Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation rolls 5001, 5002, 5003 and Paeroa Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Paeroa Ward but outside the valuation rolls 5001, 5002, 5003 and Plains Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation roll Plains Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Plains Ward but outside the valuation roll Waihi Ward Urban all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the valuation rolls 5020 and Waihi Ward Rural all separately used or inhabited part of a rating unit used principally for commercial and industrial purposes situated within the Waihi Ward but outside the valuation rolls 5020 and The 2018/19 estimated rates (in cents per dollar of capital value) are: Category CV Rate in the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Plains Ward Urban $5,110 N/A Funding impact statement rating implications 5c - 4

259 Category CV Rate in the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Plains Ward Rural $5,220 N/A Paeroa Ward Urban $32,000 N/A Paeroa Ward Rural $1,950 N/A Waihi Ward Urban $25,000 N/A Waihi Ward Rural $1,930 N/A Community halls HDC sets targeted rates on all rating units in Community Hall Rating Areas for the purpose of funding community halls. A separate targeted rate will be set for each Community Hall Rating Area. For maps of the Community Hall Rating Areas, refer to the HDC website: Land value rates HDC sets targeted rates, based on land value, on each of the following categories based on location. The categories are: Kaihere Hall all rating units situated within the Kaihere Hall Rating Area. Patetonga Hall all rating units situated within the Patetonga Hall Rating Area. The 2018/19 estimated rates (in cents per dollar of land value) are: Category LV Rate In the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Kaihere Hall $4,000 $4,000 Patetonga Hall $1,500 $1,500 Annual charges HDC sets targeted rates, based on an annual charge per separately used or inhabited part of a rating unit, on each of the following categories based on location. The categories are: Hikutaia Hall all rating units situated within the Hikutaia Hall Rating Area within the Hauraki District. Kaiaua Hall - all rating units situated within the Kaiaua Hall Rating Area. Karangahake Hall all rating units situated within the Karangahake Hall Rating Area. Kerepehi Hall all rating units situated within the Kerepehi Hall Rating Area. Mangatangi Community Centre all rating units situated within the Mangatangi Community Centre Rating Area within the Hauraki District. Netherton Hall all rating units situated within the Netherton Hall Rating Area. Turua Hall all rating units situated within the Turua Hall Rating Area. Waikino Hall all rating units situated within the Waikino Hall Rating Area. Waitakaruru Hall all rating units situated within the Waitakaruru Hall Rating Area. In the 2018/19 year the estimated charges are: Category Annual Charge Revenue Sought 2018/19 Revenue Sought 2017/18 Hikutaia Hall $20.00 $2,300 $2,300 Kaiaua Hall $8.70 $5,000 N/A Karangahake Hall $21.74 $3,220 $1,970 Funding impact statement rating implications 5c - 5

260 Category Annual Charge Revenue Sought 2018/19 Revenue Sought 2017/18 Kerepehi Hall $13.04 $3,610 $2,460 Mangatangi Community Centre $20.00 $760 $760 Netherton Hall $17.78 $3,040 $3,040 Turua Hall $19.13 $7,710 $7,710 Waikino Hall $20.00 $4,200 $4,200 Waitakaruru Hall $22.00 $5,130 $4,660 Land drainage HDC sets targeted rates for each of the Drainage Districts for the purpose of funding drainage activity within those drainage districts. For maps of the Drainage Districts, refer to the HDC website, Drainage rates (D rates) HDC sets land value rates on each rating unit within the following categories based on location for the purpose of funding drainage activity. The categories are: Eastern Plains all rating units situated within the Eastern Plains Drainage District, excluding those residential, commercial & industrial, and community land use rating units within the townships of Kerepehi and Turua. Western Plains all rating units situated within the Western Plains Drainage District, excluding those residential, commercial & industrial, and community land use rating units within the town of Ngatea. Komata North Drainage District all land situated within the Komata North Drainage District. Opukeko Drainage District all land situated within the Opukeko Drainage District excluding those residential, commercial & industrial, and community land use rating units within the town of Paeroa. Tirohia-Rotokohu Drainage District all land situated within the Tirohia-Rotokohu Drainage District excluding those residential, commercial & industrial, and community land use rating units within the town of Paeroa. Taramaire Drainage District all land situated within the Taramaire Drainage District. The 2018/19 estimated rates (in cents per dollar of land value) are: Category LV Rate in the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Eastern Plains D Rate $271,000 $266,000 Western Plains D Rate $406,000 $398,000 Komata North D Rate $51,000 $51,000 Opukeko D Rate $30,000 $28,000 Tirohia-Rotokohu D Rate $106,000 $106,000 Taramaire D Rate $7,800 $6,500 Funding impact statement rating implications 5c - 6

261 Flood protection rates (F Rates) HDC sets land value rates on a differential basis on each rating unit within the following categories based on the extent of the service provided for the purpose of funding flood protection activity. For maps of the Flood Protections Areas, refer to the HDC website, The categories are: Flood Protection Class 1 (F1) all rating units situated within the Western Plains Drainage District Flood Protection Area 1. Flood Protection Class 2 (F2) all rating units situated within the Western Plains Drainage District Flood Protection Area 2. Flood Protection Taramaire all rating units situated within the Taramaire Flood Protection area. Flood Protection Kaiaua all rating units situated within the Kaiaua Flood Protection area. The 2018/19 estimated rate (in cents per dollar of land value) is: Category LV Rate in the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Western Plains F $57,600 $56,500 Western Plains F $5,500 $5,400 Taramaire $5,600 $4,700 Kaiaua $7,100 $6,200 Pump rates (P rates) HDC sets a land area rate on a uniform basis on all land within the following category based on provision of service, for the purpose of funding the replacement of drainage pumps. Western Plains Class P all land serviced by the Hopai West, Martinovich, Central, North and Rawerawe West pump stations. For maps of the land serviced by pump stations, refer to the HDC website, The 2018/19 estimated rates (in dollars per hectare of land area) are: Category Rate per Hectare Revenue Sought 2018/19 Revenue Sought 2017/18 Western Plains Class P $22.60 $34,700 $34,000 Urban stormwater HDC sets targeted rates on all non-rural land use rating units in the towns of Paeroa, Ngatea, Kerepehi, Turua, Waihi, Whiritoa and on some rating units within the Kaiaua Coastal Area for the purpose of funding the urban stormwater activity. Capital value rates HDC sets capital value targeted rates on each rating unit within the following categories based on land use, provision of service, and location. Funding impact statement rating implications 5c - 7

262 The categories are: Residential, commercial & industrial, and community land use rating units within the town of Paeroa that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units within the town of Ngatea that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units within the town of Kerepehi that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units within the town of Turua that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units within the town of Waihi that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units within the town of Whiritoa that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. Residential, commercial & industrial, and community land use rating units in the wider Kaiaua area that receive a level of protection from stormwater flooding by being able to discharge directly, or indirectly, to HDC stormwater or drainage assets. The 2018/19 estimated rates (in cents per dollar of capital value) are: Category Capital value rate in the dollar Revenue Sought 2018/19 Revenue Sought 2017/18 Paeroa $250,000 $250,000 Ngatea $121,000 $104,000 Kerepehi $42,000 $36,000 Turua $42,000 $36,000 Waihi $212,000 $208,000 Whiritoa $41,000 $27,000 Kaiaua $39,000 $34,000 Water supply HDC sets targeted rates for water supply based on, the volume of water supplied and, the number of connections to the supply on all rating units connected to a water supply, for the purpose of funding the water supply activity. The water volume rate is on a differential basis based on location, and the extent of the provision of service. Water supply rates are billed separately twice yearly on varying dates in the various water supply areas. For the purposes of water supply, properties are connected to a water supply when the means to connect has been installed, i.e. a water lead has been installed from HDC water main to the boundary. Annual charges HDC sets an annual charge per connection to a water supply on each rating unit within the following category based on the provision of a service: Connected all rating units with a connection to an HDC water supply. The 2018/19 estimated annual charge is $98.94 (2017/18 $93.34) per metered connection. Every metered connection will be charged the annual charge in conjunction with their usage charges for water consumed. Funding impact statement rating implications 5c - 8

263 Water volume rates (metered supply) HDC sets a targeted rate on a differential basis per unit of water supplied to each rating unit within the following categories based on location and level of service provided. The categories are: Category One all rating units connected to the Paeroa, Plains, and Waihi water supplies according to a scale of stepped charges. Category Two all rating units connected to the Kaimanawa water supply. Category Three rating units connected to a HDC raw water main that receive completely untreated water. The 2018/19 estimated rates (in cents per cubic metre of water supplied) are: Category One: 2018/ /18 Base Rate Consumption up to 200 cubic metres c c Step One Consumption between 200 and 400 cubic meters c c Step Two All consumption over 400 cubic metres c c Category Two: c c Category Three: 58.37c 55.07c The revenue sought from water supply targeted rate annual charges and water volume rates is approximately $6,537,000 (2017/18 $6,167,000). Wastewater HDC sets targeted rates for wastewater based on an annual charge per rating unit for unconnected rating units, or per water closet / urinal (pan) for connected rating units. Rating units used primarily as a residence for one household will only be charged one pan charge. The targeted rates are for the purpose of funding the wastewater activity. Annual charges HDC sets an annual charge on a differential basis on the following categories based on location, provision of service, and land use. The categories are: District Unconnected All rating units not connected to the Kerepehi, Ngatea, Paeroa, Turua, Waitakaruru, Waihi or Whiritoa wastewater schemes but with part of a boundary within 30 metres of a wastewater main belonging to one of those schemes. District Connected All rating units connected to the Kerepehi, Ngatea, Paeroa, Turua, Waitakaruru, Waihi or Whiritoa wastewater schemes. The 2018/19 estimated annual charges are: Category Uniform Charge Revenue Sought 2018/19 Revenue Sought 2017/18 District Unconnected $ $184,000 $175,000 For District Connected rating units a scale of charges will apply: Rating units used primarily as a residence for one household will be treated as having one pan. Funding impact statement rating implications 5c - 9

264 Number of Pans % of residential annual charge District connected Up to & including 2 Pans 100% $559 per pan Up to & including 4 Pans 75% $419 per pan Up to & including 6 Pans 67% $374 per pan Up to & including 8 Pans 62.5% $350 per pan Up to & including 10 Pans 60% $335 per pan Up to & including 15 Pans 48% $268 per pan Up to & including 20 Pans 42.5% $237 per pan Over 20 Pans 37% $207 per pan The revenue sought from wastewater connected rates is approximately $3,225,000 ($3,071,000 in 2017/18). There may be further reductions in pan charges for educational establishments dependent upon regulations made under section 25 of the Local Government (Rating) Act HDC s remission policy on wastewater charging for educational establishments should be read in conjunction with this policy. Refuse collection targeted rates HDC sets targeted rates for refuse collection and kerbside recycling based on a uniform charge per separately used or inhabited part of a rating unit serviced by a HDC funded refuse collection. The targeted rates are for the purpose of funding the kerbside recycling activity, and the administration of the refuse collection activity. The annual charge is on a differential basis (based on location and the provision of service). Annual charges HDC sets an annual charge per separately used or inhabited part of a rating unit on a differential basis (based location and the provision of service). Whiritoa rating units have an increased number of collections per year. The categories are: District Collected all rating units serviced by HDC s kerbside recycling collection excluding those in the Whiritoa township. Whiritoa Collected all rating units serviced by HDC s kerbside recycling collection in the Whiritoa township. The 2018/19 estimated annual charges are: Category Uniform charge Revenue Sought 2018/19 Revenue Sought 2017/18 District Collected $28.50 $183,000 $179,000 Whiritoa Collected $36.91 $16,300 $16,000 Funding impact statement rating implications 5c - 10

265 Penalties for late payments and due date of payments Payment methods The above rates are payable at HDC Offices at William Street, Paeroa, Orchard Rd, Ngatea and Rosemont Rd, Waihi between 8.00am and 4.30pm Monday to Friday. Payments may also be made by way of Direct Debits and Automatic Payments. Direct Credits in the form of telephone and internet banking services are also accepted. Credit card payments on the HDC website are also accepted. Rates (excluding water rates) due dates Excluding water supply targeted rates, the above rates are by way of four instalments, the dates of such instalments being: Instalment Number Instalment date Last date before penalty Penalty added One 20 August August August 2018 Two 20 November November November 2018 Three 20 February February March 2019 Four 20 May May May 2019 Rates (excluding water rates) penalties for late payment The following penalties will be added to outstanding rates (excluding water supply rates): an additional charge on unpaid rates of 10% of the instalment amount will be added on the day following the last date on which the instalment is payable without incurring additional charges (as described above) an additional charge of 10% will be added to all rates assessed in a previous year which remain unpaid on 3 September 2018 a further additional charge of 10% will be added to all rates assessed in a previous year which remain unpaid on 1 March Water supply targeted rates due dates Water supply targeted rates are by way of two instalments per year for those rating units that have received less than 10,000kl over the last two billing periods. Those rating units who have used more than 10,000kl over the last two billing periods, will be billed bi-monthly. Instalment dates are staggered throughout the year. Refer to HDC s website to find a map of the various reading areas For a list of rating units (over 10,000kl as described above) by assessment number refer to HDC s website. These rating units will be billed bi-monthly. The dates of instalments are: For rating units billed twice a year: Instalment Number One One One One Reading area 1- Ngatea township - Paeroa township - Waihi township 2 Turua & surrounds Paeroa commercial Waihi commercial Waihi gold 3 Waitakururu & Ngatea North Waihi rural 4 Kerepehi & Ngatea South Ohinemuri & Kaimanawa Instalment date Last date before penalty Penalty added 20 August August August September September September October October November November November November 2018 One 5 - Netherton 20 December December December 2018 Funding impact statement rating implications 5c - 11

266 Instalment Number One Two Two Two Two Reading area 6 - Karangahake/Mackaytown - Waikino 1- Ngatea township - Paeroa township - Waihi township 2 Turua & surrounds Paeroa commercial Waihi commercial Waihi gold 3 Waitakururu & Ngatea North Waihi rural 4 Kerepehi & Ngatea South Ohinemuri & Kaimanawa Instalment date Last date before penalty Penalty added 20 January January February February February March March March March April April April May May May 2019 Two 5 - Netherton 20 June June June 2019 Two 6 - Karangahake/Mackaytown - Waikino For rating units billed bi-monthly: 20 July June June 2019 Instalment Number Instalment date Last date before penalty Penalty added One 20 August 2018 Two 20 October October October 2018 Three 20 December 2018 Four 20 February 2019 Five 20 April April April 2019 Six 20 June 2019 Water supply targeted rates penalties for late payment The following penalties will be applied to water supply rates: For rating units billed twice a year: an additional charge of 5% will be added to all current and previous years rates outstanding on the day following the last date for payment of the first instalment (as described above) an additional charge of 5% will be added to all current and previous years rates outstanding on the day following the last date for payment of the second instalment (as described above). For rating units billed bi-monthly: an additional charge of 5% will be added to all current and previous years rates outstanding on the day following the last date for payment of the second instalment (as described above) an additional charge of 5% will be added to all current and previous years rates outstanding on the day following the last date for payment of the fifth instalment (as described above). Rating base information The projected number of rating units within our district at 30 June 2018 is 11,085. The projected total capital value of rating units within our district at 30 June 2018 is $5,640,235,000. The projected total land value of rating units within our district at 30 June 2018 is $3,664,597,200. Funding impact statement rating implications 5c - 12

267 Rating changes Summary of rating changes by type Forecast Changes by Rate (%) Budgeted 2017/ /18 Change Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 Forecast 2022/23 Forecast 2023/24 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 General Rates 9, % 7.5% 5.0% 5.0% 2.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Roading 3, % 7.8% 10.0% 10.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Targeted Rates - Paeroa Community Facilities % 5.0% 7.0% 6.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Paeroa Community Facilities Business % 8.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Plains Community Facilities % 9.2% 4.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Plains Community Facilities Business % 100.0% 50.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Waihi Community Facilities 1, % 2.3% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Waihi Community Facilities Business % 2.3% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Wastewater 3, % 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 10.0% 10.0% Targeted Rates - Western Plains 'D' % -6.4% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Eastern Plains 'D' % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Komata North 'D' % 0.0% 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Opukeko 'D' % 8.0% 5.0% 5.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Targeted Rates - Tirohia-Rotokohu 'D' % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Targeted Rates - Taramaire 'D' % 20.0% 20.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Taramaire 'F' 5 0.0% 20.0% 20.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Western Plains 'F1' % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Western Plains 'F2' 5 0.0% -10.4% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Western Plains 'P' % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Paeroa Stormwater % 0.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Ngatea Stormwater % 16.0% 16.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Targeted Rates - Kerepehi Stormwater % 15.0% 15.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Turua Stormwater % 15.0% 15.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Waihi Stormwater % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Whiritoa Stormwater % 50.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Kaiaua Stormwater % 15.0% 15.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Targeted Rates - Waste Collection and Recycling % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Rates excluding water 21, % 6.49% 5.74% 5.41% 3.62% 3.42% 3.46% 3.51% 3.55% 4.38% 4.47% Cap for rates excluding water 3.9% 7.5% 7.7% 7.7% 5.7% 5.8% 5.8% 5.9% 6.0% 6.1% 6.2% Targeted Rates - Water Meter Charges 6, % 6.0% 6.0% 6.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Water Meter Charges Cap 5.4% 8.0% 8.2% 8.2% 3.7% 3.8% 3.8% 3.9% 4.0% 4.1% 4.2% Total Rates 27, % 6.4% 5.8% 5.5% 3.3% 3.1% 3.1% 3.2% 3.2% 3.9% 4.0% Rating changes 5d - 1

268 Forecast Rates ($000's) Budgeted 2017/18 Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/18 Change 2018/ / / / / / / / / /28 General Rates 9, % 10,565 11,093 11,647 11,939 12,177 12,421 12,669 12,923 13,181 13,445 Targeted Rates - Roading 3, % 4,039 4,443 4,887 5,229 5,595 5,987 6,406 6,854 7,334 7,848 Targeted Rates - Paeroa Community Facilities % ,017 1,038 1,058 1,080 1,101 1,123 Targeted Rates - Paeroa Community Facilities Business % Targeted Rates - Plains Community Facilities % Targeted Rates - Plains Community Facilities Business % Targeted Rates - Waihi Community Facilities 1, % 1,162 1,185 1,208 1,233 1,257 1,282 1,308 1,334 1,361 1,388 Targeted Rates - Waihi Community Facilities Business % Targeted Rates - Wastewater 3, % 3,408 3,579 3,758 3,946 4,143 4,350 4,567 4,796 5,275 5,803 Targeted Rates - Western Plains 'D' % Targeted Rates - Eastern Plains 'D' % Targeted Rates - Komata North 'D' % Targeted Rates - Opukeko 'D' % Targeted Rates - Tirohia-Rotokohu 'D' % Targeted Rates - Taramaire 'D' % Targeted Rates - Taramaire 'F' 5 0.0% Targeted Rates - Western Plains 'F1' % Targeted Rates - Western Plains 'F2' 5 0.0% Targeted Rates - Western Plains 'P' % Targeted Rates - Paeroa Stormwater % Targeted Rates - Ngatea Stormwater % Targeted Rates - Kerepehi Stormwater % Targeted Rates - Turua Stormwater % Targeted Rates - Waihi Stormwater % Targeted Rates - Whiritoa Stormwater % Targeted Rates - Kaiaua Stormwater % Targeted Rates - Waste Collection and Recycling % Rates excluding water 21,639 23,045 24,368 25,686 26,615 27,526 28,480 29,478 30,524 31,860 33,285 Targeted Rates - Water Meter Charges 6, % 6,537 6,929 7,345 7,492 7,642 7,795 7,950 8,109 8,272 8,437 Total Rates 27,806 29,582 31,297 33,031 34,107 35,168 36,274 37,429 38,634 40,132 41,722 Rating changes 5d - 2

269 Examples of changes to rates 2017/18 actual 2018/19 proposed Rural Low value ($500,000) Plains $2,008 $2,120 Paeroa $2,496 $2,618 Waihi $1,793 $1,905 Medium value ($1,430,000) Plains $4,083 $4,331 Paeroa $5,272 $5,560 Waihi $3,399 $3,677 High value ($4,310,000) Plains $10,632 $11,293 Paeroa $14,178 $14,980 Waihi $8,372 $9,164 Residential Low value ($140,000) Plains $1,892 $1,979 Paeroa $1,946 $2,012 Waihi $1,880 $1,947 Medium value ($230,000) Plains $2,082 $2,232 Paeroa $2,130 $2,242 Waihi $2,051 $2,152 High value ($370,000) Plains $2,375 $2,626 Paeroa $2,415 $2,601 Waihi $2,317 $2,471 Commercial/Industrial Low value ($110,000) Plains $2,897 $3,239 Paeroa $3,560 $3,583 Waihi $3,556 $3,523 Medium value ($300,000) Plains $3,509 $3,978 Paeroa $4,152 $4,315 Waihi $4,104 $4,182 High value ($840,000) Plains $5,181 $6,079 Paeroa $5,780 $6,397 Waihi $5,631 $6,055 Rating changes 5d - 3

270 Balanced budget statement We re required by legislation to operate a balanced budget for each activity, i.e. our projected revenues in any particular year must be set at a level to meet that year s projected operating expenditure. The elected Council can resolve not to balance its budget, as long as it can show it s acting prudently and has future or past surpluses to offset the current deficits. We re forecasting deficits in our first two years, and surpluses for the remaining eight years. In the first two years of our LTP, we re forecasting overall deficits of $1.5 million (2018/19) and $0.8 million (2019/20). In the remaining eight years of the plan we re forecasting overall surpluses of $19.6 million. This means that the first two years deficits are more than offset by the future surpluses. In a number of activities, we ve decided it s prudent not to fully fund operating expenses in each year because of past or future year surpluses. Examples include where there is cyclical expenditure such as Council elections. The elections occur every three years, and are funded over the three-year period rather than seeing a spike in funding for one year. This means there is under-funding for one year and surplus funding for the other two years. Similarly, there is expenditure in creating/reviewing the District Plan. The District Plan is a document that has a multi-year lifespan with the bulk of the expenditure occurring in the first years of development. We consider that it s more equitable to fund the review of this document over the life of the Plan and not in the year the expenditure is incurred. Specific activities that are funded, or partly funded, by general rates are forecast to run deficits for the first three years of the Plan. These activities are largely district-funded activities. governance and leadership, community development, community services, regulatory services, solid waste, and water. The deficits are due to our policy of smoothing rates changes to prevent large increases and they re offset by surpluses in the last seven years of the Plan. We ve taking into account our debt levels and overall surplus/deficits and believe the Plan shows this approach is financially prudent. The water supply activity is also forecast to run at a deficit in 2018/19 and 2019/20. In all these cases we believe it is prudent to run a deficit in those years. Balanced budget statement 5e - 1

271 Financial reporting and prudence regulations disclosure statement for the period commencing 1 July 2018 What is the purpose of this statement? The purpose of this statement is to disclose the Council's planned financial performance in relation to various benchmarks to enable the assessment of whether the Council is prudently managing its revenues, expenses, assets, liabilities, and general financial dealings. The Council is required to include this statement in its Long Term Plan in accordance with the Local Government (Financial Reporting and Prudence) Regulations 2014 (the regulations). Refer to the regulations for more information, including definitions of some of the terms used in this statement. Rates affordability benchmark The Council meets the rates affordability benchmark if: its planned rates income equals or is less than each quantified limit on rates; and its planned rates increases equal or are less than each quantified limit on rates increases. Financial reporting and prudence regulations disclosure 5f - 1

272 All rates excluding water Millions Rates excluding water rates (income) affordability The following graph compares the Council's planned rates (excluding water rates) with a quantified limit on rates contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that the percentage increase in rates will be no more than the Local Government Cost Index plus 2.5% for all rates excluding water, for the first four years, and the Local Government Cost Index plus 2% for the remaining years Year Quantified limit on Proposed rates Proposed rates rates income excluding income excluding water (at income excluding water water or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 2

273 Water rates Millions Water rates (income) affordability The following graph compares the Council's planned water rates with a quantified limit on water rates contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that the increase in water rates will be no more than 2016/17 forecast water rates income plus forecast Local Government Cost Index (LGCI) plus 4% per annum Year Quantified limit on Proposed water rates Proposed water rates water rates income income (at or within limit) income (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 3

274 Increases on all rates excluding water Rates excluding water (increases) affordability The following graph compares the Council's planned rates increases (excluding water rates) with a quantified limit on rates increases contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that the percentage increase in rates will be no more than the Local Government Cost Index plus 2.5% for all rates excluding water, for the first four years, and the Local Government Cost Index plus 2% for the remaining years. 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Year Quantified limit on Proposed rates Proposed rates rates increase excluding increase excluding water (at increase excluding water water or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 4

275 Increases on water rates Water rates (increases) affordability The following graph compares the Council's planned water rates increases quantified limits on water rates increases contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that the percentage increase in water rates should not exceed Local Government Cost Index (LGCI) plus 4% per annum. Council's water rates are forecast to be within the cap in each year of the plan. However due to the unpredictability of water consumption resulting from variable year-to-year weather patterns, it is likely that in drier years water rates will breach the cap, with this being offset by lower income in wetter years. Council has not forecast which years are likely to be dry years. 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Year Quantified limit on Proposed water rates Proposed water rates water rates increase increase (at or within limit) increase (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 5

276 Debt / Revenue Debt affordability benchmark The Council meets the debt affordability benchmark if its actual borrowing is within each quantified limit on borrowing. The Council has four quantified limits on borrowing: debt is equal to or less than 175% of total revenue net interest expense is equal to or less than 15% of rates revenue net interest expense is equal to or less than 10% of total revenue external public debt per assessment is equal to or less than $8,000 Debt (debt to total revenue) affordability The following graph compares the Council's planned debt with a quantified limit on borrowing contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that net external debt is equal to or less than 175% of total revenue. 200% 175% 150% 125% 100% 75% 50% 25% 0% Year Quantified limit on Proposed debt Proposed debt debt (at or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 6

277 Borrowing costs / Rates Revenue Debt (net interest expense to rates revenue) affordability The following graph compares the Council's planned debt with a quantified limit on borrowing contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that net interest expense is equal to or less than 15% of rates revenue. 18% 15% 12% 9% 6% 3% 0% Year Quantified limit on Proposed debt Proposed debt debt (at or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 7

278 Borrowing costs / Revenue Debt (net interest expense to total revenue) affordability The following graph compares the Council's planned debt with a quantified limit on borrowing contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that net interest expense is equal to or less than 10% of total revenue. 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Year Quantified limit on Proposed debt Proposed debt debt (at or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 8

279 External Net Debt per Rating Unit Debt (external public debt per assessment) affordability The following graph compares the Council's planned debt with a quantified limit on borrowing contained in the Financial Strategy included in this Long Term Plan. The quantified limit is that external net debt per rating unit is equal to or less than $8,000 in any year. 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Year Quantified limit on Proposed debt Proposed debt debt (at or within limit) (exceeds limit) Financial reporting and prudence regulations disclosure 5f - 9

280 Revenue / operating expenditure (%) Balanced budget benchmark The following graph displays the Council's planned revenue (excluding development contributions, financial contributions, vested asset income, gains on derivative financial instruments, and revaluations of property, plant, or equipment) as a proportion of planned operating expenses (excluding losses on derivative financial instruments and revaluation of property, plant, or equipment). The Council meets the balanced budget benchmark if its planned revenue equals or is greater than its operating expenses. 120% 100% 99% 95% 97% 102% 103% 104% 105% 106% 106% 107% 107% 80% 60% 40% 20% 0% Year Benchmark met Benchmark not met The Council has a policy of smoothing rates increases and also of smoothing the funding of irregularly occurring expenditure over several years (e.g. election costs fall every three years but are funded evenly). This policy can cause surpluses or deficits in individual years. Council is forecasting small deficits in 2017/18 through 2019/20, but this is offset by small surpluses in each of the other years in the plan. Financial reporting and prudence regulations disclosure 5f - 10

281 Capital expenditure / depreciation (%) Essential services benchmark The following graph displays the Council's planned capital expenditure on network services as a proportion of expected depreciation on network services. The Council meets the essential services benchmark if its planned capital expenditure on network services equals or is greater than expected depreciation on network services. 260% 240% 220% 200% 180% 160% 140% 187% 133% 127% 117% 126% 133% 157% 175% 149% 120% 100% 104% 94% 80% 60% 40% 20% 0% Year Benchmark met Benchmark not met Financial reporting and prudence regulations disclosure 5f - 11

282 Borrowing costs / Revenue (%) Debt servicing benchmark The following graph displays the Council's planned borrowing costs as a proportion of planned revenue (excluding development contributions, financial contributions, vested asset income, gains on derivative financial instruments, and revaluations of property, plant, or equipment). Because Statistics New Zealand projects the Council's population will grow more slowly than the national population growth rate, it meets the debt servicing benchmark if its planned borrowing costs equal or are less than 10% of its planned revenue % 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 5.14% 5.71% 6.15% 5.99% 6.00% 5.70% 5.23% 4.97% 4.90% 4.80% 4.85% 4.00% 3.00% 2.00% 1.00% 0.00% Benchmark met Year Benchmark not met Financial reporting and prudence regulations disclosure 5f - 12

283 William Street, Paeroa PO Box, Paeroa P () (from within the district) E info@hauraki-dc.govt.nz