Notice is given that an ordinary meeting of the Commercial Subcommittee will be held on:
Date:
Time:
Meeting Room:
Venue:
Tuesday 14 May 2013 9.30 am
Tasman Council Chamber 189 Queen Street
Richmond
Commercial Subcommittee AGENDA
MEMBERSHIP
Chairperson Chairperson T B King
Members Mr A D Dunn
Cr B W Ensor Mr P G Grover Mr R T Taylor
(Quorum 3 members – one of whom must be an elected member)
Contact Telephone:
Email: [email protected] Website: www.tasman.govt.nz
Contents
AGENDA
1 OPENING, WELCOME
2 APOLOGIES AND LEAVE OF ABSENCE
Apologies
Recommendation
That apologies be accepted.
3 DECLARATIONS OF INTEREST 4 CONFIRMATION OF MINUTES 5 PRESENTATIONS
Nil
6 REPORTS
6.1 Manager Property Services Report ... 5 6.2 Matters for Discussion ... 19
7 CONFIDENTIAL SESSION
7.1 Procedural motion to exclude the public ... 23 7.1 In Committee Matters for Discussion ... 23
Item 6. 1
Reports 1. M anager Propert y Ser vic es Repor t
6 REPORTS
6.1 MANAGER PROPERTY SERVICES REPORT
Information Only - No Decision Required Report To: Commercial Subcommittee
Meeting Date: 14 May 2013
Report Author: Jim Frater, Manager Property Services Report Number: RFN13-05-02
File Reference:
1 Summary
1.1 Council manages a range of commercial and semi-commercial activities.
1.2 This report provides a brief overview of the commercial portfolio.
1.3 The commercial portfolio includes the following Council assets and business operations:
Aerodromes
Forestry
Camping Grounds
Commercial Property
1.4 The most recent financial reports for aerodromes and forestry have been appended to this report.
1.5 Camping grounds and Commercial Property are included in the aggregate six monthly reports, but commentary only occurs on “an exceptions” basis.
2 Draft Resolution
Recommendati on
That the Commercial Subcommittee receives the Manager Property Services Report RFN13-05-02.
Item 6. 1
Tasman District Council Commercial Subcommittee Agenda – 14 May 2013
Agenda Page 6
3 Purpose of the Report
3.1 To provide an overview of the activities covered by the Commercial Subcommittee.
4 Aerodromes
4.1 Council owns two aerodromes which are situated at Puramahoi (Golden Bay) and Motueka.
The Puramahoi Aerodrome is managed by a Committee of users. This Committee runs its own bank account, collects landing fees and rentals and undertakes maintenance to keep the Aerodrome operative. The Aerodrome’s Activity Management Plan is the guiding document for maintenance and renewals.
4.2 Puramahoi Aerodrome has two runways - the main runway which is sealed and a cross wind runway which is unsealed and is in a poor state of repair. This runway is only used at certain times of the year when the wind direction makes the main runway unsafe to use. In its present condition the runway is not able to be used and an estimate obtained in 2012 for its repair was $55,000. The income streams for the Aerodrome are insufficient for it to be self funding although the Aerodrome Committee keeps expenditure to a minimum.
4.3 The property is held under the Reserves Act 1977 and was gifted by the Crown for the purposes of an Aerodrome. The property differs from freehold property in that should it no longer be required for the purpose for which it was given, or should the Council no longer wish to use the property for its approved purpose, it is required to be given back to the Crown.
4.4 Consideration has been given to commencing a passenger levy at this Aerodrome. There are two operators who operate commercially and while some initial discussions have taken place, it has not led to any agreement at this stage. Because of the location of the
Aerodrome, options for leasing additional space for Aerodrome associated businesses is fairly slim and the infrastructure to support development is non-existent.
4.5 For the first time in several years, Motueka Aerodrome will return a small surplus this year.
This Aerodrome is managed by staff in conjunction with users. The Motueka Aerodrome Management and Development Plans were approved late last year and may be accessed through the Council website (http://www.tasman.govt.nz/policy/public-consultation/recently-closed- consultations/motueka-aerodrome-management-and-development-plans/). A user group has been formed which met for the first time on 7 May 2013. This group is a link between the users and the Corporate Services Committee. An Operations and Safety Committee is also operating, which consists of all aviators operating out of the Aerodrome.
4.6 The maintenance contract for the Aerodrome is held with SICON and is due for a review at 1 July 2013. SICON have given notice that they do not intend to exercise their right to take a further two year contract. Discussions are being held with the new parks contractor, Nelmac, as to whether they would be willing to take over the contract on the same terms and conditions as at present.
Item 6. 1
4.7 The Development Plan provides for expansion of facilities in three areas - fixed wing aircraft, helicopters and hangars with accommodation. Future hangars are to be of a construction that allows them to be linked up to avoid wasted space. Previously hangars have been privately owned with Council leasing ground space only.
5 Forestry
5.1 The Council’s forest estate is located in the Howard Valley, Sherry, Kohatu, Wai-iti, Eves Valley, Richmond Hills and Rabbit Island. Most of the properties are freehold although some are held as reserves such as Rabbit Island.
5.2 The forest estate is managed by PF Olsen Ltd who undertake management and harvesting operations as well as management of the Emissions Trading Scheme. Both Rabbit Island and Richmond Hills (Kingsland) have substantial recreational use. Rabbit Island forest also receives biosolids application. The forest estate totals 3831 ha of which 2897 ha are planted in exotic forest.
5.3 The forestry account is a separate account within the Council structure which provides an internal dividend each year to offset the general rates. The level of the dividend is set in the Long Term Plan and is reviewed annually.
5.4 The Forest Manager’s performance has recently been reviewed by Forme Consulting and the results of that review will be available soon. Additional income to the forestry account includes grazing leases at Sherry and Howard Forests as well as cell phone and
broadcasting towers. For the next few years, the income from harvesting is lean but this will improve from 2017/2018 when the estates purchased in the early 1990s start maturing.
Because of the size and nature of our forest estates, there are flat spots in the logging programme which do affect the income and as a consequence the level of the dividend.
6 Camping Grounds
6.1 Four camping grounds come under the influence of the Commercial Subcommittee. These are located at Collingwood, Pohara, Motueka and Murchison. All are on reserve land. They must be managed and leased in accordance with the Reserves Act 1977. Motueka and Pohara rentals are set at 30% of the average turnover for the previous two years, reviewed at three yearly intervals for the landlord’s improvements. They pay a rental of 4% of the lessee’s improvements.
6.2 Collingwood Camping Ground is managed under contract. There are issues with some of the land within the camp ground being Maori owned land. A meeting is being held toward the end of June 2013 with descendants of the original Maori owners to try to resolve the issues. A large double garage including a linen store was destroyed by fire late last year and is in the process of being replaced.
6.3 Riverview Camping Ground at Murchison is a relatively marginal operation. With a few exceptions, the buildings require a fairly high level of maintenance due to their age and condition and the cost of the sewerage fees each year take a fair chunk of the camp
Item 6. 1
Tasman District Council Commercial Subcommittee Agenda – 14 May 2013
Agenda Page 8
operating budget. The camping grounds make an annual financial contribution to the parks and reserves activity.
6.4 One of the lessees of the Riverview Camping Ground at Murchison has left and the remaining lessee has appointed a manager to continue operating the camp. Staff are working with the lessee’s accountants to ensure that the camping ground continues to operate, although they may close the camping ground over winter for this year.
6.5 Reliance on the Pohara Valley water supply for the Pohara Top 10 Holiday Park caused some issues through the Christmas holiday period because the water supply had to be disconnected during certain weather events. Until an adequate water supply is provided to the camping ground, this will continue to be an issue at times when the camping ground is heavily booked.
6.6 The Motueka Top 10 Holiday Park internal roading network has deteriorated and requires remediation. The standard cabins at the Holiday Park are near the end of their useful life and the costs of repair are exceeding the returns that can be generated from them. A proposal to replace the cabins and upgrade the roading network will be presented to the Commercial Subcommittee for consideration.
7 Commercial Property
7.1 The attached list shows Council’s commercial property assets.
7.2 Negotiations are pending for the potential sale of part of the property at 149 Salisbury Road which has a tourism services zoning.
7.3 A lease agreement is being prepared for part of the former Westpac property at 257 Queen Street, Richmond which Council recently agreed to offer for sale. The sale process is to be by tender and whether or not the sale occurs, will depend on the outcome of that process.
The leasehold interests in two leased properties at Redwood Valley near Rabbit Island are in the process of being sold to the existing lessee. These are perpetual leases and the
opportunity is being taken to sell the freehold to the existing lessee. The proceeds from resales and a previous sale in Landsdowne Road, Richmond are available for further investment.
7.4 The Council had resolved to purchase the building owned by Mapua Holdings Ltd which is occupied by the Golden Bear Brewing Company, Hamish’s Café and Cool Change Gallery.
This building is on Council land and Council has sought to contain control of the activities in the wharf area by taking ownership of the building. The building purchase is to be funded from the sales income mentioned in 7.3 above.
7.5 The former Fruitgrowers Chemical site at Mapua has been subject to remediation of the contaminated soil and is now able to be developed, sold or leased. There is an ongoing requirement for parts of the land to be available for groundwater testing and any
developments will need to provide for this. There is some interest in the land for a medical centre and retirement home but also for motels and a conference centre. From the
Item 6. 1
proceeds of any sales, Council is required to repay $745,000 to the Ministry for the Environment for our share of the remediation costs.
7.6 The properties at Port Motueka (and the former Westpac Bank in Richmond) form part of the Motueka Harbour and Coastal Works Account. Properties at 95 Wharf Road and 17 North Street are in the process of being offered back to Wakatu Incorporation as the result of a High Court decision some years ago. The lease at 3 Everett Street has recently been sold and the lessees have indicated that they will be requesting approval to freehold the lessee’s interest. The Council has previously agreed to freehold this property. The proceeds are expected to be around $200,000. These funds will be available for reinvestment into commercial activities.
7.7 The Motueka Harbour and Coastal Works Account is a separate account within the Council structure but has been called upon to fund works at Jackett Island which has seriously depleted the reserve. The funds in the account were primarily from previous property sales.
7.8 The performance of the properties within the commercial portfolio is not separately
measured. The income and expenditure streams will require separate accounts within our financial systems to ensure that they are separately identified in the future and therefore able to be accurately reported on.
8 Appendices
1. Properties with development or sale potential 11
2. Motueka Airport Financial Report 13
3. Forestry Financial Report 15
4. Camping Grounds 17
Att ac hm ent 1 Item 6. 1
Att ac hm ent 2 Item 6. 1
Att ac hm ent 3 Item 6. 1
Att ac hm ent 4 Item 6. 1
Item 6. 2
2. M att ers for Dis cus sion
6.2 MATTERS FOR DISCUSSION
Decision Required Report To: Commercial Subcommittee
Meeting Date: 14 May 2013
Report Author: Mike Drummond, Corporate Services Manager Report Number: RFN13-05-01
File Reference:
1 Summary
1.1 This is the inaugural meeting of this Subcommittee as such its intended that a number of housekeeping matters are addressed. These matters include:
Future Meeting dates.
Role of the Subcommittee members
Subcommittee Terms of Reference
2 Draft Resolution
Recommendati on
That the Commercial Subcommittee receives the Matters for Discussion Report RFN13-05- 01.
Item 6. 2
Tasman District Council Commercial Subcommittee Agenda – 14 May 2013
Agenda Page 20
3 Future Meeting dates
3.1 The Subcommittee is set to meet every two months. Due to the availability of members these dates and times need to be set well in advance.
3.2 This discussion item is intended to allow members to agree the next and subsequent meeting dates.
3.3 Consideration will need to be given to the timing of the Local Authority elections (12 October 2013).
3.4 The first Council meeting following the elections is set for 24 October 2013.
4 Role of the Subcommittee members
4.1 The Subcommittee is yet to establish an operating process or set expectations on resourcing. This is an opportunity for members to determine how they see themselves adding value.
4.2 This is important to ensuring that the Subcommittee is effective in assisting Council to improve the financial performance of its commercial operations.
5 Subcommittee Terms of Reference
5.1 To assist the Subcommittee, the terms of reference agreed by Council, are attached for your information.
6 Appendices
1. Terms of Reference 21
Att ac hm ent 1 Item 6. 2
Att ac hm ent 1 Item 6. 2
Tasman District Council Commercial Subcommittee Agenda – 14 May 2013
Agenda Page 22
7 CONFIDENTIAL SESSION
7.1 Procedural motion to exclude the public The following motion is submitted for consideration:
THAT the public be excluded from the following part(s) of the proceedings of this meeting.
The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.
This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:
7.1 In Committee Matters for Discussion
Reason for passing this resolution in relation to each matter
Particular interest(s) protected (where applicable)
Ground(s) under section 48(1) for the passing of this resolution The public conduct of the part of
the meeting would be likely to result in the disclosure of
information for which good reason for withholding exists under section 7.
s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.
s48(1)(a)
The public conduct of the part of the meeting would be likely to result in the disclosure of
information for which good reason for withholding exists under section 7.
