Joint Regional Economic Development Committee

Friday 29 July 2022 at 10.00am

 

 

AGENDA

 


Joint Regional Economic Development Committee

29 July 2022

Joint Regional Economic Development Committee Agenda

 

Meeting to be held in the Council Chamber

36 Water Street, Whangārei

on Friday 29 July 2022, commencing at 10.00am

 

Recommendations contained in the agenda are NOT decisions of the meeting. Please refer to minutes for resolutions.

 

MEMBERSHIP OF THE Joint Regional Economic Development Committee

Chairperson, Councillor Justin Blaikie

Councillor Terry Archer

Councillor Anna Curnow

Councillor David Clendon

Councillor John Vujcich

Councillor Peter Wethey

 

 

 

RĪMITI (Item)                                                                                                       Page

1.0      Ngā Mahi Whakapai/Housekeeping

2.0      Ngā Whakapahā/apologies   

3.0      Ngā Whakapuakanga/declarations of conflicts of interest

4.0      Ngā Whakaae Miniti (Confirmation of Minutes)

4.1      Confirmation of Minutes - 29 April 2022                            4

5.0      Receipt of Action Sheet

5.1      Receipt of Action Sheet                                                          8

6.0      Reports

6.1      Northland Inc Limited: Statement of Intent 2022-25     10

 


 


Joint Regional Economic Development Committee                                            item: 4.1

29 July 2022

 

TITLE:

Confirmation of Minutes - 29 April 2022

From:

Emmanouela Galanou, Economic Policy Advisor and Darryl Jones, Economist

Authorised by Group Manager/s:

Auriole Ruka, Pou Manawhakahaere - GM Governance and Engagement, on 25 July 2022

 

Ngā mahi tūtohutia / Recommendation

That the minutes of the Joint Regional Economic Development Committee meeting held on 29 April 2022 be confirmed as a true and correct record.

 

 

Attachments/Ngā tapirihanga

Attachment 1: Joint Regional Economic Development Committee Minutes 29 April 2022   


Joint Regional Economic Development Committee  ITEM: 4.1

29 July 2022Attachment 1

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Joint Regional Economic Development Committee                                            item: 5.1

29 July 2022

 

TITLE:

Receipt of Action Sheet

From:

Emmanouela Galanou, Economic Policy Advisor and Darryl Jones, Economist

Authorised by Group Manager/s:

Auriole Ruka, Pou Manawhakahaere - GM Governance and Engagement, on 25 July 2022

 

Whakarāpopototanga / Executive summary

The purpose of this report is to enable the meeting to receive the current action sheet.

 

 

Nga mahi tutohutia / Recommendation

That the action sheet be received.

 

 

Attachments/Ngā tapirihanga

Attachment 1: Action Sheet June 2022   


Joint Regional Economic Development Committee  ITEM: 5.1

29 July 2022Attachment 1

 


Joint Regional Economic Development Committee                                            item: 6.1

29 July 2022

 

TITLE:

Northland Inc Limited: Statement of Intent 2022-25

From:

Emmanouela Galanou, Economic Policy Advisor and Darryl Jones, Economist

Authorised by Group Manager/s:

Auriole Ruka, Pou Manawhakahaere - GM Governance and Engagement, on 25 July 2022

 

Executive summary/Whakarāpopototanga

The purpose of this report is to present the Joint Regional Economic Development Committee (Joint Committee) with Northland Inc Limited’s (Northland Inc) final Statement of Intent (SOI) for 2022-2025 (Attachment One).  Along with the final SOI, Northland Inc provided a cover letter highlighting changes in the organisation’s operational expenditure (Attachment Two).  The forecast financial performance table shows an operational deficit due to the non-inclusion of unconfirmed tenant income associated with the Ngawha Innovation and Enterprise Hub.  The Northland Inc board has chosen to incorporate almost all the suggestions by the Joint Committee in its shareholder comment. 

 

Under section 65(2) of the Local Government Act (LGA) 2002 the Joint Committee must agree to Northland Inc’s SOI, or if it does not agree, takes steps to require the SOI to be modified.  Staff recommend that the Joint Committee agree to the SOI 2022-2025 and send a letter specifically relating to Northland Inc’s financial obligations and the Joint Committee’s expectations regarding the operation of the Innovation Hub.

 

Recommendation(s)

1.        That the report ‘Northland Inc Limited: Statement of Intent 2022-25’ by Emmanouela Galanou, Economic Policy Advisor and Darryl Jones, Economist and dated 15 July 2022, be received.

2.        That the Joint Regional Economic Development Committee agree to Northland Inc Limited’s Statement of Intent 2022-2025 as set out in Attachment One pertaining to item 6.1 of the 29 July 2022 Joint Committee agenda.

3.        That the Joint Regional Economic Development Committee authorise its Chair to write to Northland Inc reminding them of their financial obligations under the underwrite agreement for the Ngawha Innovation and Enterprise Hub and its expectation that the Hub will be cost neutral. 

 

Options

 

No.

Option

Advantages

Disadvantages

1

Agree to Northland Inc’s SIO 2022-2025 as set out in Attachment One.

Allows Northland Inc to begin operating in 2022/23 without uncertainty.

Do not get all the changes requested by the Joint Committee incorporated into the SOI 2022-2025.

2

Not agree to Northland Inc’s SOI 2022-2025 as set out in Attachment One and formally request additional modifications.

Get further changes requested by the Joint Committee incorporated into the SOI 2022-2025.

Creates unnecessary antagonism with Northland Inc given that the Joint Committee requests to date have either been incorporated within the SOI 2022-2025 or answered separately.

 

The staff’s recommended option is Option 1, that the Joint Committee agree to the SOI 2022-2025 received from Northland Inc as set out in Attachment One.  Northland Inc have chosen to incorporate almost all the Joint Committee’s comments into the final SOI 2022-2025.  While recommending that the Joint Committee agree to the SOI, staff also recommend that a letter be sent to Northland Inc reminding them of their financial obligations under the underwrite agreement for the Ngawha Innovation and Enterprise Hub, setting out the Joint Committee’s expectation that the Hub will be cost neutral, and requesting a footnote be added to the financial information table regarding the non-inclusion of unconfirmed income (see Financial implications section for further explanation). 

Considerations

1.        Environmental Impact

This decision does not have any environmental risks or negative impacts.  Northland Inc’s final SOI 2022-2025 incorporates the organisational objective of environmental sustainability and includes references in the Activity and Key Performance Indicators sections.  Northland Inc intend to continue assisting the region’s transition to a zero carbon and low emission economy by partnering to provide support and embedding environmental sustainability criteria within all active projects.

2.        Community views

The community have not been specifically consulted with regarding the development of the latest Northland Inc SOI.  NRC’s proposed Long Term Plan 2021-2031 consultation document outlined the policies, objectives and Key Performance Indicators for Northland Inc.  NRC has received ongoing support for providing regional economic development services through Northland Inc.  Both Far North and Kaipara district councils consulted on the joint delivery model proposal as part of their respective Long Term Plan 2021-2023 consultation process, including becoming joint owners of Northland Inc.  Both FNDC and KDC received responses in favour and against the proposal, but both councils agreed in their deliberation to participate in the joint ownership of Northland Inc. 

3.        Māori impact statement

Northland Inc’s SOI 2022-2025 continues to place a focus on strategic partnerships in the Māori Economic Development space to drive delivery on high impact Māori economic development projects across all levels.  Within the latest SOI, Northland Inc continue to implement their “He Korowai Manawanui” pathway, a two-year programme working on their organisational culture towards elevating the importance of Māori Economic Development and becoming a better partner for Māori with a genuine understanding of Tikanga and Te Ao Māori.  Northland Inc respect and implement the principals of the Te Tiriti O Waitangi, which support meaningful partnerships with Māori. 

4.        Financial implications

Through their SOI and cover letter, Northland Inc have presented a budget that reflects the current economic environment.  Northland Inc have ensured an appropriate provision for inflation across the operational activities.  The presentation of the financial table in section 13 of the SOI has been improved by separating out income and expenditure into three distinct sections: business as usual, strategic projects and the Innovation Hub at the Ngawha Innovation and Enterprise Park. 

Northland Inc have also included only confirmed income in their budget as directed by the Joint Committee.  In this regard, the unconfirmed tenant income associated with the Innovation Hub has now not been included (it was originally included in the draft received on 1 March 2022) while the planned costs of operating the Hub continue to be.  The unconfirmed MBIE Regional Business Programme (RBP) included in the draft SOI has now been confirmed so is included in the final SOI.  As a result, the total Northland Inc loss of $70k in year one and $140k in years two and three is due to the budgeted loss at the Innovation Hub.  Northland Inc are confident that they will be able to secure the required income to operate the Innovation Hub without incurring a loss. 

The exclusion of unconfirmed tenant income clearly shows the financial risks associated with the development of the Innovation Hub.  In recognition of this risk, an underwrite commitment agreement between Northland Regional Council and Northland Inc was signed in April 2021.  This agreement provides for the use of the annual Project Development funding category of the Investment and Growth Reserve to cover any operational loss associated with the Innovation Hub.  To ensure there is enough funding in the Project Development category to cover any operational shortfall at the Innovation Hub, there are quarter limits put in place on the amount of Project Development funding that can be allocated by Northland Inc. 

A letter should be written to Northland Inc reminding them of these limits and other obligations in the agreement including the need to provide quarterly financial reporting on the operation of the Innovation Hub to the Joint Committee.  The letter should also include an expectation from the Joint Committee that the Innovation Hub will, in the long term, be self-sustaining and not propped up by council funding from the IGR through the Project Development category.  While recommending that the Joint Committee agree to the SOI, staff also consider that the letter should include a further request that a footnote be added to the financial table along the lines that “Only confirmed funding has been included”.  This was the only request made in the shareholders comment on the draft that had not been incorporated. 

5.        Implementation issues

Northland Inc is responsible for implementing its SOI.  The Joint Committee does not provide any direction to Northland Inc on how its operational funding is spent across the work programmes.  It is up to the board of Northland Inc to prioritise the allocation of its operation funding across the work programmes.  The Joint Committee receives a report each quarter from Northland Inc on progress made in achieving the performance measure targets.

 

6.        Significance and engagement

In relation to section 79 of the Local Government Act 2002, this decision is considered to be of low significance when assessed against Northland Regional Council’s Significance and Engagement Policy because it is provided for in councils’ Long Term Plans 2021-2031 and previous decisions of council to set up Northland Inc Limited as a joint council controlled organisation.  This does not mean that this matter is not of significance to tangata whenau and/or individual communities, but that the Joint Committee can make decisions relating to this matter without undertaking further consultation or engagement. 

7.        Policy, risk management and legislative compliance

 The decision is consistent with policy and legislative requirements, and no significant corporate risks are identified under Northland Regional Council’s Risk Management Policy.  Under section 65(2) of the Local Government Act (LGA) 2002 the Joint Committee must agree to Northland Inc’s SOI, or if it does not agree, takes steps to require the SOI to be modified.

Background/Tuhinga

In March 2022, Northland Inc provided a draft SOI for the three-year period 2022-2025 for the Joint Committee’s consideration based on the committee’s letter of expectations sent on 14 December 2021 (Attachment Three).  Northland Inc’s draft SOI 2022-2025 was received within the time requirement set out in Schedule 8 of the Local Government Act 2002 (LGA 2002), i.e., on or before 1 March.  The draft SOI 2022-2025 was formally received at the Joint Committee meeting on 11 March 2022, with the shareholders comments on the draft SOI agreed at the Joint Committee meeting on 29 April.  The Joint Committee’s shareholder comment was sent to Northland Inc on 29 April 2022 (Attachment Four).

The Joint Committee received a Northland Inc board approved final version of the SOI 2022–2025 on 29 June 2020 along with a cover letter (Attachment Two), within the deadline required by clause 3 of Schedule 8 of the Local Government Act 2002, i.e., before 1 July 2021.

Staff have reviewed the SOI and confirm that it complies with the requirements of Schedule 8 of the LGA 2002.  Staff have also reviewed the final SOI against the shareholder comments provided by the Joint Committee.  Almost all the changes and additions suggested by the committee have either been taken on board and incorporated into the final SOI.  An overview of Northland Inc’s response to the shareholder comments is included in Attachment Five.

If the Joint Committee does not agree to Northland Inc’s final SOI 2022-2025, it is then required to take practicable steps to make a modification to the SOI.  Clause 6 of Schedule 8 sets out the process that the shareholders must follow to make modification.  This includes consultation with the board regarding the proposed modification before being passed by resolution of the shareholders. 

Northland Inc representatives will attend the Joint Committee meeting.

Attachments/Ngā tapirihanga

Attachment 1: Northland Inc's Statement of Intent 2022-2025

Attachment 2: Cover Letter accompanying Northland Inc's final SOI - 29 June 2022

Attachment 3: Letter of Expectations to Northland Inc - 14 December 2021

Attachment 4: Shareholder Comment to Northland Inc - 29 April 2022

Attachment 5: Overview of Northland Inc's response to shareholder comments   


Joint Regional Economic Development Committee  ITEM: 6.1

29 July 2022Attachment 1

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Joint Regional Economic Development Committee  ITEM: 6.1

29 July 2022Attachment 2

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Joint Regional Economic Development Committee  ITEM: 6.1

29 July 2022Attachment 3

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Joint Regional Economic Development Committee  ITEM: 6.1

29 July 2022Attachment 4

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Joint Regional Economic Development Committee  ITEM: 6.1

29 July 2022Attachment 5

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