NEW PLYMOUTH DISTRICT COUNCIL (WAITARA LANDS) BILL Initial briefing to the Māori Affairs Committee 3 October 2016 Contents He Mihi .................................................................................................................................................... 3 Background to the Bill ............................................................................................................................. 4 About Waitara ................................................................................................................................. 4 The history of Waitara land ............................................................................................................ 4 Leasehold properties in Waitara ..................................................................................................... 5 Existing legislation ........................................................................................................................... 5 Previous reform attempts have not succeeded.............................................................................. 6 Process followed in development of this Bill .................................................................................. 8 The Bill’s key proposals ........................................................................................................................... 9 1. Land in Waitara will be vested in Te Atiawa ............................................................................... 9 2. Leaseholders have a right to freehold ...................................................................................... 10 3. Rents and sale proceeds will be used to benefit the Waitara community ............................... 11 Key issues that you will need to consider ............................................................................................. 13 Relationship with the Te Atiawa Claims Settlement Bill ............................................................... 13 The price to freehold .................................................................................................................... 14 The potential for the Council to sell the freehold estate of leasehold land to a third party........ 16 Local authorities cost recovery ..................................................................................................... 17 Taranaki Regional Council’s share................................................................................................. 17 Rents ............................................................................................................................................. 18 Returning of all endowment land to Te Atiawa or hapū .............................................................. 19 Overall community views.............................................................................................................. 19 Issues outside of the Bill ............................................................................................................... 20 Greater opportunities for the Waitara community .............................................................................. 21 Front cover: Maunga Taranaki over Waitara 2 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill He Mihi Korōria ki te Atua i runga rawa Maungarongo ki te whenua Whakaaro pai ki ngā tāngata katoa. Tēnā koutou e te iwi whānui He mihi tēnei ki a koutou katoa. He mihi hoki ki a rātou kua mene ki tua o te ārai. E ngā mātua i te pō haere haere. Hoki atu ra ki paerau ki te kainga tūturu o te tāngata. Kei reira e noho noa atu. Kāti. The New Plymouth District Council (Waitara Lands) Bill provides significant reform, and an enduring solution, for the Waitara endowment land. The Council has been attempting to find resolution to the Waitara endowment land issues since it was amalgamated in 1989. This is the third attempt at reform. The endowment land has always been contentious because it was confiscated from the hapū of Te Atiawa and some time later was vested into the Council’s predecessors. Much of the endowment land is now leasehold residential land and comprises approximately one quarter of all residential land in Waitara. This Bill has significant implications on the future of the township of Waitara. The Bill will, if enacted, provide multiple benefits for the Waitara community through transferring almost half the endowment land to the mana whenua iwi, normalising its property market, and creating significant community development funds. Broadly, the Bill will provide a brighter future for Waitara. The Bill reflects a compromise between competing interests in the land and all three of the policy proposals are required to provide some form of resolution to the Waitara lands. We would like to make an oral submission to the Committee with additional information, and we will be available throughout the Committee’s consideration of the Bill to answer any questions or queries you may have. We have consulted with our community, receiving 141 submissions, and we made substantial changes to the Bill. We will work with you to consider the submissions you receive to assess whether any further changes to the Bill are required. We therefore intend to provide commentary on submissions as appropriate when they are released. To that end, we would be appreciative if the Committee would instruct that submissions be released as they are received. Andrew Judd Mayor, New Plymouth District Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 3 Background to the Bill About Waitara Waitara is a north Taranaki town of approximately 6,800 people. Waitara is the second largest population centre in the New Plymouth District (after New Plymouth City), and the third largest in the Taranaki region. The town is approximately 500 hectares, and is located at the mouth of the Waitara River on the Tasman Sea on the North Taranaki Blight approximately 15 kilometres northeast of New Plymouth on State Highway 3. It has two substantial surf beaches. The Waitara River is seen as the spiritual centre of the town and its tributaries come from both Maunga Taranaki and the north Taranaki hill country. Waitara is naturally flood prone due to these substantial tributaries and its low-lying coastal location. Waitara is a diverse community, with a strong Māori population (37 per cent) – of whom about 40 per cent affiliate to Te Atiawa (or 15 per cent of the total population). Te Atiawa are the iwi with mana whenua, with Manukorihi and Otaraua hapū as the mana whenua hapū over Waitara. Waitara has a high proportion of both retirees (19 per cent) and children under 15 (22 per cent). Waitara is a low socio-economic town, with the New Zealand Deprivation Index placing Waitara East as decile 9 and Waitara West as decile 10 (where 1 indicates low deprivation and 10 indicates high deprivation). Other than the freezing works and some industrial sites there are limited places of employment in the township itself. There are two substantial methanol plants nearby as well as substantial oil and gas operations (both onand off-shore). The growth of the nearby Bell Block industrial area (the fastest growing employment centre in Taranaki) and recent (and future planned) improvements to the state highway between Waitara and New Plymouth have provided increased employment prospects for Waitara residents in recent years. The history of Waitara land As you will be aware, before European settlement, the area of modern Waitara was a prominent Te Atiawa settlement. The initial European settlors of Taranaki saw Waitara as an attractive harbour and site for a new township. Tensions began as early as 1842. In the 1850s the Pekapeka Block (on the western side of the Waitara River) became a source of contention, and eventually in 1860 war broke out in Waitara following the Crown’s attempted purchase of the Pekapeka Block. This began the First Taranaki War, which started the main period of fighting in the New Zealand Wars. Plan of the Pekapeka Block, Waitara, with an insert of Te Kohia Pā (where the first shots of the First Taranaki War were fired at). The Council has recently purchased on the open market the property Te Kohia Pā is located on. We intend to work with Te Atiawa and hapū on developing this site into an appropriate memorial and centre for learning. In 1865 (following the Second Taranaki War) the Crown confiscated the Pekapeka Block and other lands from Te Atiawa. In 1876 the Crown began vesting land in the Waitara Harbour Board and the Raleigh 4 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill Town Board (which later became the Waitara Borough Council). Over the next 70 years further land was vested in the Council’s predecessors for various purposes, mostly relating to harbour improvements and municipal development. This was a common method of funding local bodies and other public bodies in those times, when central Government had little money available. An endowment gave a town, harbour board, hospital authority, charity or university a steady income from rentals. Leasehold properties in Waitara There are approximately 780 leasehold properties in Waitara. To our knowledge, this is the largest local authority-owned leasehold portfolio remaining in New Zealand. Around 700 of these leasehold properties are residential leases, the rest are commercial, industrial and farm leasehold properties. Approximately one quarter of all residential properties in Waitara are leasehold properties. There is also endowment land used for municipal purposes, and a small portion is vacant. Leaseholders have a perpetual right to renew their lease, with rents set every 21 years for most properties (although there are some on 7 and 10 year renewal cycles). Rents are set in accordance with the Public Bodies Leases Act 1969. Rents are set at a market rate at the start of the cycle but, as they are fixed for the cycle, rents are substantially below market rates by the end of the cycle. This means that rents can jump considerably when renewed. Leaseholders renewing today are often moving from paying a few hundred dollars per annum to $4,000 to $5,000 per annum. Leaseholders are also responsible for paying rates. This places some leaseholders under considerable financial stress upon renewal. Although they have had a substantial discount for a number of years, some leaseholders do not adequately provide for future increases. Using census data, we estimate that approximately 40 per cent of leasehold properties are sub-leased as residential tenancies at market rates (the average rent of a house in Waitara is approximately $290 per week). Also, of course, it is cheaper to purchase a leasehold property because the purchase price does not include the price or value of the underlying land. Existing legislation Most of the endowment land in Waitara is governed by the Waitara Harbour Act 1940 (the WH Act), with the Waitara Borough Reserves Vesting Act 1909 also applying to some of the land. Some land even continues to be held under the original 1876 Gazette notice. The WH Act governs the majority of endowment land (shaded red and purple in the map on the next page). The WH Act dissolved the Waitara Harbour Board as the Waitara River was no longer being used as a harbour. It provides that the Council can use the funds derived from the endowment land for river erosion control, maintenance or reconstruction of the Waitara River Bridge, harbour lights, retirement allowances and administration. These purposes are out-dated and the Council no longer requires a substantial endowment to support these limited activities. The New Plymouth Harbour Board (now Taranaki Regional Council) can use “surplus moneys” for general harbour purposes following either agreement with the Council or a Commission of Inquiry. Waitara Port and Freezing Works, year unknown The Waitara Borough Reserves Vesting Act 1909 (the 1909 Act) meanwhile governs a small number of leases (shaded brown in the map). The 1909 Act provides for the land to be leased and rents used for the Waitara Library. It does not address the sale of property. Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 5 The 1876 Gazette notice that still governs a small proportion of land was made under regulations under the New Zealand Settlements Act 1863 and the New Zealand Settlements Amendment and Continuance Act 1865. The income from these properties (shaded orange in the map) can be used for “town improvement”. There is a small proportion of leasehold land that is owned by the Council with no restrictions (shaded yellow). There are also a significant number of properties that have two or more statuses applying to them – creating legal confusion about the use of income from those properties (shaded blue). This myriad of endowment statutes and out-dated legislation provides significant barriers to the Council in administering the estate, and requires further legislation to alter. A map of endowment land in Waitara. Land vested by the Waitara Harbour Act 1940 Land subsequently made subject to the WHA 1940 Land subject to the Waitara Borough Reserves Vesting Act 1909 Town improvement land under the 1876 Gazette notice Land with no statutory restrictions Mixed statuses Previous reform attempts have not succeeded In 1989 the Council, upon amalgamation, resolved to adopt a policy of permitting Waitara leasehold owners to purchase the freehold estate, subject to further investigation. This resulted in a 1991 decision to promote local legislation to Parliament to facilitate freeholding and enable all funds derived from sales to be credited to the Council’s general account. In 1992 the New Plymouth District Council (Land Vesting) Bill was introduced to Parliament. This six clause Bill would have removed the trusts, endowments and restrictions, with all rents and sales proceeds (if the Council decided to sell) being put into the Council’s general account. The 1992 Bill stalled at the select committee stage because of concerns by the Government of the day around Treaty of Waitangi claim issues with Te Atiawa. The Crown asked the Council to work with the iwi to find an appropriate position to address the iwi concerns. However, the Council and the Te Atiawa 6 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill Tribal Council could not find a position that both parties could agree to. The Crown reiterated to the Council on a number of occasions that the land was ‘private land’ (from the Crown’s perspective) and therefore fell outside of scope for Te Atiawa’s Treaty settlement. In 2002 the Council began to review its position on the Waitara endowment lands. The Council commissioned reports to investigate and document the history of the Waitara lands. The Council also assessed a wide range of options. After three rounds of consultation over two years, the Council resolved to withdraw the 1992 Bill from Parliament and to sell the leasehold land to the Crown for fair market value for inclusion in a Treaty of Waitangi claims settlement for Te Atiawa if the Crown and Te Atiawa so wished. The resolution also required the rights of leaseholders be preserved. The Waitara Leaseholders Association Inc. challenged this decision. The High Court ruled largely in favour of the leaseholders in two decisions in 2004 and 2005. The Council appealed this decision. The Court of Appeal decided in favour of the Council in 2006. The Waitara Leaseholders Association sought leave to appeal to the Supreme Court, but leave was denied in 2007. Further litigation by over 100 individual leaseholders was ultimately dismissed in 2010. The Council expended considerable resource and cost in fighting these legal battles to enable the Crown to purchase the leasehold estate to include in Te Atiawa’s Treaty settlement. The depth of feeling of the leaseholders is also very evidence from the length they went to challenge the decision. In 2010 the Council entered into a conditional sale and purchase agreement with the Crown that provided for the transfer of the leasehold land to the Crown if Te Atiawa decided to uptake the Waitara endowment land as part of its Treaty settlement. In accordance with the Council’s 2004 resolution and its fiduciary and legal obligations under the Local Government Act 2002, the agreement provided for the purchase price that the Crown paid to be a fair market value. New Plymouth District Council and Taranaki Regional Council also came to an agreement in relation to the use of sales proceeds for the Waitara harbour land that reflected Taranaki Regional Council’s contingent interest under the WH Act in 2010. We understand that the Crown and Te Atiawa agreed that the Waitara endowment land would become part of the commercial redress rather than cultural redress. The Council and Crown agreed in October 2013, through an independent valuation process, to a provisional purchase price of $23m for these properties. Following this, the Crown engaged in negotiations with Te Atiawa to determine if Te Atiawa wished to proceed with the acquisition at the price of $23m. We note that it was the Crown’s decision that the $23m would be the value of the leasehold land in the settlement. Meanwhile, Te Atiawa approached the Council directly with an alternative offer to purchase the land for $16.3m, which the Council was unable to accept as it fell outside of the Council’s 2004 resolution and legal obligations and the terms of the agreement with the Crown, as the price offered did not represent a fair market value. In 2014, the Council was notified that the Waitara endowment land would not be included as part of the Treaty settlement, and the agreement between the Crown and the Council was terminated. We understand there were a variety of reasons. These include that the leaseholders have a perpetual right to lease meaning Te Atiawa could not use the land for its own purposes, and that the $23m price was considered too high for leased land. Te Atiawa instead received financial redress of $23m. Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 7 Process followed in development of this Bill The Council has sought a new way forward following the Crown and Te Atiawa decision to not include the Waitara endowment land in the Te Atiawa Treaty settlement. In August 2014 the Council resolved to enter into a Heads of Agreement with Te Kotahitanga o Te Atiawa Trust on the future of the Waitara endowment land. The Minister for Treaty of Waitangi Negotiations was involved in this initial negotiation period. The Heads of Agreement was signed on the eve of the Te Atiawa Deed of Settlement being signed between the Crown and Te Atiawa. The Heads of Agreement sees the Council promoting new legislation to govern the Waitara endowment land. We attach a copy of this Heads of Agreement for your information. There are some changes from the Heads of Agreement to this Bill that benefit Te Atiawa, such as doubling the land for Te Kotahitanga to develop. Following almost two years of detailed due diligence, discussions and decisions, the Council agreed in April 2016 to consult the public over a draft version of the New Plymouth District Council (Waitara Lands) Bill that implements the Heads of Agreement. The statement of proposal was sent to all leaseholders, and Te Kotahitanga provided Our community consultation document copies to hapū and those who whakapaka to Te Atiawa. During the one-month consultation period, Council staff ran ‘drop-in’ sessions at the Waitara Library and Service Centre as well as a public question and answer session at the Waitara War Memorial Hall. The Council received 141 submissions on the draft Bill, predominately from leaseholders. The Council considered these submissions, and made a number of changes to the Bill. The Council then notified the Bill as required by Standing Orders from 8 to 31 August 2016. We have attached a copy of the Bill as consulted upon under the Local Government Act 2002 provisions, and a version showing changes made to it prior to introduction. Waitara’s West Beach, looking towards the Waitara River. This land is vested in Te Kotahitanga o Te Atiawa Trust by the Bill, with co-governance with the Council as a recreation reserve (with Council undertaking day-to-day administration and therefore covering all costs). 8 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill The Bill’s key proposals There are a number of competing and legitimate interests in the Waitara endowment and leasehold lands. The Bill proposes an approach that accommodates and takes into account, as much as possible, these competing interests. However, there are always going to be parties who are not fully satisfied. It is a difficult balancing act. There are three main aspects to the Bill. All three aspects of the Bill are key to its success. The history of attempted resolutions shows that each part is critical to the success of the others and favouring one interest over others will not work. 1. Land in Waitara will be vested in Te Atiawa The Bill proposes to vest land in Te Kotahitanga o Te Atiawa Trust. This will significantly increase the amount of Te Atiawa collectively-owned land in Waitara. Returning confiscated land to Te Atiawa has been the aim of the Council since 2004, and we are pleased to be able to vest this land in Te Atiawa as part of a wider resolution. In total, the Bill will vest in Te Atiawa, or provide a right of first refusal over, approximately 45 per cent of the Waitara endowment land, and about 20 per cent of the Pekapeka Block. This is on top of other Te Atiawa land holdings in Waitara.1 The vesting includes approximately 13ha of prime vacant coastal residential-zoned land (in purple) that Te Kotahitanga can develop in the future as it sees fit (within the District Plan framework). There is strong development potential for this site. This land could, for instance, be developed into over 130 standard residential sections, or could have other iwi/hapū uses. We understand that Te Kotahitanga intend to work with the hapū to determine the best future use of this opportunity. Land to be transferred to Te Atiawa, including right of first refusal land. Te Kotahitanga will also have vested in it the underlying ownership of three areas of reserve land with joint strategic decision-making and Council day-to-day administration, including bearing all costs (in yellow). This includes the beach front areas owned by the Council, as well as Clifton Park (where a major new multi-purpose sporting complex is being developed). The East Beach borders the Rohutu Block, a significant Māori-owned block of coastal land. The West Beach currently comprises Marine Park (with a playground, open space and walkways), the Waitara Motor Camp, open space and some grazing areas. Te Kotahitanga will also have the right of first refusal to purchase two significant blocks of land in Waitara from the Council should the Council decide to sell them in the future (shaded orange). This includes the Council-owned 16ha of Ranfurly Park (a further 8ha of Ranfurly Park is Crown-derived reserve), and part of the Waitara Golf Club land. Ranfurly Park is currently used by the Waitara Pony Club (lease expiring 2022, with a right of renewal for a further 10 years); however it is suitable for development in the future (subject to re-zoning in the District Plan). The Waitara Golf Course land (lease expiring 2024) is suited to recreation or farming purposes. Te Atiawa also recieve land in Waitara from the Crown as part of their Treaty of Waitangi settlement, including approximately 5ha of vacant residential zoned land. 1 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 9 The removal of statutory restrictions on endowment land also means that some other minor parcels of land within Waitara may become available for Te Kotahitanga or the hapū to purchase in the future. There is approximately 7 hectares of such endowment land. Some of this land is vacant. Some of this land is used for municipal purposes, including playgrounds, parks, the Waitara swimming pool, pensioner housing, a former Council depot and the waste transfer station. The Bill requires the Council to seek and have particularly regard to the views of Te Kotahitanga in considering selling this land thus providing an ability for Te Kotahitanga to indicate its desire to purchase. This complements the Council’s existing land sales policy to offer land to iwi and hapū first (unless good reason exists). We also intend to enter into a memorandum of understanding with Te Kotahitanga on land transfers (throughout Te Atiawa’s rohe) once their settlement legislation is enacted. None of this transfer land is residential leasehold land, although there are non-registered leases in place over parts of the land vested for reserves, as well as the land subject to rights of first refusal (including a registered but non-perpetual lease for the Waitara Golf Club that will not have a right to freehold). There are also two perpetual leases inside the West Beach transfer land that cannot be vested with Te Kotahitanga because the Council does not own all estates in the properties and the leaseholders will receive the right to freehold. However, there is provision in the Bill to include these properties in the reserve land in the future if the Council ever owns these properties outright. This policy objective is contained in subparts 2 and 3 of Part 2 of the Bill, as well as much of Part 5. Parts 1, 3 and 4 of Schedule 3 contain the relevant land descriptions. 2. Leaseholders have a right to freehold Secondly, the Bill provides that the Waitara leaseholders have a right to purchase the freehold title to their properties. The opportunity to freehold has long been sought after by leaseholders. The Council has previously attempted to enable freeholding through the 1992 local Bill and has been taken to court by leaseholders seeking to freehold. The Council now believes it is time to give leaseholders not only the ability to freehold, but a permanent statutory right to do so. Leaseholders who wish to purchase the freehold title can do so by paying the unimproved land value at the time of the purchase. There will be no obligation or time constraints on leaseholders. This right applies to all perpetually renewable registered leases of the Council land in Waitara (the Waitara Golf Club lease is not perpetual and does not gain that right). Providing a right to freehold will mean that even leaseholders who cannot necessarily afford to freehold will benefit. The leasehold status of one-quarter of the town has significant impacts on the property market, with many leasehold properties being difficult to sell. We have already noticed an upturn in the leasehold market as a result of this proposal being made 2013 Rateable land values of leasehold properties public; and we expect that (should the Bill be enacted) 600 leasehold properties will be more marketable in the 500 future with faster sale time and potentially higher prices 400 being obtained. We are also aware that some 300 leaseholders have not invested in their property in fear 200 100 of over-capitalising a leasehold property; so a provision 0 of a right to freehold should provide more confidence to invest in the property. This policy objective is contained in Part 3 of the Bill, and Part 2 of Schedule 3 contains the relevant land descriptions. 10 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 3. Rents and sale proceeds will be used to benefit the Waitara community Thirdly, Te Atiawa and hapū will have co-governance of the proceeds of the leasehold estate (both rent and sales proceeds). The Bill splits accumulated and future funds from ongoing rents and sales proceeds between New Plymouth District Council and Taranaki Regional Council. New Plymouth District Council and Taranaki Regional Council will equally split proceeds for land currently subject to the WH Act (this land is approximately 80 per cent of all of the Waitara endowment land). All proceeds from other endowment and leasehold lands will go solely to New Plymouth District Council. Iwi and hapū are involved in the distribution of these funds from each local authority, albeit in different ways. New Plymouth District Council’s share New Plymouth District Council share of the proceeds will be invested into a perpetual fund. This means the fund can grow or hold its value each year, although it can lose value as a result of market conditions or if earnings are not retained to match inflation. A statutory Board will be established to distribute an ‘Annual Release’ from the Fund. The Board will have three members Schedule 1 defines the area of Waitara as including appointed by each of the Council and Te Kotahitanga o Te the current urban area, identified future urban Atiawa Trust. This creates a forward-looking and enduring areas, the Pekapeka Block and all endowment land. partnership between Waitara’s territorial authority and mana whenua iwi. It provides iwi and hapū with co-governance on the proceeds of the endowment land for the land that is not returned to them. The Bill requires that the Board must attempt to make its decisions unanimously. However, the Council will appoint a chair with a casting vote that can be used for split decisions if required. The Chair can be selected from any of the 6 members (i.e. not just the Council’s appointees). Furthermore, the Chair must rotate annually unless all members agree otherwise to ensure there is no long-standing Chair. The appointment of the Chair by the Council is not supported by Te Kotahitanga. Its inclusion by the Council reflects that the Council has wider community responsibilities and obligations. The amount of money available for the Annual Release will be determined by the Council following consultation with the Board. Furthermore, the Board will recommend a policy to the Council on how the Council will set this amount, and the policy must be included in the Council’s Long-Term Plan. The policy must take into account the desirability of maintaining or increasing the real value of the capital of the fund. These provisions reflect the Council’s role as guardian of public monies and our responsibilities to account for money in our long-term and annual plans under the Local Government Act 2002. The statutory Board will determine the distribution of the Annual Release. The Annual Release must be used to benefit the Waitara community, or a part of the Waitara community. The Bill provides two guiding mechanisms for the Board. Firstly, the Bill sets out a list of examples on the use of the Annual Release. These examples are similar to the provisions that govern lottery grant distributions in the Gambling Act 2003 (s277). Secondly, the Bill requires the Board to consider the social, economic, cultural and environmental issues of importance to the Waitara community to provide a strategic framework in deciding the distribution of the Annual Release. The issues of importance will be assessed by the Board on a 3-yearly basis after consultation with the Waitara community. Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 11 These provisions are designed to allow the Annual Releases’ uses to change over time to suit the changing needs of the Waitara community rather than having a defined list of uses that may become outdated as has happened with the current statutory framework. Taranaki Regional Council’s share Taranaki Regional Council will have priorities for how it uses it share of proceeds for the performance of its responsibilities. Taranaki Regional Council will first and foremost have to spend the proceeds within Waitara or for the benefit of the Waitara community. As part of this, Taranaki Regional Council can use the funds to recover the costs associated with its recent flood protection scheme work (as that is the most substantial investment in Waitara by Taranaki Regional Council in recent years, is funded by internal borrowing repaid by a targeted rate, and could have been funded from the Waitara Harbour Act endowment if funds were then available). The proceeds can accumulate over time, rather than having to be spent as they come in. Taranaki Regional Council can also use its funds outside of Waitara if it cannot identify projects within its mandate in Waitara and chooses not to accumulate them until a suitable matter arises. Taranaki Regional Council can only do so if such a proposal is included in its Long-Term Plan or Annual Plan that is subject to public scrutiny and input. Te Atiawa (and the other iwi of Taranaki) will have an opportunity to be represented on Taranaki Regional Council’s standing committees under the Te Atiawa Claims Settlement Bill (and other settlement legislation) currently before the House.2 The Bill represents a significant shift for Taranaki Regional Council in applying its share of funds for the benefit of the Waitara community. At present, Taranaki Regional Council can use any proceeds for ‘general harbour purposes’ within Taranaki. Amount of funding available The leasehold properties provide about $1.3 million per annum in rent currently. The current rateable land value of the leasehold properties is over $60 million. However, the income from sales proceeds will take time as leaseholders will not all freehold immediately. This means there is a high degree of uncertainty in how much funds will be available immediately. $2.0 NPDC Annual Release forecast Millions $1.5 $1.0 $0.5 $- 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Our modelling indicates that, in a few years’ time, over $500,000 could be available to Waitara annually from New Plymouth District Council’s Annual Release, rising steadily to around $2 million per annum in the next 20 years. Taranaki Regional Council could have over $25 million accumulate over the next 20 years to invest in projects as they arise. This modelling is based on a range of assumptions. Such a substantial amount of money for investment into a community of fewer than 7000 residents should enable the community to prosper, develop and grow in the future. This policy objective is contained in Part 4 of the Bill, as well as Schedules 1 and 2. The eight iwi of Taranaki will jointly have three representatives on the Policy & Planning Committee and the Consents and Regulatory Committee. 2 12 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill Key issues that you will need to consider The Council has consulted with our community on an earlier draft of this Bill. We received 141 submissions, with the majority of submissions coming from leaseholders. While we addressed some concerns, a number of key issues arose from those submissions that are likely to be raised with you also. Relationship with the Te Atiawa Claims Settlement Bill The Bill and the Te Atiawa Claims Settlement Bill (the TACS Bill) are inter-related. Clause 117 of the TACS Bill addresses the Waitara endowment land, following Te Atiawa negotiators’ decision not to uptake the Waitara endowment land as part of their settlement. The Council was informed this clause would be included in the TACS Bill but was given limited opportunity to comment on its inclusion. Clause 117 of the TACS Bill provides that, if the Council sells any part of the Waitara endowment land to Te Kotahitanga, the existing statutory restrictions on the use of funds removed. The provision is designed to incentivise the Council to sell the Waitara endowment land to Te Kotahitanga. There is no obligation on the Council to sell, nor an obligation for Te Kotahitanga to purchase. The provision does not, in our view, represent a successful path forward for the Waitara endowment land. As there is a monopsony (single buyer) situation, it is unlikely that Te Kotahitanga would agree to a price that the Council could accept under Owae Marae, Waitara its wider fiduciary obligations. Te Atiawa negotiators previously rejected a fair market value for the land. Clause 117 does not address ongoing rents, take into account the contingent pecuniary interests of Taranaki Regional Council, nor the interests and expectations of leaseholders. It is unlikely that clause 117 of the TACS Bill would be invoked by the Council. When this Committee considered the Te Atiawa Claims Settlement Bill, it inserted a provision that clause 117 is repealed if the statutory restrictions are uplifted (which this Bill provides for). This local Bill gives Te Kotahitanga outright ownership of some land, a right of first refusal over more land, and the underlying title to some reserve land – totalling approximately 45 per cent of the endowment land. Te Kotahitanga are also included in a new co-governance model for the proceeds from the remaining 55 per cent. Individual Te Atiawa leaseholders also gain the right to freehold their leasehold properties. The Bill also enables the Council to sell the leased and non-leased endowment land, and in doing so the Council must seek and give particular regards to the views of Te Kotahitanga. This gives an opportunity for Te Kotahitanga to purchase more land from the Council, should it so wish. The Heads of Agreement was developed in the weeks between the announcement of the leasehold not being included in the Treaty settlement and when the Deed of Settlement was signed between the Crown and Te Atiawa. The Heads of Agreement was, at that time, seen as complementing the Deed of Settlement in that it provided a resolution of the Waitara endowment lands issues that the Deed of Settlement did not provide. When the Council and Te Kotahitanga entered into the Heads of Agreement both parties were aware of clause 117 of the TACS Bill. Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 13 It is important to note that this Bill is not a part of the Te Atiawa Treaty of Waitangi settlement. While some in Te Atiawa see it as a continuation of the settlement process and it has many facets in common with Treaty settlements, such as an RFR process and shared governance of reserves, it has significant and wider implications for the whole community of Waitara. Te Atiawa have entered into a full and final settlement with the Crown being implemented by settlement legislation. However, the Council acknowledges the traditional owner and mana whenua of Waitara in seeking a lasting resolution to the competing interests in the Waitara lands that sits outside the final version of the settlement process negotiated by Te Atiawa with the Crown. The price to freehold The most common issue raised by submitters to the Council was on the price to freehold. The Bill we took to our community, and the Bill in front of you, requires leaseholders pay the unimproved land value for the property. Leaseholders will also need to meet any costs associated with any required resource consents (subdivision) and building consents – this does not affect many properties. Leaseholders will also pay for the reasonable costs of the Council in the transactions (such as valuation and legal costs). This is set out in clauses 20 and 21. The unimproved land value is a well-tested valuation mechanism to assess the value of land for freeholding. It is effectively a market value in that it assesses what the property would sell for on the open market without any improvements on, or to, the land. It is as though the Council were selling a vacant section in the existing neighbourhood. The unimproved land value is used as a component to work out rents in Waitara. It is a common methodology for calculating the price to freehold and has been used in Taranaki, including the Council’s recent sale of Junction Road endowment farm leases, Taranaki Regional Council’s New Plymouth leases, and the church-owned Whiteley leases in New Plymouth. While it may seem unfair that leaseholders have to pay Council costs in the freeholding transaction, this is because freeholding is an entirely private benefit. It is not fair that other ratepayers (who do not benefit from freeholding) should pay the Council’s costs. In most cases these costs will not be significant, comprising valuation costs and the legal costs of transferring a title. As so many properties are involved, the relevant professionals will likely work out fairly priced packages. Leaseholders sought in their submissions Residential leasehold properties in Waitara to the Council various types of lower prices and discounts. Submitters said that many leaseholders are elderly and that Waitara is a low socio-economic town so the unimproved land value may be unaffordable. Another common point was that there have been previous promises or attempts to allow leaseholders to freehold, including the 1992 Bill introduced to Parliament (and eventually withdrawn by the Council) and the price now should be tied to a historic price. Another frequent point was that the Council’s provisional sale and purchase agreement to sell the leasehold land to the Crown (for Te Atiawa’s Treaty settlement) was for the price of $23m (fixed valuation date of 15 April 2013), which is substantially lower than the current approximately $60m value of the portfolio. 14 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill Freeholding involves the unimproved land value. The average land value of the leasehold properties is $90,000 as of the 2013 rating valuations. There is, however, a range within that depending on the size and location of the property. The Council will be able to provide the Committee with an updated value once the 2016 rating valuations have been released later this year (we expect, based on recent sales data, approximately a 25 per cent increase in rateable land values). It should be noted that rateable land values include some improvements to the land (retaining walls, drains etc., not buildings), whereas the proposed valuation mechanism in the Bill excludes such improvements – there is usually a 3-5 per cent difference in these valuations, but they can be much larger (one recently assessed leasehold property in Waitara had a difference of nearly 25 per cent). The conditional (and now terminated) sale and purchase agreement with the Crown had a provisional price of $23m for the lessor’s interest in the leasehold estate. This reflected the substantially different nature of that agreement. The Crown was purchasing, to transfer to Te Atiawa, the underlying title of the leasehold properties. Te Atiawa would have been bound by the perpetual leases, so would not have been able to use or do anything to the land. The price was therefore set on the basis of future rent proceeds from the leases rather than on the value of the land. Under this Bill, leaseholders who purchase the freehold title will, in contrast, own the land outright and will have full legal rights to do as they wish with the entire property. We note that while many of the submissions were concerned about reducing costs for poorer leaseholders, in fact about 40 per cent of leasehold properties are sub-leased as residential tenancies. This means that they are investment properties. The current interest rate market makes freeholding an affordable alternative to continuing to leasing, particularly for leaseholders who have recently renewed their lease. For instance, one leaseholder recently renewed the lease on their property, with an unimproved land value of $85,000, and now pays $78 per week in rent. If that leaseholder purchased the freehold estate with a 20 per cent deposit ($17,000), their mortgage repayments would be $77 per week (4.25% interest, 30 year term). An interest only loan of $85,000 at 4.25% would cost $74 per week. Long-term interest only loans are not common from institutions but could feature in intra-family loans or could even be seen as an appropriate investment by Te Atiawa for the estimated 100 leaseholders of Te Atiawa. Waitara River walkway Providing leaseholders with a right to freehold enables leaseholders to determine when they would like to freehold themselves. Leaseholders will be in control of the process to freehold. This means the Council cannot maximise the returns from the leasehold estate for the wider community. For instance, if the property market collapses (for whatever reason), then leaseholders will be able to take advantage of this by freeholding as the Council cannot decline an application. Similarly, the current low interest rate environment means rents from recently renewed properties are likely to be higher yields than returns from the Council’s investing the freehold sales proceeds. The Council does not believe it is appropriate, prudent, or consistent with legal obligations to offer a discounted price for leaseholders to freehold. Any discount will create private pecuniary gain for leaseholders with no corresponding gain for the community (indeed, the community will see less funding Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 15 available for the future). Having a perpetual statutory right to freehold places leaseholders in a strong position to maximise their financial position. Discounting the freeholding price would also lead, logically, to calls by leaseholders who are not freeholding to reduce their rents. For reasons explained later, that is not appropriate either. Fixed price introduction offer The Bill has an ‘introductory offer’ fixing the price for one year upon enactment, with some costs coming from proceeds rather than as an additional cost on leaseholders. This provides time for leaseholders to obtain finance and consider financial advice in the first year without being concerned about land price inflation in that year as well as providing some incentive to freehold in the first year. This could fairly be called a ‘kick start’ incentive, to be met from the fund, not ratepayers as a whole. We are also developing an administrative package, outside of the Bill, to support leaseholders, such as facilitating finance from the private sector. The potential for the Council to sell the freehold estate of leasehold land to a third party The Bill includes provision for the Council to be able to sell the freehold estate of leasehold land to third parties (clause 23). While the Council has no plans to do so now or in the near future, when creating legislation it is prudent to provide opportunities for the future. There has been no substantive changes to the legislation surrounding the Waitara endowment land for over 75 years, since 1940, and the Council seeks future flexibility without having to seek amendments in the future. Leaseholders have expressed concern about what protects them if the Council sold the freehold estate of their property to a third party. There is protection for leaseholders from increasing rents as their lease specifies that the Public Bodies Leases Act 1969 (or its predecessor) applies in setting rents. This cannot be altered without the leaseholder’s approval. Furthermore, the right to freehold will attach to the title of the property and cannot be removed or denied by a future landlord. Many of the concerns around this provision were about investors buying and seeking a profit by increasing rents. However, there are many different bodies that may want to purchase the freehold title of a leasehold property. These could include social housing providers, family members of elderly leaseholders and family trusts. It is also possible that because of changes of relationships, and deaths, the names on leases are not completely the same as the name of the leaseholders who would want to freehold. Te Kotahitanga sought (as part of their submission to the Council) a right of first Waitara town centre. A number of the shops are leasehold properties. refusal if the Council ever seeks to sell any leasehold land to a third party. This is despite agreeing, as part of the Heads of Agreement, that the Bill would include the “unrestricted ability of the Council to sell the freehold interest in the balance in the Waitara land (excluding the Transfer Land and the RFR land)”. The Council does not wish to provide an express statutory right of first refusal in the leasehold land because (as noted above) there will be a variety of people who may wish to purchase the freehold estate to a leasehold property, including family members of elderly leaseholders and family 16 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill trusts. While we are generally supportive of the concept Te Kotahitanga seek, we do not wish to block an adult child of an elderly leaseholder purchasing the freehold estate to help their parents out. The Bill now includes, at clause 23, a requirement that the Council seek and have particular regard to the views of affected leaseholders, Te Kotahitanga o Te Atiawa Trust and Taranaki Regional Council before selling the freehold title to a third party. The drafting used here is deliberately stronger than a standard consultation requirement in legislation and places an active obligation on the Council to seek and properly consider views. We believe that this provision creates a compromise between the competing parties claiming interest in this land. It allows leaseholders to have their views taken into account and also exercise the option to freehold if they wish. Te Kotahitanga has an opportunity to put their hand up if they wish to purchase leasehold land in Waitara, and Taranaki Regional Council has an opportunity to consider and comment on the financial implications for them. While it is not a right of first refusal for Te Kotahitanga, it places considerable onus on the Council to consider whether or not Te Kotahitanga desire to purchase the freehold estate to the leasehold land. It enshrines in legislation a long established and effective Council policy of involving iwi and/or hapū whenever Council has land for sale anywhere in its district. Local authorities cost recovery The Bill includes a provision for the Council to recover its costs in administering the endowment and leasehold land. This includes historic costs for both New Plymouth District Council and Taranaki Regional Council. This is set out in clause 24. There were concerns about the Council recovering costs. It is a basic principle of endowment funds that they pay for their costs first and foremost, as they are designed to provide additional income to local authorities for specific purposes or localities. It would be unfair for all ratepayers of New Plymouth District Council and Taranaki Regional Council to pay costs when the benefits fall to one township only. Rangi Bailey carving, West Quay Waitara The inclusion of historic costs may appear to be unusual. This is not an attempt to retrospectively legitimise or validate costs, or to retrospectively change who pays these costs. The need to include this provision arises from the unique nature of the WH Act endowment land, whereby two local authorities have incurred legal and other costs as a result of litigation and previous attempts to resolve the issues at hand, but only one of those (NPDC) is able to recover its costs under the current legislation. Taranaki Regional Council’s share Taranaki Regional Council receives, under the Bill, half the proceeds from the ongoing rents and sales proceeds from land currently governed by the WH Act. The Regional Council can use its funds to undertake projects within its mandate that benefit the Waitara community, as well as recovering its costs from its recent flood protection scheme work.3 If the Regional Council cannot identify projects within its This scheme raises the flood protection control to protect the town up to a one-in-a-hundred year flood. It represents a significant investment in protecting the Waitara community given the flood-prone nature of the town. The scheme is being funded from internal borrowing and repaid by a special targeted rate that would be reduced or eliminated if Taranaki Regional Council allocated its funds to that purpose. 3 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 17 mandate in Waitara, it can, through its consulted upon long-term or annual plan, use those funds outside of Waitara. This is set out in clauses 24 and 25. A number of submissions to the Council’s process did not support the inclusion of funds for the Taranaki Regional Council, the ability of Taranaki Regional Council to use funds outside of Waitara, or the ability to recover the costs of the recent flood protection scheme. The submissions against the proposed provisions for Taranaki Regional Council did not take into account the existing provisions under the WH Act. Taranaki Regional Council is the successor of the Taranaki Harbour Board (itself the successor to the Waitara Harbour Board). The WH Act includes ability for the Taranaki Harbour Board to receive any ‘surplus’ funds for Waitara Wharf by the Waitara River, restored in 2009 general harbour purposes (for all of Taranaki, it is not limited to the Waitara harbour). It also includes provisions for New Plymouth District Council (as successor to the Waitara Borough Council) to use funds for the prevention of erosion along the Waitara River – a responsibility that now lies with Taranaki Regional Council not New Plymouth District Council. The Regional Council therefore has a contingent pecuniary interest in WH Act endowment land. An equal split of the funds arising from the WH Act endowment land is the simplest and fairest solution to reflect that both local authorities have interest in the proceeds at present. This split was initially agreed to by the two local authorities when the Crown was going to purchase the land for Te Atiawa’s Treaty of Waitangi settlement, and both local authorities have agreed to continue this approach in this Bill. While Taranaki Regional Council have a contingent interest in the WH Act land, they have not received any proceeds from the land to date. Taranaki Regional Council has a different mandate than New Plymouth District Council under the WH Act. Indeed, Taranaki Regional Council could use funds today if such funds were available to them. The two local authorities have different starting points in applying future proceeds from the WH Act endowment land. Taranaki Regional Council has therefore made a substantial commitment to use its funds within Waitara first and foremost given its region-wide mandate and the existing statutory provisions. Rents You may receive submissions on the rent paid by leaseholders. The Bill does not address how rents are set or any other term of the lease (other than introducing a new right to freehold). Changes to the way rents are set would likely be outside of the scope of the Bill. Rents are generally set on 21 year cycles, although there are some on shorter terms (7 or 10 years). Renewing leaseholders are currently generally shifting from paying a few hundred dollars per annum to $4000-$5000. However, most leaseholders are paying less than $1000 per annum for the use of the land. Rents are set in accordance with the Public Bodies Leases Act 1969, as set out in the lease that leaseholders have signed. We acknowledge that there are some leaseholders who find paying the rent difficult, particularly following a rent renewal. However, the 21 year rent renewal cycle (that most leaseholders are on) means that for much of the term leaseholders are paying below market rates. Whatever the rents, there is limited scope to address rent issues under current legislation. 18 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill <$200 $200-$400 $400-600 $600-$800 $800-$1000 $1000-$1200 $1200-$1400 $1400-$1600 $1600-$1800 $1800-$2000 $2000-$2200 $2200-2400 $2400-$2600 $2600-$2800 $2800-$3000 $3000-$3200 $3200-$3400 $3400-$3600 $3600-$3800 $3800-$4000 $4000-$4200 $4200-$4400 $4400-$4600 $4600-$4800 $4800-$5000 $5000-$6000 $6000+ Lease renewals are an Current annual rents paid by leaseholders 200 opportune time for 175 leaseholders to consider 150 whether or not to 125 purchase the freehold title to their property. A 100 leaseholder midway 75 through their rent renewal 50 cycle is likely to face a 25 significant increase 0 replacing rent with a mortgage payment. A leaseholder with a recently renewed rental (or a renewal on the near horizon) is likely to find rent and mortgage payments are similar. Reducing rents would unjustifiably increases the value of the lessee’s interest; which the leaseholder can sell to another party at any time. Returning of all endowment land to Te Atiawa or hapū While this Bill provides for approximately 45 per cent of the endowment land to Te Atiawa, either through direct vesting or by rights of first refusal, and co-governance of the proceeds of the remaining lands, and that Te Atiawa negotiators declined the uptake of the leasehold lands in their Treaty settlement, some in the community have called for the return of all endowment land to Te Atiawa and, in particular, the hapū. This reflects that it was confiscated land and should therefore be returned. To do this would be inconsistent with the Council’s wider statutory obligations regarding prudent financial conduct. Irrespective of how the Crown acquired the Pekapeka Block, endowing it on the predecessors of the Council was a legal act and the land is an asset in the Council’s books. The logic behind statements that the Council is the receiver of stolen goods and should give them back could apply to endowments granted to local authorities, universities, health boards, and various other public bodies all over New Zealand. Similar land will now likely be held by and in the books of other related entities such as port companies (some of which are privatised and even listed, but still Council controlled). If the concept is valid, it should apply to all endowments, or indeed even sales for value, by the Crown of land taken or purchased unfairly from Māori by the Crown, but to require forfeiture of what is now regarded as private (i.e. non-Crown) assets would cut across one of the key principles of Treaty settlements. Further, the bona fide receiver of the land (which did not even exist when the Crown took the land) would be entitled to look to the Crown for compensation. These are weighty issues going to the heart of Māori/Crown/public body relationships, private land owners and society generally. Council submits they are well outside the scope, and certainly not appropriately addressed, in a local Bill. Overall community views In general, the community was supportive of the Bill in our consultation, albeit with various objections to various aspects. Leaseholders have long sought to freehold, and this is generally strongly supported within the community. There is also general acknowledgement of Te Atiawa’s history and grievances (albeit with the Crown not the Council) and the fairness of the restoration of land to them. Some in the Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 19 community did disagree on the basis that Te Atiawa have entered into a full and final settlement and refused to purchase the freeholds as part of that settlement. There are two hapū with mana whenua in Waitara – Manukorihi and Otaraua. These hapū did not support the Te Atiawa negotiators declining to uptake the Waitara leasehold land as part of the Te Atiawa Treaty of Waitangi settlement. The hapū wish to see the return of all of the confiscated land to the hapū. This Bill, in providing a right for leaseholders to freehold, will remove a considerable portion of land from public ownership and therefore the best chance of hapū to see some of the land returned. As such, the hapū did not support the Bill in their submissions to Council. Te Kotahitanga o Te Atiawa Trust are a significant beneficiary under the Bill. They are supportive of the general principles of the Bill, as they are based on the Heads of Agreement entered into by the Council and Te Kotahitanga. However, there are some aspects of the Bill that Te Kotahitanga are not in agreement with the Council over. The Council has had a balancing task in drafting this Bill, and some of Te Kotahitanga’s requests are unfeasible given other obligations. The Brown Road land. Te Kotahitanga will have this land vested in it to develop as it sees fit. Issues outside of the Bill You may hear complaints about other issues in Waitara. While these sit outside of the Bill, some in the community may take this as an opportunity to raise these issues at a national level. The state of infrastructure is one of the Waitara community’s biggest issues. When the Waitara Borough Council was amalgamated into New Plymouth District Council, much of Waitara was lacking kerbs and channels on roads, stormwater pipes and footpaths. New Plymouth District Council has invested in Waitara’s infrastructure since then – most recently in a new pipeline to take Waitara sewerage to the New Plymouth Waste Water Treatment Plant. However, the investment in stormwater infrastructure has been stalled for a number of years due the impact this investment has on the District’s ratepayers. Some properties have surface flooding issues and the lack of stormwater infrastructure is often cited by the property owners as a contributing factor. We are currently undertaking stormwater catchment management plans to better understand the stormwater issues in Waitara. Submitters identified improvements to infrastructure as one of the potential uses of the Council’s Annual Release in our community consultation. Others do not believe that the Fund should be used as a substitute for rates. You may also receive comments around the Council’s relationship with iwi, hapū and Māori given that the Bill provides land and representation for Te Atiawa. For instance, there was substantial community disagreement in naming two roads in Waitara earlier this year, with the Council deciding to use the names put forward by the developers rather than names put forward by the hapū. The wider community has also been debating the role of tangata whenua in the Council’s decision-making processes, most notably through a binding poll on establishing a Māori ward. 20 Initial briefing on the New Plymouth District Council (Waitara Lands) Bill Greater opportunities for the Waitara community The New Plymouth District Council (Waitara Lands) Bill provides a substantial opportunity to enhance the Waitara community. Waitara is a beautiful town, with much potential to develop a brighter future. The Bill’s three policy platforms mean: The right to freehold will result in the Waitara market beginning to function as a normal property market, no longer held back by the blight of the substantial leasehold portfolio, The proceeds from the leasehold land being invested into Waitara through co-governance arrangements to grow the Waitara community, and The transfer of almost half of the endowment land to Te Kotahitanga o Te Atiawa Trust will allow Te Atiawa to develop and grow its Waitara base. Combined, we hope that this Bill will change Waitara’s future for the better. We expect that the impact of this Bill will be to provide real opportunities to improve Waitara. While there is a compromise, and no party receives all that it wants, there is also substantial benefit to all parties into the future. This Bill cannot succeed in providing some form of resolution to the Waitara endowment land without all three policy objectives being fulfilled. We thank all parties for their willingness to engage in finding a lasting resolution. We cannot continue to have one of our most important towns held back by out-dated legislation that blights the township. We implore you to support this Bill. Nau te rourou, naku te rourou, ka makona te iwi Leasehold properties in Waitara Back cover: The Waitara River heading towards the Tasman Sea Initial briefing on the New Plymouth District Council (Waitara Lands) Bill 21 The name Whaitara (commonly spelled as Waitara) is said to come from the story of Whare Matangi, the estranged son of local Ariki (chief) Ngārue, and his quest to be reunited with his father. Whare Matangi was given a dart (tara) imbued with magic that his mother foretold would lead him to his father. His first four throws landed elsewhere but on the fifth throw, the tara struck Ngārue’s house at the mouth of a river, thereafter known as Te Whai-tara-nui-a-Ngārue (follow the dart of Ngārue).
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