3/1 1 Operations & Monitoring Committee Doc No: RDC-752844 3 August 2017 01-15-226 ROTORUA LAKES COUNCIL Minutes Operations & Monitoring Committee meeting held Thursday, 3 August 2017 at 9:30am in the Council Chamber, Rotorua Lakes Council MEMBERS PRESENT: Cr Sturt (Chairperson) Mayor Chadwick, Cr Bentley, Cr Donaldson, Cr Gould, Cr Hunt, Cr Kent, Cr Kumar, Cr Raukawa-Tait, Cr Tapsell, (Deputy Chair), Mr Stanton (Lakes Community Board), Mr Martin (Rural Community Board), and and Mr Waru (Te Tatau o Te Arawa) APOLOGIES: Cr Maxwell, Mr Biasiny-Tule STAFF PRESENT: G Williams, Chief Executive; T Collé, Chief Financial Officer; J-P Gaston, Group Manager Strategy; M Morrison, Kaitiaki Maori; H Weston, Acting Group Manager Operatons; S Michael, General Manager Infrastructure; C Tiriana, Manager CE Office; O Hopkins, Governance & Partnerships Manager; S Brown, Arts & Culture Manager; R Pitkethley, Recreation and Environment Manager (part); C Vibert, Financial Services Manager (part); A McGregor, Project Management Office Manager (part); S Craig, Information Solutions Manager (part): M Petersen, Fixed Term Project Manager (part); Margaret Goo, Project/Change Manager (part); N Hill, Community & Regulatory Services Manager; I Tiriana, Public Relations Manager; R Dunn, Governance Lead; H King, Governance Support Advisor. The Chairman welcomed members, members of the public and staff to the meeting 1. APOLOGIES Resolved: That the apologies from Mr Waru for lateness and Cr Maxwell & Mr Biasiny-Tule be accepted. Cr Gould/Cr Hunt OM17/08/045 CARRIED 2. DECLARATIONS OF INTEREST None.
held Thursday, 3 August 2017 at 9:30am in the Council Chamber, Rotorua Lakes Council
MEMBERS PRESENT: Cr Sturt (Chairperson)
Mayor Chadwick, Cr Bentley, Cr Donaldson, Cr Gould, Cr Hunt, Cr Kent, Cr Kumar, Cr Raukawa-Tait, Cr Tapsell, (Deputy Chair), Mr Stanton (Lakes Community Board), Mr Martin (Rural Community Board), and and Mr Waru (Te Tatau o Te Arawa)
APOLOGIES: Cr Maxwell, Mr Biasiny-Tule
STAFF PRESENT: G Williams, Chief Executive; T Collé, Chief Financial Officer; J-P Gaston, Group Manager Strategy; M Morrison, Kaitiaki Maori; H Weston, Acting Group Manager Operatons; S Michael, General Manager Infrastructure; C Tiriana, Manager CE Office; O Hopkins, Governance & Partnerships Manager; S Brown, Arts & Culture Manager; R Pitkethley, Recreation and Environment Manager (part); C Vibert, Financial Services Manager (part); A McGregor, Project Management Office Manager (part); S Craig, Information Solutions Manager (part): M Petersen, Fixed Term Project Manager (part); Margaret Goo, Project/Change Manager (part); N Hill, Community & Regulatory Services Manager; I Tiriana, Public Relations Manager; R Dunn, Governance Lead; H King, Governance Support Advisor.
The Chairman welcomed members, members of the public and staff to the meeting 1. APOLOGIES
Resolved: That the apologies from Mr Waru for lateness and Cr Maxwell & Mr Biasiny-Tule be accepted.
The Chair advised that an “Urgent Item” titled “Mudtopia update” had been received and that this item would be discussed following the Project Management Office presentation. 3. PRESENTATIONS 3.1 Project Management Office
Aimee McGregor spoke to a PowerPoint presentation (Attachment 1) Resolved
That the presentation titled “Project Management Office” be received. Cr Donaldson/Cr Hunt
OM17/08/046 CARRIED
Attendance: Mr Waru joined the meeting at 9.56am. 4. URGENT ITEMS NOT ON THE AGENDA
Resolved
That the ‘Mudtopia – update’ item be dealt with at this meeting.
Cr Sturt/Cr Donaldson OM17/08/047a CARRIED
The chair advised that: (7) (b) (i) The reason why the item is not on the agenda is because comments made by media over that the last three days regarding the event require an urgent response. (7) (b) (ii) The reason why the discussion of the item cannot be delayed until a subsequent meeting because the event is due to take place in early December and planning for the festival is well underway. A report titled “Mudtopia-update” was tabled (Attachment 2). The Chair adjourned the meeting at 10.30am to allow members time to read the late report. The meeting resumed at 10.40am. The following motion was moved by Cr Hunt, seconded by Cr Donaldson:
“1. That the report “Mudtopia - update” be received.
2. That the Committee confirm its support for the Mudtopia Event: a. Noting that the value proposition described in the feasibility work and business
case still holds; and
b. Noting that the risk profile has increased with recent negative media coverage and that this has the potential to impact on the bottom line in the first year.”
The following amendment was moved by Cr Donaldson and seconded by Cr Sturt:
“c. That staff investigate legal remedies to address the loss of sponsorship revenue arising as a result of actions of the taxpayers union.”
Following discussion the amendment was WITHRAWN
The original motion was put to the vote and declared CARRIED.
Resolved:
2. That the Committee confirm its support for the Mudtopia Event: a. Noting that the value proposition described in the feasibility work and business case
still holds: and
b. Noting that the risk profile has increased with recent negative media coverage and that this has the potential to impact on the bottom line in the first year.
Cr Hunt/Cr Donaldson
OM17/08/048b CARRIED
5. CONFIRMATION OF MINUTES 5.1 Operations & Monitoring Committee meeting 6 July 2017
Resolved: That the minutes of the Operations & Monitoring Committee meeting held 6 July 2017 be confirmed as a true and correct record.
6.1 Recommendation 1: Operational report for June/July 2017 01-65-052
Resolved: That the “Operational report for June/July 2017” be received.
Cr Gould/Mr Waru
OM17/08/050 CARRIED
Thomas Collé spoke to a Powerpoint presentation “Property update August 2017” (Attachment 3)
7. RESOLUTION TO EXCLUDE THE PUBLIC
Resolved: That the committee move into public excluded session.
Mayor Chadwick/ Cr Donaldson
CARRIED
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 are as follows:
General subject of each matter to be considered
Reason for passing this resolution in relation to each matter
Ground(s) under Section 48(1) for passing of this resolution
OPERATIONS & MONITORING COMMITTEE MEETING 6 July 2017 (Minutes) Confidential items from the Chief Executive’s operational report.
Enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).
Section 48(1)(a) Section 7(2)(i)
OPERATIONAL REPORT for June to July 2017 (Confidential items)
Enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).
Protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.
Section 48(1)(a) Section 7(2)(b)(ii)
This resolution is made in reliance on Section 48(1) of the Local Government Official Information and
Meetings Act 1987 and the particular interest or interests protected by Sections 6 or 7 of the Act or Sections 6, 7 or 9 of the Official Information Act 1982, as the case may require, which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as shown above (in brackets) with respect to each item.”
OPEN SESSION
____________________________
Meeting closed at 1.30pm
____________________________
Confirmed at the Operations & Monitoring Committee meeting on 7 September 2017
………….……………………………
Chairperson
Rotorua Lakes Council is the operating name of Rotorua District Council
ROTORUA LAKES COUNCIL Mayor Chairperson and Members OPERATIONS & MONITORING COMMITTEE MUDTOPIA - UPDATE Report prepared by: Stewart Brown, Arts and Culture Director Report reviewed by: Henry Weston, Acting Group Manager Operations Report approved by: Geoff Williams, Chief Executive
1. PURPOSE
The purpose of this report is to update the Committee on the planning for the upcoming Mudtopia Festival, provide context on the media interest in the purchase of Korean mud, and seek confirmation of support for the event.
2. RECOMMENDATION 1. That the report “Mudtopia - Update” be received. 2. That the Committee confirm its support for the Mudtopia Event:
a. Noting that the value proposition described in the feasibility work and business case still holds; and
b. Noting that the risk profile has increased with recent negative media coverage and that this has the potential to impact on the bottom line in the first year.
3. BACKGROUND
In December 2015, the Strategy, Finance and Policy Committee received a business case on a proposed Mud Festival and agreed to run the event, subject to confirming Government investment. The Council agreed to ‘underwrite’ the event up to $500,000, with the Mayor and CEO authorised to negotiate the value and term of the underwrite. The event was projected to break-even in each of the first five years, but it was highlighted that all revenue streams have risk and hence the need for the ‘underwrite’ commitment. The underlying value proposition has not changed. Extensive independent feasibility work was carried out with the support of the Ministry of Business, Innovation and Employment, and consultation was carried out with the community, the tourism sector and iwi, and this was followed up with a comprehensive business plan (both documents are circulated with this report). Conservative estimates of market demand indicated that a mud festival in Rotorua could attract from 9,500 to 21,600 attendees over the first five years of its growth and provide $10m in positive economic impact in its fifth year of operation (and $5m in year one). On the strength of this work, New Zealand Major Events agreed to provide considerable funding over a five year period and Council committed to the option of owning and underwriting the event. The partnership support
from Central Government has been very strong from the outset. It was projected that this event has the potential to build on Rotorua’s reputation as a spa and wellbeing destination. However, the recent negative publicity over the purchase of Korean mud has been unhelpful and potentially puts some funding streams at risk. Given this, it is prudent that we provide you with an update on progress with the event preparation, provide some financial projection scenarios, and seek confirmation of Council support for the event.
4. DISCUSSION Progress to date
It was recognised early that the Council did not have the capacity or expertise to run the event in-house. Because of this a specialist event management company was appointed to run it – Event Engine. Their expertise and experience includes running the NZ Ocean Swim series , Wag n’Walk NZ’s largest mulitisport event and ASB Polyfest. RLC also made the decision to appoint an external advisory board to provide governance oversight of
the event. Board members are: Martin Croft, Jason Cameron, Craig Tiriana and Thomas Cole from RLC
Scott and Simon from Event Engine
James Fitzgerald
Gert Taljaard
Anne Hindson
Sarah Lewis
Paora Te Hurihanganui
Professor Jeong (founder of the Boryeong mud festival) The board meets on a regular basis every six weeks to discuss festival development, marketing strategy and KPI delivery. Planning is well advanced, with some highlights being pre-ticketing release of the event, strong marketing strategy in place and the announcement of Shapeshifter as a headline act (with another international act soon to be announced) and supporting acts including Anika Moa, Jordan Luck Band and others. We also have a number of local businesses who will be part of the event – including Polynesian Spa and Waiora Spa. Tickets for the event are now on sale and extensive advertising is underway through various media.
The recent trip to Korea by the Mayor, Cr Maxwell and staff provided councillors with an insight into the festival. Their views, at first hand, were overwhelmingly positive.
Expenditure to date has been approximately $460,000 and there are also a number of commitments that have been entered into including part payment for the performing acts, land rental, and costs for the event manager.
Financial Scenarios
As noted earlier, we believe that the recent negative media publicity has changed the risk profile to at least some degree, and has increased the risk of reduced revenue streams. Broadly, there are potentially three scenarios – optimistic, realistic, pessimistic – that follow. We have also included the draft budget (essentially ‘break even’) from the initial paper to Council in
2015. The major change we are forecasting is the potential reduction in sponsorship/funding as a result of negative publicity. We simply have no way of knowing the likelihood or otherwise of this. Council committed to what was described as an ‘underwrite’ of up to $500,000, though the reality is that this is not technically an underwrite given it is the Council owning the event and any financial risk around it. The concept of the Council paying for events is not a new one, and is consistent with the obligations entered into for events like Crankworx, UCI World Champs and the recent British and Irish Lions Tour. It recognises that while the direct revenue from the event may be less than the costs, in certain siutations the Council has been prepared to recognise wider benefits from the event for the District and has been prepared to invest in them on that basis.
The assumption in the business plan was that any surplus generated from the event will go back into making the event a success in future years. Any deficit will be met out of the Council’s ‘underwrite’.
Purchase of Korean Mud
The media coverage of the decision to purchase approximately $90,000 of Korean mud has been unhelpful, and the information presented in the public arena been both incomplete and misleading.
Mudtopia budget scenarios 2017Original (Business
Case)
EE Forecast
Realistic
EE
Reforecast
Pessimistic
EE
Reforecast
Optimistic
Revenue
New Zealand Major Events 600,000 600,000 480,000 600,000
RLC - Major Events and Venues Bid Fund 75,000 100,000 100,000 100,000
RLC - Famously Rotorua Campaign 75,000 - - -
RLC Business Case Support 50,000 50,000 50,000 50,000
Regional trust funding 300,000 - - -
Total Funding Partners 1,100,000 750,000 630,000 750,000
Total Sponsorship Revenue 240,000 60,000 35,000 90,000
Total Festival Revenue 527,477 649,248 461,190 954,681
Total Third Party Delivered Events 5,000 0 0 0
Total Other Revenue 54,000 247,750 187,750 306,750
Total Revenue 1,926,477 1,706,998 1,313,940 2,101,431
Expenses
Total Festival Management 501,000 547,940 547,940 547,940
Total Festival Marketing 366,973 391,000 378,000 424,000
Total Venue and General Expenses 526,300 591,709 587,709 587,709
Total Third Party Events Expenses 15,000 26,000 26,000 26,000
Total Equipment And Infrastructure 200,000 33,833 33,833 33,833 Total Evening Entertainment 189,000 130,000 130,000 130,000
Total Other Expenses 0 128,450 96,338 160,562
Contingency 89,914 92,447 89,991 95,502
Total Expenses 1,798,273 1,848,932 1,799,820 1,910,044
Net surplus/loss after Cont 38,290 -234,381 -575,871 95,885
The situation is that when the Mayor, Cr Maxwell and staff visited the Boryeong Festival in July, a memorandum of understanding was signed with the Mayor of Boryeong. As well as committing to a partnership approach, the memorandum confirmed an agreement that had already been made to purchase some $90,000 of Boryeong mud powder (five tonnes, or approximately 3m³). The option is open to use this mud powder over multiple festivals. The partnership with Boryeong has been critical to progressing Mudtopia and they have been extremely generous with their intellectual property and advice. The purchase of their mud and the agreement to use it – at least partly – to promote the Boryeong Festival is recognition of that ongoing support. Mudtopia was promoted at the Boryeong Festiveal this year. Reports attributing this expenditure to central government, or at least not a cost to ratepayers, are not correct. It is important to be very clear that this cost (approximately $30,000 over the first year out of $2.3m) forms part of the overall cost of the festival. The mud itself is a small volume – with perhaps 2m³ used in the first year, and constituting about 15% of the mud being used at Mudtopia. It is a cosmetic-grade product and will be used in a Boryeong section of the event and applied to the skin. Because it is a high-value cosmetic and therapeutic product this is not the mud that will be sloshed around in. The Korean mud powder is heat treated and/or irradiated and staff have been working with MPI to ensure there are no biosecurity issues of any concern. 10kg has already been brought into the country and approved by MPI. Staff have also been working with the Bay of Plenty Regional Council to ensure that all best practice processes are followed in the disposal of the mud both during and after the event.
5. ASSESSMENT OF SIGNIFICANCE
This update and the potential resolution to confirm support for the Mudtopia Festival is not considered to be significant.
6. COMMUNITY INPUT/ENGAGEMENT AND PUBLICITY
In the process of preparing the feasibility studies and business case there was engagement with the tourism sector, iwi and the wider community. More recently, advertising of the event has increased significantly on tv, radio and social media.
7. CONSIDERATIONS
7.1 Financial/budget considerations The financial considerations are highlighted earlier in this paper.
7.2 Policy and planning implications
Staff have been working with the Ministry of Primary Industries and the Bay of Plenty Regional Council to ensure compliance with key regulations. Noise mitigation measures will be put in place so as to meet the requirements in the District Plan.
7.3 Risks
Supporting a new and major event inevitably carries risks of both a financial and political nature. The extensive work on the feasibility of the event and the business case, as well as the strong partnership support from central government, reduce the risk. Although we believe the risk profile has increased
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