7 March 2023
Media: Rotorua Daily Post
Topic: Costs associated with emergency housing
Enquiry
NOTE: Reporter also sought comment from Mayor Tapsell and MHUD
I'm just picking up on something that was in the ordinary committee meeting agenda for February 22.
It was to do with the council's financial performance and its operating pressures. This was noted as one of the pressures.
Costs associated with the monitoring of emergency housing motels, plus hearings and deliberations on the conditions these motels were operating under, were not known at the time the 2022/23 Annual Plan was adopted. The council has since invoiced the Ministry of Housing and Urban Development for a $420,000 share of the costs associated with the November and December hearings.
Residual costs of $680,000 remained with the council. These were non-recoverable costs to the council associated with the consenting process and regulatory work undertaken in regards to motels providing emergency housing.
- Has the $420,000 invoice been paid?
- Can you please explain in more detail what the $420,000 was for as part of the hearings in November and December?
- It said it was a "share of the costs". What was the actual cost to the council for the hearings?
- Can you please explain in more detail why the $680,000 residual costs can't be invoiced?
- Former mayor Steve Chadwick said in a letter to Social Development Minister Carmel Sepuloni in February last year the council was being forced to invest more in security, cleaning and maintenance as a result of emergency housing and it wasn't sustainable. I suppose it is too tricky to measure those increases as a direct impact of the emergency housing influx. Instead, could you please provide how much was spent on security in the 2019/2020 financial year, 2020/2021 financial year and 2021/2022 financial year?
- Would the council consider invoicing the Government for the extra security costs? Why/why not?
- I wrote a story in August last year about an emergency housing manager's vacancy on the council staff. Was this role ever filled? Will the council consider invoicing the Government for this position? Why/why not?
Below are the links to the previous stories I've mentioned above.
Subsequent additional enquiry from reporter:
I have just received comment from Reynold Macpherson and was wondering if the council/Tania Tapsell would like to respond to any of the criticism.
Reynold Macpherson, Chairman, RDRR:
These revelations confirm that these costs incurred by Council to do with emergency housing were not budgeted for by ex-Mayor Steve Chadwick and her Housing Lead Tania Tapsell. Nor apparently guaranteed by Ministers Carmel Sepuloni and Megan Woods. They also confirm that Council expenditure on emergency housing was not authorised by the 2022/23 Annual Plan process.
Council knew early that Restore Rotorua was going to challenge the agreement between the ex-Mayor and Ministers and that Commissioners would probably be appointed to review MHUD's application. IMO, the cavalier absence of contingency budgeting was a hallmark of Council's leadership and administration.
So why would Council's retrospective invoicing of MHUD for a share of $420,000 of the costs of the November and December hearings be honoured? The naivety involved is confirmed by no mention of cost sharing in the latest Housing Accord. And should not the "residual" costs of $680,000 for Council's consenting and regulatory work related to motels providing emergency housing also be invoiced to the applicants, MSD and MHUD, as would be the case if the applicant were from the private sector?
The more ratepayers learn about the funding of Rotorua's homeless industry the more unsavoury it becomes.
Subsequent clarifications sought:
Is it correct to say the hearings process all up cost the council $1.1m and the council is asking MHUD to pay $420k for the reasons you've outlined in your [initial] response?
and just one more clarification (maths isn't our best subject as writers!)..... If the council is allowed to charge up to $45k per consent and there's 13, that's $585k. Why isn't the bill for $585k?
Response
From DCE District Development Jean-Paul Gaston:
1: No, because HUD disagrees with all the cost within the invoice. We are providing them with more clarification.
2: Under the current policy we are entitled to charge the cost of running a consent up to $45k. In this case we have 13 consents.
The cost in relates to the expert reports, summarizing submissions and hearing costs. have been significant. Our consent policy limits the amount we can charge per consent. The $428k is the amount remaining to pay, outside of the deposit previously received from HUD.
3: The costs incurred in processing the consents was in excess of what our policy allows us to charge. The costs not able to be charged per consent include Councils staff costs and the cost of councils lawyers involved in the hearing.
4: see above. Not all the councils emergency housing costs reported at Council relate to the consents for the 13 contracted motels.
5: RLC operationally are committed to making Rotorua a safer place and as a result we have and are working hard to ensure we integrate our deployment model of Police, Guardians, regulatory staff and security partners to be more visible in key locations across the CBD.
6: We can’t just send someone an invoice and expect them to pay.
7: It was not an emergency housing manager but we were looking to create a project manager’s role for a number of work streams relating to housing of which emergency housing was one of the projects. RLC has not begun the recruitment process for this position.
From Mayor Tania Tapsell:
Do you support the council invoicing the Government $420,000? Do you think it is reasonable?
Yes. This has come at significant cost to ratepayers that had not been expected or budgeted for. Council has a responsibility to act prudently and I believe given justifiable costs occurred because of Government decisions it is reasonable and fair to ask them to front the costs.
Do you think the council should invoice more given the burden this has been on ratepayers?
I acknowledge there has been a significant wider cost to both Council and the Rotorua community regarding emergency housing. We’ve had great progress through our Housing Accord with Government and Iwi and are focused on reducing the use of motels for emergency housing in Rotorua to near zero.
Former mayor Steve Chadwick said in a letter to Social Development Minister Carmel Sepuloni in February last year the council was being forced to invest more in security, cleaning and maintenance as a result of emergency housing and it wasn't sustainable. Do you think ratepayers should have to pay for these costs considering at least a third of those in the motels were not from Rotorua?
Council chose to take on costs associated with security, cleaning and maintenance to improve the situation in Rotorua. We cannot change these costs now, however, as Mayor of Rotorua it is my focus to ensure we continue to see an immediate delivery of the outcomes of the Housing Accord, including working towards zero emergency housing motels use in Rotorua and removing mixed use facilities as well.
From MHUD:
Do you think it is reasonable for the council to invoice the Government $420,000?
The Ministry acknowledges there are reasonable costs associated with the consenting process of 13 resource consent applications for the use of motels for emergency housing. Whilst the value and items determining those costs are yet to be agreed to, the Ministry continues to work with RLC in good faith to resolve this. In the meantime, as part of the RMA process, the Ministry has lodged an Objection to the Additional Charges imposed by the Council on the 13 resource consent applications for the use of motels for emergency housing, which were publicly notified and determined by Independent Hearing Commissioners on 15 December 2022.
Will this invoice be paid?
The Ministry intends to pay agreed costs in due course.
In response to subsequent additional enquiry:
From Mayor Tapsell’s office:
Not for comment, just clarification:Mr Macpherson has referenced Mayor Tapsell as the Housing Lead in the previous Council. As per the Council decision of 29 July 2021, regarding councillor lead roles, Mayor Chadwick was the lead for housing with Cr Tapsell in a supporting role.
From the council organisation:
Kia ora ano Kelly, there are a number of factual inaccuracies that we would like to correct, please see in red. These can also be attributed to JP Gaston:
These revelations confirm that these costs incurred by Council to do with emergency housing were not budgeted for by ex-Mayor Steve Chadwick and her Housing Lead Tania Tapsell. Nor apparently guaranteed by Ministers Carmel Sepuloni and Megan Woods. They also confirm that Council expenditure on emergency housing was not authorised by the 2022/23 Annual Plan process.
Council has a variety of regulatory functions that incur costs and not all of these costs are recoverable or able to be predicted in advance.
Council knew early that Restore Rotorua was going to challenge the agreement between the ex-Mayor and Ministers and that Commissioners would probably be appointed to review MHUD's application. IMO, the cavalier absence of contingency budgeting was a hallmark of Council's leadership and administration.
We do not know what “agreement” is being referred to but the consenting process undertaken in relation to the 13 consents was a formal RMA process (ie it was a legal process) and was run as per the requirements of that legislation.
While contingencies are included in annual operational budgets, all eventualities cannot be predicted and our Fees and Charges policy seeks to recover, as much as is possible, additional costs council may incur, to reduce this burden.
So why would Council's retrospective invoicing of MHUD for a share of $420,000 of the costs of the November and December hearings be honoured? The naivety involved is confirmed by no mention of cost sharing in the latest Housing Accord. And should not the "residual" costs of $680,000 for Council's consenting and regulatory work related to motels providing emergency housing also be invoiced to the applicants, MSD and MHUD, as would be the case if the applicant were from the private sector?
As we do with any consenting process, Council is seeking to recover a portion of the costs associated with the process, as per Council’s Fees and Charges policy. As per info you received earlier today, our policy limits the amount we can charge per consent.
The more ratepayers learn about the funding of Rotorua's homeless industry the more unsavoury it becomes.
Rotorua Lakes Council is not “funding” emergency housing but has a regulatory role which, as is the case with any regulatory function of council, incurs costs, not all which are recoverable.
In response to subsequent clarifications sought:
Is it correct to say the hearings process all up cost the council $1.1M and the Council is MHUD to pay $420,000 (for the reasons you’ve outlined in your response)?
No, this isn’t correct. Some of the $680,000 is for previous enforcement and regulatory work related to emergency housing.
We do not have an exact cost of the consent process re the 13 contracted motels.
If the council is allowed to charge up to $45,000 per consent and there’s 13, that’s $585,000. Why isn’t the bill for $585,000?
MHUD has already paid a deposit and a progress payment totalling $165,000.
$420,000 is what remains outstanding.