Waterfront Auckland · Page | 4 1. Executive Summary Introduction 1.1. Waterfront Auckland is an Auckland Council Controlled Organisation (CCO) set up to develop the Auckland waterfront

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Waterfront Auckland

(Auckland Waterfront Development Agency Limited)

Statement of Intent

for the period from 1 July 2012 to 30 June 2015

Adopted by Waterfront Auckland Board on 27 June 2012

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Document Control

Document

Project Title Waterfront Auckland Statement of Intent for the period from 1 July 2012 to 30 June 2015

File Name / Path U:\CCO\Waterfront Development Agency\Finance\SOI and AP extract\2012-2015 SOI\2012.06.20 SOI 2012-2015 - Final with Shareholder Comments.docx

Version No. 5.0

Status Final

Document Author Aimee Comer

History

Version Issue Date Author Notes / Changes

1.0 26.01.12 A. Comer

2.0 3.02.12 A. Comer Board review comments incorporated

3.0 8.02.12 A. Comer Further Executive review comments incorporated

4.0 22.04.12 A. Comer Further Executive review and shareholder comments incorporated

5.0 20.06.12 A. Comer Further Board review and shareholder comments incorporated

Document Review

Name Signature Date

Waterfront Auckland Board 01.02.12

John Dalzell (CEO) 08.02.12

Auckland Council CCO Monitoring Unit 30.04.12

Waterfront Auckland Board workshop 13.06.12

Document Approval

Name Signature Date

John Dalzell 20.06.12

Waterfront Auckland Board 27.06.12

Glossary

Abbreviation / Term Description

ACIL Auckland Council Investments Limited

ACPL Auckland Council Property Limited

AP Auckland Plan

AT Auckland Transport

ATEED Auckland Tourism, Events & Economic Development Limited

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Glossary cont’d

Abbreviation / Term Description

CCO Council Controlled Organisation

CCMP City Centre Master Plan

CEO Chief Executive Officer

FRS Financial Reporting Standards

IMSB Independent Maori Statutory Board

LOE Letter of Expectation

LTP Long-term Plan

NZTA New Zealand Transport Agency

P Priority

PSP Project Safety Plan

RFA Regional Facilities Auckland

SD Strategic Direction

Sea+City Sea+City Projects Limited

SEG Shareholder Expectation Guide

SOI Statement of Intent

Watercare Watercare Services Limited

Waterfront Auckland Auckland Waterfront Development Agency Limited

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Contents 1. Executive Summary ................................................................................ 4 2. Introduction ............................................................................................. 7 3. Strategic Direction ................................................................................ 10 4. Nature and Scope of Activities ............................................................ 13 5. Performance Measurement and Reporting ......................................... 21

6. Approach to Governance ..................................................................... 35 7 Organisational Health, Capability and Risk Management ................. 40 8 Accounting Policies ............................................................................. 43

Attachments Attachment 1: Waterfront Auckland Public Charter Attachment 2: Area of Ownership and Influence Attachment 3: Contribution to Council Objectives Attachment 4: Performance Measures Attachment 5: Assets Attachment 6: Description of Strategic Projects Attachment 7: Map of Strategic Projects Attachment 8: Accounting Policies

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1. Executive Summary Introduction 1.1. Waterfront Auckland is an Auckland Council Controlled Organisation (CCO) set up to

develop the Auckland waterfront as a location specific development agency. 1.2. Waterfront Auckland leads the delivery of the revitalisation of the waterfront as a key

destination and location for businesses, residents and visitors; and assists Auckland Council in uniting the waterfront with the city centre. These actions assist in the development of central Auckland as a creative and vibrant world city.

1.3. Waterfront Auckland has a mix of commercial and public good objectives and

receives revenue from a variety of sources. It has service delivery functions as well as being an owner and operator of commercial assets.

1.4. This Statement of Intent (SOI) describes the accountability of the Waterfront

Auckland Board of Directors to its Shareholder, Auckland Council, for the period from 1 July 2012 to 30 June 2015. It sets out the nature and scope of our activities, the strategic direction, and projects that will be delivered over the next three years. It also shows how Waterfront Auckland proposes to measure its performance in contributing to Auckland Council’s strategic directions as specified in the Auckland Plan.

Key strategic aspects highlighted 1.5. In support of the Auckland Plan objectives, and to achieve the vision for Auckland’s

waterfront while promoting a balance of sustainability, resiliency and productivity, a Waterfront Plan has been developed. In this plan, Waterfront Auckland sets out five goals, being the creation of a:

Public waterfront;

Smart working waterfront;

Connected waterfront;

Liveable waterfront; and

Blue-green waterfront.

1.6. Strategies for delivering these goals are contained in the Waterfront Plan and form

the basis for the strategic content of this SOI. 1.7. These goals are supported by three business objectives: to be a successful business

managed with strong commercial disciplines to ensure corporate sustainability; an innovative, sustainable organisation with highly skilled staff and efficient robust business systems; and to demonstrate excellence in customer service provision.

1.8. In essence, Waterfront Auckland’s primary strategic aims during the SOI period are

to:

a) Leverage public sector investment to attract private sector equity participation

that will drive sustainable growth and development; and

b) Implement ‘key building blocks’ that will drive transformational change on the waterfront. These include:

Long-term Plan (LTP) projects – including the Shed 10 events and cruise facility and construction of new urban realms in Wynyard Quarter; and

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Marina and Commercial Property projects - continued development of Wynyard Quarter Central Precinct with the Innovation hub, Marine Centre, and residential and hotel development which, together with improved facilities at Westhaven Marina, will provide a showcase of innovative sustainable development and vibrant inner city living.

1.9. Under this SOI, Waterfront Auckland contributes to Auckland Council objectives

through a number of strategic initiatives and projects. Strategic projects are classified as either:

Confirmed Strategic Public Projects, such as the Queens Wharf events and

cruise facilities; or

Unconfirmed Strategic Public Projects, for example the Waterfront walkway and cycleway

. 1.10. Auckland Council will contractually commit to provide all funding necessary for the

design, development and completion of all the Confirmed Strategic Public Projects

Performance measurement and reporting 1.11. Non-Financial and Financial Performance Measurements are detailed in Section 5.

This section also contains funding assumptions. Operational public space activities are funded by grants from Auckland Council. Public space capital works are funded through equity investment by Council. Commercial property and marina operational activities will be funded through commercial income with any shortfall covered by debt funding. Cash surpluses generated from commercial operational activities not used to reduce debt or fund capital works for commercial activities, over a threshold to be agreed annually, may be returned to the shareholder. Overheads will be allocated across each of the three areas mentioned.

1.12. The Council has set the expected rate of return on investment (ROI) on commercial

waterfront activities and marinas at 8% p.a. The target takes account of Council's reasonable expectation of the returns achievable from the commercial property investment portfolio. The Council and Waterfront Auckland have agreed to review the allocation and treatment of commercial property that is taken into account in the calculation of the ROI performance against the target set during 2012/13.

1.13. The budgets for the next three years, as approved by Auckland Council, have indicative ROI values significantly below the expected ROI level of 8%. This reflects the current nature of the commercial portfolio vested in Waterfront Auckland, the timeline for scheduled developments and the loss of income associated with the redevelopment phase of existing tenanted areas. All new development schemes have a threshold ROI of 8% post completion, unless specifically authorised by Board and Council to be lower, due to intervention or other public interest initiatives.

1.14. Capital expenditure and financial forecasts are also contained in Section 5.

Waterfront Auckland intends to distribute to Auckland Council funds from commercial activities that are surplus to requirement. We do not envisage making such a distribution within the period of this SOI.

1.15. The commercial value of the shareholder’s investment in Waterfront Auckland as at 30 June 2011 is estimated at $299.7 million.

1.16. Reporting to Auckland Council consists of an annual SOI, Annual Report, Half Year Report, Quarterly Reports, and additional information as required by Council.

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Governance and other matters

1.17. The Waterfront Auckland Board is committed to high standards of governance and business behaviour. Governance matters are canvassed in Section 6 and cover such issues as representation, public meetings, management of strategic assets and the relationship with Auckland Council, other CCOs and stakeholders.

1.18. Risk mitigation strategies are outlined in Section 7. Note that waterfront land is a key

strategic asset and the freehold interest is to be retained in public ownership. However, there are a range of commercial mechanisms to share risk and reward with the private sector. We will proactively investigate the best structure for attracting private sector equity participation across the waterfront portfolio.

1.19. We commit to maintaining a healthy and resilient organisation. Organisational Health and Capability matters are contained in Section 7 while Section 8 covers our Accounting Policies.

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2. Introduction

Purpose and scope of SOI 2.1. This SOI is presented by Waterfront Auckland in accordance with the requirements of

Section 64(1) of the Local Government Act 2002. 2.2. This SOI covers our operations for a period of twelve months from 1 July 2012 to

30 June 2013 in detail and the following two years to 30 June 2015 in outline. 2.3. This SOI is a public and statutory expression of Waterfront Auckland’s accountability

to its shareholder, Auckland Council. It is against this document that the Board will report to Auckland Council and be held accountable. The SOI contains measures against which the performance of Waterfront Auckland can be assessed in a transparent manner.

2.4. Waterfront Auckland is not a service provider of those activities set out in Clause 9 of

Appendix 8 of the Local Government Act 2002 other than as a facilitator for the installation of infrastructural works including water supply; sewerage; stormwater drainage; flood protection and the provision of roads and footpaths which will, on completion, be maintained and serviced by Auckland Council and its related CCOs.

Background 2.5. Waterfront Auckland was established as an Auckland Council CCO pursuant to the

Local Government (Tamaki Makaurau Reorganisation) Act 2009 to develop the Auckland waterfront as a location specific development agency.

2.6. The waterfront assets of former regional and local authorities (and their agencies)

were vested in Waterfront Auckland by virtue of the Local Government (Tamaki Makaurau Reorganisation) Council-controlled Organisations Vesting Order 2010.

2.7. The Local Government (Tamaki Makaurau Reorganisation) Establishment of Council-

controlled Organisations Order 2010 Section 4 provided that Waterfront Auckland would be established and its objectives are:

(a) to lead a strategic approach to developing the Auckland waterfront that is

consistent with the Auckland Council’s vision for the Auckland waterfront; and

b) to develop property that Waterfront Auckland owns or controls in a way that is consistent with Auckland Council’s vision for the Auckland waterfront; and

(c) to achieve development objectives that are consistent with the Auckland Council’s vision for the Auckland waterfront, by acting in a commercial way, including by investing in projects and places that secure high quality urban transformation outcomes.

2.8. The Government Cabinet paper dated 30 June 2010 ‘‘Local Government Auckland Governance Reform: Council-Controlled Organisation Structure” provided that:

“International experience of successful development agencies has demonstrated that they need to have the capability to own, buy, sell and lease land, borrow funds and enter into joint venture arrangements with the private sector to drive urban transformation. This is a fundamental tool that these agencies have to encourage redevelopment of Brownfield areas and attract economic growth.”

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Who we are and what we do 2.9. Waterfront Auckland, as an environmental leader, will enhance the waterfront as a

more beautiful destination rich in public open spaces and activities that support successful and innovative businesses and celebrate the city's unique sea-faring and waka culture and identity.

2.10. In keeping with Auckland Council’s vision, Waterfront Auckland leads the delivery of

the revitalisation of the waterfront as a key destination and location for businesses, residents and visitors; and assists Auckland Council in uniting the waterfront with the city centre. These actions assist in the development of central Auckland as a creative and vibrant world city.

2.11. Waterfront Auckland develops and maintains waterfront assets comprising public

spaces, marina assets (including waterspace assets) and commercial property.

2.12. Waterfront Auckland has a mix of commercial and public good objectives and

receives revenue from a variety of sources. It has service delivery functions as well as being an owner and operator of commercial assets.

2.13. Waterfront Auckland has developed a Public Charter, which communicates our

vision, mission, philosophy, principles and objectives (refer Attachment 1).

2.14. Our Goals for the waterfront are outlined in Section 3. These are supported by three

business objectives, which shape our operation: to be a successful business managed under strong commercial and financial disciplines; to be a highly innovative, sustainable organisation with skilled staff supported by efficient and robust business systems; and to demonstrate excellence in operational areas with a major customer service provision (e.g. marina operations, rental and lease operations, car parking).

2.15. In the last five years, $120 million of projects have been completed, timed around the

Rugby World Cup. Wynyard Quarter opened in August 2011 enabling Aucklanders and Rugby World Cup visitors to celebrate and use these new spaces, and creating further expectation for Aucklanders to reclaim their waterfront.

2.16. The Waterfront Plan, which sets out the 30 year strategy for the waterfront, has been

developed in parallel with the Auckland Plan and City Centre Master Plan. The implementation of Waterfront Plan projects during the period of this SOI will see a continuation of the transformational change on Auckland’s waterfront.

2.17. Waterfront Auckland will leverage public sector investment and the legacy of the

Rugby World Cup to create an appropriate investment structure attracting private sector equity participation that will drive sustainable and rewarding growth.

Area of ownership and influence 2.18. Waterfront Auckland has an:

(a) Area of Influence: a mandated area of influence stretching from the Harbour

Bridge Park in the west to Teal Park in the east and as far inland as the original shoreline of 1840; and

(b) Area of Ownership: direct control and management rights over land, infrastructure and facilities within a smaller area of the waterfront

both as shown on the plan in Attachment 2.

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2.19. Waterfront Auckland has two primary roles:

a) To plan, facilitate and advocate the highest quality urban development

outcomes in its area of influence, and

b) To plan, manage, operate and develop land, water and public assets within its area of ownership.

2.20. Waterfront Auckland is the lead CCO to execute and implement projects in the Area of Ownership, in full co-operation with all relevant CCOs and other parties. In the Area of Influence Waterfront Auckland will cooperatively collaborate with Auckland Council (including the Waitemata Local Board), all relevant CCOs and other parties to execute and implement agreed projects.

2.21. Waterfront Auckland acknowledges that the experience for the public should be

seamlessly integrated between the CCO and Auckland Council ensuring a consistent approach to service delivery. Responsive and seamless customer service will be a priority for Waterfront Auckland.

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3. Strategic Direction

Shareholders purpose of CCO 3.1. Auckland Council’s general purpose for CCOs is to maximise returns from council-

owned commercial assets, achieve strategic goals, and efficiently deliver core council services. The commercial structure of the CCOs helps achieve focus, efficiency, and the application of commercial acumen to the delivery of public sector outcomes.

3.2. Waterfront Auckland is considered a strategic entity by Auckland Council in its

Shareholder Expectation Guide for CCOs as it was established to achieve strategic goals as set out in 3.1 above.

Auckland Plan 3.3. The Council’s vision for Auckland, as set out in the Auckland Plan, is to be the world’s

most liveable city; which means that by 2040 Auckland will be:

A fair, safe and healthy Auckland;

A green Auckland;

An Auckland of prosperity and opportunity;

A well connected and accessible Auckland;

A beautiful Auckland that is loved by its people;

A culturally rich and creative Auckland

A Maori identity that is Auckland’s point of difference in the world. 3.4. The Auckland Plan identifies 13 strategic directions to help Auckland achieve this

vision. Waterfront Auckland’s contribution to these strategic directions is outlined in paragraphs 3.9 – 3.11 below.

Waterfront Plan 3.5. The Waterfront vision is for a world class destination that excites the senses and

celebrates our sea loving pacific culture and maritime history. It supports commercially successful and innovative businesses and is a place for all people, an area rich in character and activities that link people to the city and the sea.

3.6. To contribute to the Auckland Plan objectives, and achieve the vision for Auckland’s waterfront while promoting a balance of sustainability, resiliency and productivity in our activities and projects, a Waterfront Plan has been developed which sets out five goals for Auckland’s waterfront. These are:

A public waterfront: A place for all Aucklanders and visitors to Auckland, a destination that is recognised for its outstanding design and architecture, natural environmental quality, public spaces, recreational opportunities, facilities and events; a place where we protect/enhance and express our cultural heritage and history, and celebrate our great achievements as a city and nation.

A smart working waterfront: Attracts high value innovative, creative and green businesses and investment that increases jobs and achieves a significant lift in productivity, a place for authentic and gritty waterfront activities: the marine and fishing industries, water transport and port activities.

A connected waterfront: A place that is highly accessible, and easy to move around in, where people and communities feel connected to the wider city, harbour and beyond by improved pedestrian and cycling linkages, fast, frequent

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and low-impact passenger transit, state-of-the-art telecommunications and through supportive community and business networks.

A blue-green waterfront: a resilient place where integrated systems and innovative approaches are taken to enhance the marine and natural eco-systems, conserve natural resources, minimise environmental impacts, reduce waste, build responsibly and respond to climate change.

A liveable waterfront: the location of leading sustainable urban transformation in Auckland; the most liveable New Zealand central city community; a vibrant mix of residents, workers, visitors and activities. A welcoming and resilient neighbourhood that is safe, diverse and attractive, with plentiful open space and access to local services and facilities.

Key strategic directions

3.7. Strategies for achieving these five goals for the waterfront are set out in the

Waterfront Plan. 3.8. In summary, Waterfront Auckland’s strategies for the SOI period fall into two areas:

(a) Securing appropriate private sector participation – the strategy is to leverage public sector investment and the legacy of the Rugby World Cup to attract private sector equity participation and continue the transformational change on Auckland’s waterfront that will drive sustainable and rewarding growth; and

(b) Implementing key building blocks - that will be fundamental to achieving transformational change on the waterfront. These include:

LTP Public Projects, including:

Queens Wharf – a Central Government and Waterfront Auckland joint venture which includes the Shed 10 events and cruise facility, decision on the future of the Cloud, and potential expansion of the ferry terminal.

Wynyard Quarter public works – construction of new urban realms including streets, parks and plazas, and contamination remediation of public spaces.

Marina Projects

Westhaven Marina development to improve boating facilities and public amenity for this important public and recreational facility which is enjoyed by both Aucklanders and visiting yachts from around the globe.

Commercial Property Projects

Wynyard Quarter Central Precinct – Wynyard Quarter is being described as New Zealand’s launching pad for business going offshore. It is proposed to accommodate the Innovation hub with strong linkages to marine innovation. Marine investment in the Wynyard Quarter is a Council priority to facilitate development of a super-yacht commissioning and refit yard. Planned residential and hotel development, together with resilient infrastructure and high quality design will make the Wynyard Quarter a showcase of innovative sustainable development and vibrant inner city living.

The proposed Innovation hub is a strategic development sponsored by ATEED, Waterfront Auckland, Auckland Council and the Ministry of Science

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and Innovation, with the goal of co-locating a mix of firms from the ICT and digital media sectors, R&D and business incubation services. A precinct hub, located on the land bounded by Beaumont, Madden, Halsey and Pakenham Streets, using several heritage buildings as a base, would activate the cluster showcasing innovation, new technologies and products. Initial funding for both ATEED and Waterfront Auckland has been included in Council’s LTP.

A range of other projects as signalled in the Waterfront Plan will also be undertaken.

Contribution to Auckland Council objectives 3.9. Tables 8-10 in Attachment 3 provide a more specific overview of how Waterfront

Auckland will contribute to Auckland Council’s strategic directions as set out in the Auckland Plan, as well as the relevant LTP priorities and Local Board priorities as set out in the Letter of Expectation 2012/2013.

3.10. Tables 8-10 differentiate between (a) the areas in which Waterfront Auckland will be

responsible for leading and delivering, and (b) the areas in which we will collaborate with Auckland Council (including other CCOs, Local Boards, and the IMSB) to contribute to Auckland Council’s objectives. Note: This differentiation between leading and collaborating is differentiated by project management accountability and does not necessarily align with the delineation between Waterfront Auckland’s ‘Areas of Ownership’ and ‘Areas of Influence’.

3.11. Tables 8-10 have been prepared with reference to Attachment 4 Performance

Measures (discussed in Section 5), which contains further details on how Waterfront Auckland will contribute to these Auckland Council strategic directions as well as the link between outputs (projects) and outcomes through the impacts that the outputs are anticipated to achieve.

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4. Nature and Scope of Activities

Area of ownership and Influence 4.1. Waterfront Auckland has a mandated Area of Influence, as well as control and

management rights over its Waterfront Area of Ownership (as explained in Section 2 and shown in Attachment 2).

Assets 4.2. Waterfront Auckland’s assets include commercial property, marina assets (including

waterspace assets) and public spaces as shown in the graph below and detailed in Attachment 5. Auckland Council, as shareholder, is the ultimate owner of these assets.

Figure 1: Waterfront assets based on draft valuations as at 30 June 2012

4.3. Land tenure in the Area of Ownership is mixed and includes significant land subject

to leasehold interests (terminating leases) and freehold property. Ownership of waterspace, marina assets and wharf and sea wall assets is complex and in various instances involves separate trusts, companies and limited tenures.

4.4. Other major assets owned by Auckland Council or its organisations are of strong

interest to the functions and goals of Waterfront Auckland – these include:

Ports of Auckland

Downtown Ferry Terminal

Britomart Transport Centre

Downtown car park

Viaduct Events Centre and the Voyager Museum

Designated roads and public reserves

Marine Rescue Centre

The Landing (Orakei)

Orakei Wharf, Devonport Wharf

Hobsonville marine development.

Property61%

Marina21%

Public Spaces18%

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Activities 4.5. In implementing the Waterfront Plan, and developing and maintaining waterfront

assets, Waterfront Auckland engages in three key activity areas. These are listed below and summarised in Table 1:

Public initiatives;

Marina operations; and

Commercial property initiatives.

4.6. Auckland Council sets the priorities for public projects, and funds Waterfront Auckland’s public infrastructure works. Auckland Council requires Waterfront Auckland to act in a commercial way to achieve a targeted 8% return on investment on commercial property activities and marina operations, and this has a direct impact on Auckland Council’s financial performance.

Table 1: Waterfront Auckland Key Activity Areas

Service area Sub-activities

Area of Ownership Area of Influence

Public initiatives

This service ensures the high quality standard of development of the waterfront which is accessible to all Aucklanders, whilst maintaining its working waterfront character and functions, cultural heritage, and history

By creating an international standard public realm private sector developments will be more likely to be facilitated, successful and sustainable producing appropriate returns within acceptable risk parameters

Plan, develop and manage waterfront public works in an integrated and balanced manner in coordination with the city centre and other areas connected to the waterfront

Manage the clean-up of contaminated waterfront land

Project manage the delivery of public realm assets i.e. streetscapes, public space, transport, and buildings

Project manage key public initiatives such as the development of Queens Wharf and the proposed development of an events and cruise facility

Public space asset management and renewal

Co-operatively collaborate with Auckland Council and other CCOs / parties to execute and implement agreed public projects within Waterfront Auckland’s Area of Influence e.g. Quay Street, other roads, Princes Wharf, Quay Park, Tamaki Drive

Ensure integration between Waterfront Plan and City Centre Master Plan

Marina operations

Within Waterfront Auckland ownership we can:

Ensure that Aucklanders and visitors can enjoy long term public access to the water and surrounding areas

Provide marinas and moorings for a wide range of vessel types including recreational yachts and power boats, trailerable boats, super yachts and charter boats at Westhaven, Viaduct Harbour and Hobson West

Provide a public boat ramp at Westhaven

Manage marinas and public boat ramp at Okahu Bay Landing

Operate a haul-out facility at the Landing in Orakei

Host international marine events e.g. Volvo, Louis Vuitton, Americas Cup

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Service area Sub-activities

Area of Ownership Area of Influence

Manage and develop marina assets and wharves within current legal restraints.

Enhance public realm around Westhaven and Wynyard Quarter

Manage marina operations including berth rentals, marketing and sales

Provide berths for the fishing industry at Halsey and North wharfs

Own and operate marina seabed occupation rights

Asset maintenance, renewal and development

Commercial property initiatives

This service optimises financial returns by managing Waterfront Auckland assets in a commercially feasible and sustainable manner and delivering long term value to stakeholders whilst ensuring the social, environmental, economic, and cultural wellbeing of people and communities

Secure investment and facilitate private sector development of Waterfront Auckland land, buildings and waterspace assets for commercial return

Coordinate private sector developments with the development of the public realm

Ensuring rectification of contaminated land

Project management and delivery of Waterfront Auckland private works projects

Property management of Waterfront Auckland's asset portfolio (i.e. leasehold and freehold land holdings, commercial property, and wharves); includes acquisition, valuation, divestment, licence, lease and rental management

Asset management and maintenance of Waterfront Auckland's commercial property portfolio assets

Develop, maintain and lease of car parks within Waterfront Auckland's area of ownership

Strategic investments in area of influence

Note: These activities will be delivered in a manner consistent with the Waterfront Plan. In addition to these specific activities, Waterfront Auckland will carry out an advocacy role as outlined in the Waterfront Plan.

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4.7. Overarching these activities is the need to plan for Auckland's waterfront as a high quality urban transformation project. This includes:

Planning and activation of the waterfront area, including plans to deliver

integrated transport, design, architectural, environmental and economic outcomes, and spaces for the residents and visitors to enjoy social, cultural and recreational pursuits;

Facilitating sustainable city building and urban development in the waterfront

specific area of ownership that is coordinated with wider council strategic direction;

Planning and influencing high quality architecture resulting in high quality project initiatives;

Facilitating new urban residential and business communities, creating a special sense of place and character;

Facilitating and developing attractors, interim uses, activation and programmes that stimulate visits to the waterfront;

Attracting and connecting neighbours and a wide range of Aucklanders and visitors;

Attracting innovative high growth businesses, and a collaborative business neighbourhood that stimulates the Auckland economy;

Managing stakeholder relationships and communications, project and property marketing, sponsorship and activities; and

Positively influencing waterfront development in the Waterfront Area of Influence.

Core Competencies 4.8. In order to deliver the strategies and the desired results in the key activity areas,

Waterfront Auckland has established and is continuing to develop a range of core competencies; and organises its teams around these. They are:

Strategy and planning;

Project design and development;

Property and asset management;

Operations management; and

Business support.

Strategic projects 4.9. In the period of this SOI, in undertaking these activities, Waterfront Auckland will

contribute to Auckland Council’s objectives through the delivery of a number of strategic initiatives and projects.

4.10. Auckland Council recognises the importance of committing to long term funding

arrangements to ensure that Waterfront Auckland can deliver its objectives. To that intent:

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(a) Waterfront Auckland will reasonably demonstrate to third parties that funding of strategic public projects is entrenched in order to drive private sector investment in the Auckland waterfront.

(b) Strategic Initiatives and Projects are classified into two categories:

(i) strategic public projects for which funding has been confirmed by inclusion in the LTP and for which Waterfront Auckland is not dependent on the consent of Auckland Council or any of its CCOs (Confirmed Strategic Public Projects); and

(ii) strategic public projects for which funding has not been confirmed or for which Waterfront Auckland is dependent on the consent of Auckland Council or any of its CCOs (Unconfirmed Strategic Public Projects).

(c) Auckland Council will contractually commit to provide all funding necessary for the design, development and completion of all the Confirmed Strategic Public Projects in writing following approval of the relevant business case at the Auckland Council Strategy and Finance Committee.

(d) Unconfirmed Strategic Public Projects will be reviewed at the next three year LTP cycle with a view to classifying them as Confirmed Strategic Public Projects where affordable.

4.11. The Confirmed Strategic Public Projects and Unconfirmed Strategic Public Projects

as at 23 May 2012 are set out in Tables 2 and 3 below. Only projects that commence during the SOI period are included. A description of these projects is contained in Attachment 6 as per the “Note” column and the locations of these projects are shown in Attachment 7. Further details are contained in Table 6, Section 5 which sets out the amount and timing of the capital expenditure for each.

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Table 2: Confirmed Strategic Projects

Key:

Planning

Delivery

Project Note 2012/13 2013/14 2014/15 2015-22

Public

Events and cruise facility, Queens Wharf 1

Tram connection Wynyard to Britomart 2

Vos Yard development and waterspace (Stage 1) 3

Madden / Jellicoe Western Edge 4

Daldy / Halsey Streets 5

Contamination remediation of public spaces 6

Waitemata Plaza landscaping upgrade 7

West Edge Promenade & Park 8

Madden Plaza 9

Jellicoe Plaza 10

Beaumont Plaza 11

Beaumont Street extension 12

Brigham Street Seawall 13

Pre-development expenditure 14

Marina

Westhaven pier renewals 15

Westhaven Marina operations asset renewal 16

Marina development 17

Commercial Property

Wynyard Quarter Marine Precinct (Super-yacht refit) 18

Site 38/38A Innovation Precinct Stage 1 19

Wynyard Quarter Central Area private works 20

Commercial property asset renewals 21

Table 3: Unconfirmed Strategic Projects

Project Note 2012/13 2013/14 2014/15 2015-22

Public

Waterfront Walkway & Cycleway 22

Queens Wharf Public Park (Stage 1) 23

Commercial Property

Vos Yard (Stage 2) 24

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4.12. Other key work-streams during the SOI period that will facilitate the successful implementation of our goals for the waterfront and these strategic projects as well as future developments in the waterfront area include:

Table 4: Key work-streams

Work-stream 2012/2013 2013/2014 2014/2015

Completion of the Waterfront Plan

Wynyard Central Precinct Plan (Reference Design / Integrated Development Plan)

Design Guidelines

Wynyard Quarter Residential Strategy

Commercial Development Strategy

Investment strategy and funding agreement

Launch of Travel Management Association for businesses in the Wynyard Quarter

Marina Masterplan including waterspace plan

Update Heritage Strategy (included in Urban Design Framework for Wynyard Quarter)

Sustainability and climate change – investigations into renewable energy, waste and storm water management, water efficiency and green infrastructure approaches including introduction of green leases where appropriate

Sustainability reporting

Neighbourhood development and community infrastructure plan (for a liveable resilient waterfront community)

Activation strategy including public art

Place making initiatives e.g. Garden to table, Silo Park events

Quay Street public space development planning

These work-streams will be undertaken in close collaboration with all relevant stakeholders.

Collaboration and implementation of projects 4.13. The parties recognise the importance of Waterfront Auckland as a place based

agency responsible for planning and project delivery of its objectives. To that intent:

Waterfront Area of Ownership - Confirmed Strategic Public Projects

4.14. Waterfront Auckland will have lead responsibility for delivering its Confirmed

Strategic Public Projects within the Waterfront Area of Ownership. 4.15. Waterfront Auckland will work closely with the key Auckland waterfront stakeholders

in delivering its strategic public projects including Auckland Council (comprising CCOs, Local Boards and the IMSB). In this regard, Waterfront Auckland will seek to enter into service level agreements with Council’s CCOs detailing the principles and protocols for communication and collaboration.

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4.16. Waterfront Auckland will provide the Auckland Council Governing Body (and where relevant Auckland Council’s CCOs, Local Boards and the IMSB) with as much notice as possible of, as well as the opportunity to comment on and have input into, policy, strategy, design, asset and service plans, development and operational budgets, development programmes and other matters.

Waterfront Area of Influence Projects

4.17. Waterfront Auckland has a shared interest in the standard and quality of development, nature and timing of investment in the Waterfront Area of Influence.

4.18. Waterfront Auckland will co-operatively collaborate with Auckland Council, its CCOs

and other Waterfront stakeholders to implement the delivery of agreed projects within the Waterfront Area of Influence.

4.19. The City Centre Master Plan will interface with Waterfront Auckland’s Area of

Ownership and Influence. The parties will work together to ensure that the City Centre Master Plan and the Waterfront Plan integrate seamlessly.

Link between outputs and outcomes Refer Attachment 4 which shows the link between outputs (projects) and outcomes through the impact that the outputs are anticipated to achieve.

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5. Performance Measurement and Reporting 5.1. A comprehensive set of strategic-level performance measures has been developed

that respond to the key areas of shareholder interest and the relationship with Waterfront Auckland as a CCO. The performance measures are grouped under the following headings to provide Auckland Council with a clear overview of Waterfront Auckland’s performance:

1. Waterfront Plan implementation 2. Customer satisfaction 3. Accountability 4. Strategic investment/success in leveraging private investment 5. Project delivery 6. Financial performance

Measures for 4, 5, and 6 are provided in Table 7 (Financial Performance Measures).

Non-financial performance 5.2. The performance measures for the SOI period are set out in detail in Attachment 4

and describe how Waterfront Auckland will contribute to Auckland Council Strategic Directions as well as the link between outputs, impacts and outcomes.

5.3. The summary table below includes the output measures for outcomes over which

Waterfront Auckland has a strong influence and is responsible for leading and delivering. Attachment 4 includes other strategic indicators for outcomes which Waterfront Auckland will contribute to but cannot be held responsible for as many other parties are involved (shown in italics).

5.4. Implementation of the Waterfront Plan is a key focus of Waterfront Auckland. Progress towards implementation of the Waterfront Plan will be monitored and reported on annually. The indicators are included in the Waterfront Plan (which was approved by Auckland Council in June 2012).

5.5. Measurement of the economic benefits of key projects such as cruise and super-yacht facilities cannot be undertaken annually as it is technically demanding and costly to perform. Benefit analysis will be commissioned at the appropriate time in collaboration with Auckland Council (ATEED / Economic Development / Research Investigations and Monitoring Unit).

5.6. In reporting quarterly to the shareholder, updates will be provided on progress made

on each of the projects outlined in Table 2.

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Table 5: Summary of non-financial performance measures and targets1

Performance measure

Current baseline

Target (2012/2013)

Target (2013/2014)

Target (2014/2015)

Waterfront Plan Implementation

Progress on waterfront plan implementation

New measure/ qualitative reporting

Qualitative reporting



Hectares of public open space on waterfront

16.5 ha (2011/12)

17.2 ha 18.0 ha 18.0 ha

Floor space for marine industry in Wynyard Quarter including marine retail

22,071 m2 25,792 m

2 No change No change

Percentage of Aucklanders who visit the city centre waterfront at least once a month

2

Establish baseline

2012

Develop target once

baseline established

Develop target once baseline

established

Develop target once


Distance of continuous waterfront promenade

1.75 km +0.27km +2km No change

Percentage of WA-led new developments where sustainable design principles as clearly evident as key part of design and build

Qualitative (against

SDF)

100% 100% 100%

Customer satisfaction

Public satisfaction with quality of new public spaces at Wynyard Quarter

Establish baseline

2012

Develop target once



established

Develop target once


Public satisfaction with number and variety of events at the waterfront

Establish baseline

2012

Develop target once



established

Develop target once


Customer satisfaction with Westhaven marina services

89.5% >80% >80% >80%

Accountability All Council accountability requirements are met

New measure

100% 100% 100%

Stakeholder relationship plans developed to ensure Local Board engagement, recognition of the IMSB’s Maori Wellbeing Plan and the opportunity for Maori/Iwi involvement in waterfront investment and development.

New measure

100% 100% 100%

1 Excludes measures for outcomes that fall outside of the SOI period, many of which are included in the Waterfront

Plan, for example residential development. 2 Strategic indicators over which Waterfront Auckland has limited influence (but can contribute to). Full set provided

in Attachment 4.

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Financial performance 5.7. The level of expenditure planned by Waterfront Auckland to fulfil our goals and

objectives necessitates significant investment by Auckland Council for the foreseeable future. Waterfront Auckland and Auckland Council, through the LTP and Annual Plan processes, agree the planned funding in a LOE that is issued prior to the beginning of each financial year. The funding is provided by Auckland Council in accordance with the following funding assumptions.

Funding assumptions 5.8. The LTP contains sufficient funding for the public and private projects that the

shareholder approved Waterfront Auckland to undertake. 5.9. The funding assumptions that support the activities and financial performance of

Waterfront Auckland as a tax paying entity are as follows:

5.9.1 Public Space

a) Operational public space activities will be funded by grants from

Auckland Council. b) Public space capital works will be funded by equity investment from

Auckland Council.

5.9.2 Commercial Activity (Including Marina and Property activity) a) Operational commercial activity expenditure will be funded through

commercial income or through debt in years when commercial income is insufficient to cover expenditure.

b) Capital works for commercial activities will be funded by cash

surpluses from operating activities; with any shortfall funded through debt.

c) The Council, as shareholder, is entitled to dividend payments subject

to financial performance being sufficient to meet operating costs and the capital repayment profile. Any cash surpluses generated from commercial operational activities not used to reduce debt or fund capital works for commercial activities, over a threshold to be agreed annually, may be returned to the Council for allocation or re-allocation.

d) Westhaven marina berth entitlement units are licensed through two

trusts. Trust revenues are derived from annual operating expense charges levied on licensees and interest earned on trust fund balances. These monies may only be applied to trust purposes.

5.9.3 Overheads

a) Overheads will be allocated across each of the three activity areas

outlined above and funded accordingly. 5.10. In accordance with the Funding Letter dated 26 November 2010, or any subsequent

funding letters, which recognise the principles of the related legacy Framework Agreement, and the General Security Deed between Auckland Council and Waterfront Auckland, Auckland Council will fund Waterfront Auckland to carry out certain Public Amenity and Infrastructure Works in Wynyard Quarter to an amount of $211 million plus escalations, subject to the LTP and annual planning process.

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5.11. Waterfront Auckland will work closely with Auckland Council to ensure that:

(a) Funding arrangements are both equitable and tax efficient between the parties. (b) There is transparency of LTP funding requirements between public and

commercial (property and marina) activities, and (c) The issues unique to Waterfront Auckland set out in paragraphs 5.12 – 5.17 are

satisfactorily addressed given the projected funding deficits until year 2021, the need to attract substantial private sector investment to achieve the “high quality urban transformation” envisaged and the inherent political cycles and uncertainty.

5.12. Waterfront Auckland faces unique issues that require arrangements that differ from

those applying to other CCOs. In particular, mechanisms that local authorities have traditionally used to manage short-term revenue generated by their subsidiaries and departments run contrary to Waterfront Auckland achieving Council’s aims and maintaining the programme we have agreed.

5.13. Waterfront Auckland inherited a well balanced and well understood public / private

development programme led by Sea+City and managed through the Framework Agreement between Sea+City, Auckland Regional Holdings and Auckland City Council.

5.14. This arrangement was critical to the successful development of the Wynyard Quarter

and to the attraction of Kiwi Income Property Trust as the developer of the new ASB Centre, which has in turn been the catalyst for more private commercial investment coming to the waterfront.

5.15. While the legal standing of the Framework Agreement is largely (but not entirely)

irrelevant under the new Auckland Council structure, its funding principles and the obligations it imposed on Sea+City to deliver agreed transformational change remain highly relevant to Waterfront Auckland’s delivery of Council’s expectations.

5.16. The LTP, Auckland Plan, City Centre Master Plan and Waterfront Plan processes set

clear objectives and monitoring tools for the future. However, these documents do not sufficiently define the investment framework that will underpin Waterfront Auckland’s development tasks and give the Waterfront Auckland Board the certainty it needs to deliver the 10 year programme efficiently.

5.17. Private sector investors and the public have relied on the investment principles set

out in the Framework Agreement for the Wynyard Quarter programme. It is vital to maintain continuity and confidence in this approach, especially given Waterfront Auckland’s obligation to attract responsible private sector investment to achieve public good outcomes.

5.18. The Council and Waterfront Auckland will enter into a funding agreement to maintain

the continuity and confidence in the Wynyard Quarter programme by private sector investors and the public.

5.19. Until a funding agreement is entered into, the funding principles contained in the Shareholder’s Expectation Guide for Council Controlled Organisations (SEG) will apply. If the issues outlined in paragraphs 5.12 to 5.17 are not satisfactorily addressed through the funding agreement, then expected outputs and outcomes will differ accordingly.

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Capital expenditure budget for SOI period 2012 to 2015 5.20. The capital expenditure budget for the SOI period is set out in Table 6 below (refer

Attachment 6 for project descriptions as per the “Note” column). Projects that do not commence within the SOI period are excluded from this table.

Table 6: Capital expenditure budget (inflated dollars as per 2012-22 LTP)

Year

Project Note 2012/ 2013

2013/ 2014

2014/ 2015

2015-2022 TOTAL

Public

$m $m $m $m $m

Wynyard Quarter Central Precinct public works

Daldy / Halsey Streets 5 9.2 6.5 4.6 20.3

Madden Plaza 9 0.7 0.3 4.4 5.4

Wynyard Quarter Marine Precinct public works

Vos Yard development and waterspace (Stage 1)

3 1.0 1.0

Madden / Jellicoe Western Edge 4 3.5 0.9 4.4

Wynyard Quarter Headland Precinct public works

Beaumont Plaza 11 0.3 1.4 1.7

West Edge Promenade & Park 8 0.6 1.9 1.1 3.6

Brigham Street Seawall 13 10.7 10.7

Beaumont Street Extension 12 0.7 8.6 9.3

Wynyard Quarter Development Sites public works

Contamination remediation public spaces 6 1.8 1.5 1.6 10.7 15.6

Pre-development expenditure 14 2.1 0.5 0.6 1.4 4.6

Wynyard Quarter Jellicoe Precinct public works

Jellicoe Plaza 10 0.6 3.8 4.4

Rest of Waterfront

Events and cruise facility, Queens Wharf 1 11.6 11.6

Tram connection Wynyard to Britomart 2 8.3 8.3

Waitemata Plaza landscaping upgrade 7 0.3 1.3 1.6

Total Public $m 38.2 10.3 11.9 42.1 102.5

Marina Operations

Westhaven pier renewals 15 3.3 3.2 8.0 14.5

Westhaven Marina operations asset renewal

17 0.3 0.2 0.2 1.5 2.2

Marina development 16 0.6 16.3 4.9 21.8

Total Marina Operations $m 4.2 19.7 5.1 9.5 38.5

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Commercial Property

$m $m $m $m $m

Commercial property asset renewals 21 0.4 0.3 0.3 2.7 3.7

Site 38/38A Innovation Precinct Stage 1 19 0.7 9.1 3.8 13.6

Wynyard Quarter Marine Precinct (Superyacht refit)

18 7.2 7.2

Wynyard Quarter Central Area private works

20 5.7 0.8 0.6 6.8 13.9

Total Commercial Property $m 14.0 10.2 0.9 13.3 38.4

TOTAL FUNDED $m 56.4 40.2 17.9 64.9 179.4

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Prospective Financial Statements Waterfront Auckland’s prospective financial performance for the three years to 30 June 2015 is shown below and on pages 28 and 29.

Waterfront Auckland

Prospective summary income statementfor the year ended 30 June 2013

Marina

Activities

Commercial

Property

Activities

Public

Activities Total

$000 $000 $000 $000

Income

Opex funding from Auckland Council - - 8,935 8,935

Revenue from services 9,361 13,679 310 23,350

Total income 9,361 13,679 9,245 32,285

Expenditure

Personnel Costs 1,288 2,855 3,428 7,571

Depreciation and amortisation 1,552 1,903 2,876 6,331

Finance costs - 1,912 - 1,912

Other expenditure 4,828 6,918 5,817 17,563

Total operating expenditure 7,668 13,588 12,121 33,377

Surplus/(deficit) before tax 1,693 91 (2,876) (1,092)

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Waterfront Auckland


Marina

Activities

Commercial

Property

Activities

Public

Activities Total

$000 $000 $000 $000

Income



Total income 9,876 15,708 9,531 35,115

Expenditure

Personnel Costs 1,324 3,001 3,524 7,849





Surplus/(deficit) before tax 1,927 616 (4,120) (1,577)

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Waterfront Auckland


Marina

Activities

Commercial

Property

Activities

Public

Activities Total

$000 $000 $000 $000

Income



Total income 10,719 14,484 9,824 35,027

Expenditure

Personnel Costs 1,360 3,089 3,622 8,071





Surplus/(deficit) before tax 2,512 (1,980) (4,601) (4,069)

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Waterfront Auckland’s prospective financial position for the three years to 30 June 2015 is shown below.

Waterfront Auckland

Prospective summary statement of financial positionAs at 30 June

30 June 2013 30 June 2014 30 June 2015

$000 $000 $000

Assets

Current assets

Cash and cash equivalent 2,140 2,140 2,140

Other current assets 10,687 10,687 10,687

Total current assets 12,827 12,827 12,827

Property plant and equipment 286,171 315,413 325,062

Investment property 140,764 140,764 140,764

Other non current assets 2,237 2,102 1,967

Total non- current assets 429,172 458,279 467,793

Total assets 441,999 471,106 480,620

Liabilities

Current liabilities

Trade and other payables 8,375 8,375 8,375

Other current liabilities 296 296 296

Total current liabilities 8,671 8,671 8,671

Non-current liabilities

Borrowing from parent 25,113 45,629 40,489

Other non-current liabilities 15,772 15,586 22,438

Total non-current liabilities 40,885 61,215 62,927

Total liabilities 49,556 69,886 71,598

Net assets 392,443 401,220 409,022

Equity

Contributed equity 442,546 452,900 464,771

Retained earnings (50,103) (51,680) (55,749)

Total equity 392,443 401,220 409,022

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Waterfront Auckland’s prospective funding statement for the three years to 30 June 2015 is shown below.

Waterfront Auckland

Prospective summary funding statementfor the year ended 30 June

30 June 2013 30 June 2014 30 June 2015

$000 $000 $000

Total operating expenditure 33,377 36,692 39,096

Less depreciation and amortisation (6,331) (7,786) (8,410)

Operating expenditure to be funded 27,046 28,906 30,686

Operating expenditure funded by:

Opex funding from Auckland Council 8,935 8,789 9,058

Revenue from services 23,350 26,326 25,969

Other revenue 15,856 - 7,038

Less armotised prepaid leases (186) (186) (186)

Total opex funding 47,955 34,929 41,879

Reduce loans from Auckland Council (15,856) - (7,038)

Funding Surplus 5,053 6,023 4,155

Total capital expenditure 56,365 40,139 17,924

Capital expenditure to be funded 56,365 40,139 17,924

Capital Expenditure funded by

Investment by Auckland Council 38,257 10,354 11,871

Loans from Auckland Council 9,750 20,516 1,898

Operating expenditure funding surplus 5,053 6,023 4,155

Grants and subsidies 3,305 3,246 -

Total capex funding 56,365 40,139 17,924

Page | 32

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Financial performance measures 5.21. Financial performance measures for which Waterfront Auckland will be held

accountable for delivering on are summarised in Table 7 below.

Table 7: Financial performance measures and targets

Performance measure

Current baseline

Target (2012/2013)

Target (2013/2014)

Target (2014/2015)

Strategic investment/ Progress in securing commercial investors to plan:

Private to public investment ratio in Wynyard Quarter

New measure

2:1 2:1 2:1

Projects delivered to time and budget:

Return on investment on commercial waterfront activities and marinas

New measure

8% 8% 8%

Ratio of consolidated shareholder funds to total

assets3

79%

(30 June 2011)

65%4 80% 80%

Financial performance

Variation from forecast surplus/deficit

New measure

<5-10% <5-10% <5-10%

5.22. The Council has set the expected rate of return on investment (ROI) on commercial

waterfront activities and marinas at 8% p.a. The target takes account of Council's reasonable expectation of the returns achievable from the commercial property investment portfolio. The Council recognises that the ROI is set on a portfolio wide basis and assumes that current returns from existing individual agreements and / or property will be renegotiated or adjusted over time to meet the Council's ROI targets. The Council and Waterfront Auckland have agreed to review the allocation and treatment of commercial property that is taken into account in the calculation of the ROI performance against the target set during 2012/13.

5.23. The budgets for the next three years, as approved by Auckland Council, have indicative ROI values significantly below the expected ROI level of 8%. This reflects the current nature of the commercial portfolio vested in Waterfront Auckland, the timeline for scheduled developments and the loss of income associated with the redevelopment phase of existing tenanted areas. All new development schemes have a threshold ROI of 8% post completion, unless specifically authorised by the Board and Council to be lower, due to intervention or other public interest initiatives.

3 Waterfront Auckland will ensure for the period of this SOI that the ratio of Consolidated Shareholder’s Funds to

Total Assets will be not less than 60%. Shareholder’s Funds means the sum of the amount of share capital, reserves, and accumulated funds of the parent as disclosed in Waterfront Auckland’s Statement of Financial Position. Total Assets means the sum of the net book values of property, plant and equipment, intangible assets, investment properties, investments in subsidiaries, other financial assets, and current assets of the parent as disclosed in Waterfront Auckland’s Statement of Financial Position. 4 Includes debt for equity swap

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5.24. The next three years show the ROI reducing as sites currently let are decanted for development of the innovation hub, capital investment ramps up in Westhaven, and the decontamination of future development sites continues to programme.

5.25. The review of allocation and treatment of commercial property will improve the budgeted ROI, as we know there are issues regarding the allocation to commercial property of assets like the tramway, the heritage yacht basin and the land associated with Daldy Street Linear Park. Over time the ROI trends towards the 8% target as commercial projects are completed and the revenue and investment levels settle into a mature commercial property company profile.

Distributions to Auckland Council 5.26. Waterfront Auckland intends to make dividend payments to Auckland Council from

surpluses generated within commercial activities. Before any distribution is made, Waterfront Auckland will work with Council to determine the most efficient manner of making that distribution.

5.27. The level of distributions will be determined by reference to:

(a) Waterfront Auckland’s funding agreement with Auckland Council and the agreed

capital repayment profile;

(b) The capital expenditure programme for commercial and marina activities; (c) Investment in strategic acquisitions within the Area of Influence (subject to

Council approval);

(d) Working capital requirements; and will exclude (e) Capital profits earned on disposals of assets where such profits are to be used

to meet investing and operating requirements. 5.28. Waterfront Auckland does not envisage making a distribution to Auckland Council in

the period of this SOI.

Estimate of the commercial value of Waterfront Auckland 5.29. At 30 June 2011, the commercial value of the Shareholder's investment in Waterfront

Auckland, based on the net asset value disclosed in the audited financial statements, was $299.7 million.

5.30. The Directors' assessment of the commercial value of the Shareholder's investment

will be reassessed on an annual basis at 30 June each year based on the audited net assets of Waterfront Auckland.

Reporting to Auckland Council Statement of Intent

5.31. Waterfront Auckland will provide Auckland Council with a draft and final SOI for each financial year, prepared and finalised in accordance with the requirements of Schedule 8 of the Local Government Act 2002.

Annual Report

5.32. Within three months from the end of June each year, Waterfront Auckland will provide to Auckland Council an Annual Report which will comply with Section 67 of the Local Government Act 2002.

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Half Year Report

5.33. Within two months from the end of December each year, Waterfront Auckland will provide to Auckland Council an unaudited Half Year Report which will include a: Statement of Financial Performance; Statement of Financial Position; Statement of Movements in Equity; Statement of Cash Flows and a report on the programme of action and performance targets set out in the SOI.

Quarterly Reports

5.34. Within one month from the end of the September and March quarters each year, Waterfront Auckland will provide to Auckland Council an unaudited Quarterly Report which will include a: Statement of Financial Performance; Statement of Financial Position; and a report on the programme of action and performance targets set out in the SOI.

5.35. Within one month from the end of the June quarter each year, or directly following the

next Board meeting (whichever is later), Waterfront Auckland will provide to Auckland Council an unaudited Quarterly Report which will include a: Statement of Financial Performance; Statement of Financial Position; Statement of Cash Flows and a report on the programme of action and performance targets set out in the SOI.

5.36. Waterfront Auckland will report quarterly to the Governing Body of the Auckland Council and will provide the information specified in the template, and to the timelines, provided by CCO Governance and Monitoring.

Additional information

5.37. Waterfront Auckland will provide additional information to Auckland Council as required, or as reasonably requested by Auckland Council, to ensure that Auckland Council is informed in a timely manner of significant events which related to Waterfront Auckland and which may affect Auckland Council.

Confidentiality

5.38. Relevant information which is confidential under the terms of the Local Government Official Information and Meetings Act will be shared with Auckland Council as permitted by other agreements. When sharing such information Waterfront Auckland will clearly state the nature of the information and the reason for confidentiality.

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6. Approach to Governance

Approach to governance 6.1. The Waterfront Auckland Board is committed to high standards of governance and

business behaviour. The Board of Directors will continue to monitor developments in corporate and public sector governance to ensure that Waterfront Auckland implements the highest standards of governance at all times.

6.2. In undertaking its activities, Waterfront Auckland will exhibit and ensure:

(a) Sound business practice in keeping with its business objectives

(b) Sustainable business practice

(c) Prudent, ethical and appropriate behaviour in dealing with all parties

(d) An open and transparent approach to decision-making, while respecting the need for commercially sensitive information to be protected

(e) An active partnership approach with Auckland Council and key Auckland Council Group CCOs and Stakeholders

Representation and commitment statement 6.3. The Board is accountable to Auckland Council to ensure that Waterfront Auckland:

(a) Performs its functions

(b) Acts in accordance with relevant legislation including the Local Government Act 2002 and Companies Act 1993

(c) Gives effect to and achieves the goals, business objectives, performance targets and other measures set out in this SOI.

(d) Gives effect to the vision for the Auckland waterfront, the Waterfront Plan, Auckland Council’s LTP, and all relevant shareholder polices and plans including:

(i) Shareholder Expectation Guide for Council Controlled Organisations (SEG).

(ii) Accountability Policy

(iii) Board Appointment and Remuneration Policy

6.4. The Board will:

(a) Obtain appropriate and timely information necessary to discharge its obligations effectively

(b) Actively review and direct the overall strategy of Waterfront Auckland

(c) Regularly review its policies and delegations

(d) Negotiate and agree Waterfront Auckland’s SOI with Auckland Council

(e) Actively review Waterfront Auckland to ensure it is an effective, results oriented organisation with core competencies and appropriate systems and controls necessary to carry out its functions

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(f) Manage and monitor the performance of the Waterfront Auckland Chief Executive

(g) Establish remuneration policies and practices, set and review remuneration for the Chief Executive and senior executives (Tier 2)

(h) Provide leadership with key stakeholders

(i) Maintain a risk management strategy.

Public meetings 6.5. All Waterfront Auckland Board meetings are open to the public except where the

business being discussed or transacted is commercially sensitive.

6.6 Pursuant to section 96 of the Local Government (Auckland Council) Act 2009, Waterfront Auckland will hold meetings that are open to the public at the following times:

(a) in the last week of June each year for the purpose of considering comments from the Auckland Council on the Statement of Intent for the following financial year; and

(b) towards the end of August in each year for the purpose of considering the organisation’s performance under its Statement of Intent in the previous financial year.

Procedures for purchasing shares in other companies 6.7 This will require the prior approval in writing of Auckland Council.

Management of strategic assets 6.8 Strategic assets in terms of the Local Government Act 2002, owned by Waterfront

Auckland, comprise freehold interests in waterfront land. 6.9 Pursuant to Auckland Council’s CCO Accountability Policy, Waterfront Auckland may

not undertake a major transaction in relation to strategic assets (as defined in the Accountability Policy) unless approved by the Council or already provided for in the LTP.

Decisions which require shareholder approval 6.10 Waterfront Auckland’s decisions will be made consistent with the Waterfront Plan,

and Auckland Council’s LTP as directed by Auckland Council. 6.11 Criteria guiding types of decisions requiring shareholder approval are contained in the

Shareholder Expectation Guide for CCOs.

Relationship with Auckland Council, CCOs and stakeholders 6.12 As a place-based agency, Waterfront Auckland will integrate and collaborate with

Auckland Council and its CCOs. 6.13 Strong working relationships will be built and maintained, particularly around the

quality, design and development of the public and private realm.

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6.14 Waterfront Auckland has a particular role with private investors and its intention is to secure continued private sector investment in the waterfront, together with the support from waterfront stakeholders, which is also vital to success and requires excellence in working with others.

6.15 Relationship with Auckland Council

In order to produce the best outcomes for Auckland, Waterfront Auckland will maintain an effective working and operational relationship with Auckland Council including a pro-active communication and engagement policy in accordance with the expectations, protocols and guidelines contained in the SEG.

The Chairman and Chief Executive will conduct regular briefing meetings with the Mayor and Chief Executive of Auckland Council. Waterfront Auckland agrees to inform and, where appropriate, consult with Auckland Council’s advisory panels - Pasifika, Ethnic, Youth, Business, Rural and Disability on any issues of particular interest to each advisory panel.

6.16 Relationship with Local Boards

While Waterfront Auckland is accountable to the Governing Body as shareholder, it also has relationships with Local Boards who share the decision-making responsibilities of the Auckland Council with the Governing Body. Waterfront Auckland will:

Work in accordance with its Local Board Engagement Plan, which provides

an overarching framework to guide engagement between Waterfront Auckland and Local Boards; and conforms with Auckland Council guidance provided.

Report to Local Boards as specified in its Local Board Engagement Plan.

Adequately resource liaison with and reporting to Local Boards.

Keep informed of Local Board priorities and objectives in Local Board plans and ensure that these are considered when: (i) preparing budgets; and (ii) undertaking activities in Local Board areas.

Ensure that business cases seeking Auckland Council funding, take into account Local Board priorities and objectives.

Provide regular activity reports to the relevant Local Boards on major projects that impact on the Local Boards’ areas.

6.17 Relationship with Independent Māori Statutory Board (IMSB)

Waterfront Auckland will contribute to the Auckland Council’s responsibilities of acting consistently with the provisions of the Treaty of Waitangi. Waterfront Auckland will take account of the IMSB’s schedule of issues of significance, its Māori Wellbeing Plan and any statutory Treaty provisions that are relevant to its activities and, where appropriate, engage with the IMSB on these matters.

6.18 Relationship with Auckland Council-Controlled Organisations

(a) Auckland Transport (AT): Waterfront Auckland has a direct interest in land, waterspace and associated activities within the waterfront Area of Influence. It is acknowledged that some of these areas fall into jurisdictional responsibilities of AT, particularly areas designated as road reserves and any public transport infrastructure.

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Waterfront Auckland will work closely with Auckland Transport to ensure quality outcomes land use and transport integration. We will also input expertise into regional transport projects (e.g. CBD rail link, Light Rail Integration, Alternative Harbour Crossing) in collaboration with the New Zealand Transport Authority.

(b) Auckland Tourism, Events and Economic Development Limited (ATEED): Waterfront Auckland has a direct interest in the types of events that are attracted by ATEED. We will work closely with the Major Events Team to ensure that the events that are held in the Area of Influence are consistent with ATEED’s Major Event Strategy. We will work with ATEED to promote the waterfront as a destination and with Business and Sector Development experts to attract local, regional and international investment and activity on the waterfront.

(c) Regional Facilities Auckland (RFA): Waterfront Auckland will work together with this CCO to achieve its objectives in respect of those facilities in the waterfront Area of Control and Influence. In particular we will develop and maintain a partnership with RFA for managing the Viaduct Events Centre and Voyager Museum located on the waterfront in such a way that enhances Auckland's international competitiveness, consistent with RFA’s Horizons Regional Facilities for Auckland Discussion Document.

(d) Auckland Council Investments Limited (ACIL): Waterfront Auckland has a direct interest in the Ports of Auckland land and associated water-space which is 100 percent owned by ACIL. The activities of the port and the port land and water-space are integrally linked with a number of our goals and business objectives. We will work closely with ACIL and the Port Company to deliver on our mutual goals.

(e) Auckland Council Property Limited (ACPL): Unlike other CCOs Waterfront Auckland is a major property owner and is charged with managing acquisitions and disposal of its land in the Area of Ownership. To achieve transformational change on the waterfront’s Area of Influence is an integral part of Waterfront Auckland’s scope. Strategic investment in this part of the waterfront is an important mechanism for Waterfront Auckland. ACPL may have some involvement in the management, acquisition and disposal of land in the Waterfront Auckland area of Influence and where necessary and relevant we will liaise with colleagues in this CCO.

(f) Watercare Services Limited (Watercare): Waterfront Auckland will work with Watercare on matters regarding water and waste water services, particularly in its Area of Ownership.

6.19 Relationship with Government

Waterfront Auckland recognises Central Government as a strategic partner and will align with Government policy and funding for culture and heritage that is funded at the regional level, where relevant.

6.20 Relationship with other Key Stakeholders Waterfront Auckland will be proactive, responsive and transparent in its relationship with all stakeholders and to take into account the interests of Auckland Council as well as Waterfront Auckland, in its dealings with external parties. We will develop and maintain relationships with key stakeholders, in particular:

i. The Auckland public

ii. Iwi

iii. CBD and waterfront business/user associations

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iv. Ports of Auckland Limited

v. Land owners and residents

vi. Private sector investors

vii. Industry sectors – e.g. marine, fishing, cruise sectors, tourism

viii. Development, utilities and infrastructure sector and the finance community

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7 Organisational Health, Capability and Risk Management

7.1 Waterfront Auckland will commit to building and maintaining an enduring and resilient

organisation.

Health and safety 7.2 Health and Safety is an important priority for Waterfront Auckland and we are

committed to a high standard of observance and practice. We have a Health and Safety Policy and comprehensive Project Safety Plan (PSP) in place.

7.3 The Health and Safety goal considers amongst other things; “…the preservation of

life and health to be paramount…and that there is no loss of life or serious accident during the project lifetime.” This applies to all site users and stakeholders. Along with New Zealand best practice, aspects of International Best Practice have been adopted to achieve an appropriate and higher standard than the minimum New Zealand standard.

7.4 With construction activity occurring on a number of sites simultaneously across the

wider Waterfront Auckland area, as well as the opening up of the Wynyard Quarter to the general public, it is vital that we remain proactive and focused on our aspirational goal of “zero loss of life and serious harm for all stakeholders”. Accordingly, we place a high emphasis on proactive intervention and incident prevention, auditing, surveillance and training at the high risk site level, to help ensure the workers are conscious of the Health and Safety requirements at all times, to a habitual level. The scope of Health and Safety activities has been extended across the whole of Waterfront Auckland’s area of influence.

Good employer 7.5 Waterfront Auckland will operate a human resources policy that complies with the

good employer objectives as set out in the Shareholder Expectation Guide.

Staff engagement 7.6 Waterfront Auckland will participate in Auckland Council’s staff engagement surveys

to monitor organisational health and capability.

Risk management 7.7 Waterfront Auckland has a comprehensive risk management framework which

includes:

Waterfront Auckland Board regular review of the inherent, business and major operational risks to the organisation.

Conflict of Interest Policy and Protocol for Board members, Executive and staff.

A thorough internal decision-making and risk management process supported by real-time reviews undertaken by Audit New Zealand Special Services.

Regular reviews of the financial capacity of our partners.

Annual independent audit completed by Audit New Zealand.

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7.8 Waterfront Auckland’s risk management processes aim to minimise the consequences of events that could adversely affect its ability to achieve its targets. This is achieved through structured processes based upon Australian and New Zealand Risk Management Standard AS 4360 – Risk Management. Waterfront Auckland’s risk management procedures comply with these principles and its structure is in accordance with its framework for managing risk.

7.9 In addition, where it is practical to insure Waterfront Auckland’s identified risks, these

are covered under Auckland Council's Group insurance policies. These have been fully reviewed on renewal at 30 April 2012. It is noted that some environmental and market related risks are not able to be insured.

7.10 Key risks which apply to the achievements of targets in the 2012 to 2015 SOI are:

(a) Current economic climate reduces business needs for floor space

Continuing difficult economic climate resulting in scarcity of investment funding.

(b) Certainty of Auckland Council funding for public infrastructure projects

Waterfront Auckland is reliant on Auckland Council for funding. Auckland Council’s 10 year LTP has been approved by Council’s Strategy and Finance Committee and will be adopted by the Governing Body on 28 June 2012 for effect from 1 July 2012. At this point funding for public projects will be confirmed, however each project is still subject to Business Case approval and the LTP itself is to be reviewed on a three year basis.

(c) Market perception – commercial uptake affected by perceived lack of adequate return

Market finds offerings unattractive, uncompetitive and/or concerns are raised that do not justify investment

(d) Market resistance to leasehold

Potential parties elect not to proceed due to dislike of leasehold instruments, especially in residential markets.

(e) Decontamination of contaminated land

Scale of contamination is significantly greater and/or more costly than estimated.

(f) Relocation of bulk liquids – Headland Public Space

Difficulty in finding and agreeing new location(s) for bulk liquid industry. Has potential to delay development of Headland Public Space.

(g) Third Harbour crossing (tunnel vs bridge)

Current preference is for a tunnel. Any delay in the decision will adversely affect investment in Westhaven and Wynyard Quarter.

7.11 Mitigation strategies have been identified, where possible, to deal with these

challenges. The following principles have been used in developing these strategies:

In order to clearly illustrate to the market the extent of transformational change

required and the quality aspired to, Waterfront Auckland uses exemplar development of assets to create precedents that the market can follow. Measurement against these precedents is a key part of ensuring an international standard of environmental performance, resilience, and architectural and urban design while maintaining affordability and providing utility delivery.

In planning for and implementing transformational change through the creation of excellent strategy and policy, Waterfront Auckland adopts international best practice, as a matter of principle seeks out leading experts in their respective

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fields and applies this intellectual knowledge to ensure delivery of outcomes. The Technical Advisory Group is one such forum employed that illustrates application of this principle.

An open door policy is a fundamental part of providing key stakeholders access to decision-making which affects stakeholder interests in the Area of Influence. Collaborative cooperation is fundamental to aligning competing interests and agreeing pragmatic solutions to ensure delivery of outcomes.

Innovation will be applied to devise appropriate strategies which can assist in overcoming difficult technical issues. Contamination is such an area where new and innovative ways of dealing with contamination can complete remediation in a balanced way to better achieve financial and non-financial outcomes.

Waterfront land is classified as a key strategic asset. As such, the freehold interest is to be retained in public ownership. Within this context, however, there is opportunity for a range of deal mechanisms to appropriately share risk and reward with the private sector.

To secure appropriate private sector investment in these difficult times, Waterfront Auckland is open to the concept of mixed ownership across the waterfront portfolio. Waterfront Auckland will proactively investigate the optimal structure for attracting private sector equity participation on the waterfront.

Where commercial projects are marginal or do not meet financial hurdle rates required by the private sector, but are fundamental for achievement of economic or non-financial outcomes, then Waterfront Auckland may take the lead in facilitating, planning, investing and developing such assets either in partnership with other stakeholders or in its own right if achievement of combined financial and non-financial requirements can be demonstrated to the Board.

A strategic approach to the Area of Influence is important in terms of potential investment opportunities that, if acquired, could assist in achieving non-financial outcomes in particular. Typically, such investments will be of a short to medium term duration with careful consideration given to management of risk and a clearly defined exit strategy.

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8 Accounting Policies 8.1 Waterfront Auckland will comply with the accounting and disclosure practices set out

in all the relevant Financial Reporting Standards (FRS) issued by the New Zealand Institute of Chartered Accountants as periodically updated and as required by the Financial Reporting Act 1993.

8.2 The accounting policies, which form Attachment 8, are consistent with those of

Auckland Council group policies.

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ATTACHMENT 1 – WATERFRONT AUCKLAND PUBLIC CHARTER Waterfront Auckland has developed a Public Charter, which communicates our vision, mission, philosophy, principles and objectives as follows: (a) Our VISION is to be a leading contributor to Auckland’s urban and economic development,

creating authentic waterfront spaces for people and celebrating design excellence. (b) Our MISSION is to deliver a waterfront which contributes to Auckland becoming “the most liveable

city” by being a public waterfront, a working waterfront, a growing waterfront, a connected waterfront, a liveable waterfront, and a green waterfront, which is resilient.

(c) Our PHILOSOPHY recognises that we are but temporary custodians of a precious place. We

welcome all parts of Auckland and diverse points of view. We aim to be a leading voice for bold, contemporary ideas, and the champions of a design led approach. With principled and visionary leadership, we strive to balance environmental outcomes with community and economic growth.

(d) We are committed to being open, collaborative and transparent. Our PRINCIPLES are based on

promoting sustainability, respecting iwi and reflecting our maritime heritage. We acknowledge the role of the private sector and demonstrate a strong customer focus. We are a results and delivery-orientated organisation. Our solutions are bold, financially prudent and commercially successful.

We have a number of OBJECTIVES – we aim to:

Realise the full potential that the Auckland waterfront holds

Lead a strategic approach to development

Maintain relationships with key stakeholders and Aucklanders

Transform the waterfront to attract visitors, skilled talent and investment

Deliver high quality architecture, design and beautiful places for people

Develop and manage property commercially, driving sustainable urban and economic development

Better connect the waterfront and the surrounding city and harbour

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ATTACHMENT 2 – AREA OF OWNERSHIP AND INFLUENCE

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ATTACHMENT 3 – CONTRIBUTION TO COUNCIL OBJECTIVES Table 8: Contribution to Council Objectives

Auckland Plan Outcomes How we will contribute

Strategic Direction Priority / Target Reference Lead and deliver Contribute and Collaborate

A strong, inclusive and equitable society that provides opportunity for all Aucklanders

Put children and young people first;

Improve education health and safety;

Strengthen communities

SD1 - priorities 1, 2, 3

WA will seek to develop a diverse, resilient community in the Wynyard Quarter Area of Ownership. WA will ensure spaces and activities for all age groups including children and consider safety in all design and development. WA has developed resilient community objectives and will develop a residential and community infrastructure strategy.

WA will work with Council and other stakeholders to ensure the provision of social and community infrastructure and services, open space and transport.

Enable Maori aspirations through recognition of the Treaty of Waitangi and customary rights

Support sustainable development of Maori outcomes, leadership, community and partnerships

SD2 – priority 5

WA is committed to the inclusion of Maori culture, philosophies and the Maori economy as vital and desirable threads that need to be woven through the waterfront development. WA will develop a Maori stakeholder relationship plan to ensure ongoing engagement with Maori at both a strategic and project level to identify economic, cultural and social opportunities and advance environmental outcomes.

Auckland Council IMSB has developed a draft Maori Maori Wellbeing Plan to guide council’s operations. WA will contribute as required.

The integration of arts, culture, heritage, and lifestyle into the everyday lives of Auckland’s residents and visitors.

Value and foster Auckland's cultural diversity.

Value artists, creative sector and institutions.

SD3 - priorities 1, 2

WA will deliver an activation strategy

WA will work with Auckland Council’s Public Art Team and deliver public art.

WA will work with key stakeholders (e.g. ATEED) on delivery of events (supporting Auckland's arts and culture).

WA will support the arts and creative sector businesses to locate in the Wynyard Quarter as part of the Innovation hub.

WA will support (and deliver) projects that celebrate the areas cultural (including Maori, Pasifika, Asian and Pakeha) heritage.

Protect and preserve Auckland’s historic heritage

Understand, value and share our heritage.

SD4 – priorities 1, 2

WA will lead (and invest where appropriate) in the preservation of historic heritage at the

WA has completed a heritage assessment for the waterfront and will

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for the benefit and enjoyment of present and future generations

Invest in heritage.

waterfront, e.g. Vos and Brijs project.

WA will investigate the reuse of character buildings and elements in development projects (e.g. Lysaght and TMS buildings)

contribute to a Local Board heritage trail project (if this is funded).

Promote individual and community wellbeing through participation and excellence in recreation and sport

Provide quality opportunities for all Aucklander’s to participate in recreation and sport.

Maximise contribution of sport to economy.

SD5 priorities 1, 3

WA will deliver the Daldy Linear park (Stage 1) open space which will provide opportunities for passive recreation and for walking and cycling (and will maintain the Silo park playground, ball court and open spaces for public passive and active recreation).

WA will upgrade the Waitemata Plaza to improve its suitability for passive recreation and public enjoyment.

WA will work with ATEED to ensure that the major sporting and recreation events on the waterfront run smoothly and are economically successful.

An economy delivering opportunities and prosperity for all Aucklanders and New Zealand

Develop an innovation hub of the Asia-Pacific Rim.

Become internationally connected and export driven

SD4 priorities 2, 3

WA will lead the urban regeneration of the Wynyard Quarter Central Precinct (including innovation hub and marine facility) and commercial development of marinas.

WA will work with partners and stakeholder groups on developing an innovation hub (supporting a productive high level economy) and supporting existing marine and fishing industries

WA will work with ATEED to ensure that development, activation and events support the tourism and visitor strategy.

Develop a creative, vibrant international city.

A revitalised waterfront that is a key destination and events venue for businesses, residents and visitors, and is united with the City Centre.

SD4 Priority 5 + Action 1

WA is leading the sustainable transformation of the Wynyard Quarter (within its Area of Ownership) into a mixed use, vibrant city neighbourhood (consistent with the vision and goals of the waterfront plan). WA will act in a commercial way to achieve development outcomes (LOE), including investing in projects and places that secure high quality urban transformation outcomes.

Acknowledging that nature and people are inseparable

The protection of Auckland’s high value coastline, harbours and marine areas.

SD7 – priority 3 WA will manage storm-water from its land using low impact design approaches.

WA will manage increasing demands for harbour and marine access in accordance with waterfront plan and leases.

WA will work with Auckland Council, Watercare and Ports of Auckland to improve water quality of the Waitemata Harbour.

WA will contribute to marine spatial

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planning for the Waitemata Harbour.

Building resilience to natural hazards

SD7 – priority 4 WA will plan for natural hazards in accordance with local and national guidance.

Sustainably manage natural resources

SD7- priority 2, Dir 5.8, Dir 5.10

WA will develop Wynyard Quarter in a way that reduces energy and water use and waste generation and investigate the potential for an “eco precinct”

Value our natural heritage SD7 - priority 1 In the design of public open space WA will use plants that reflect natural heritage and enhance biodiversity.

Auckland will play its part in tackling climate change and increasing energy resilience

A 10-20% reduction in human induced greenhouse gas emissions by 2020 (based on 1990 levels) 40% reduction by 2040, 50% reduction by 2050

SD8 - target, Box 6.2 options to reduce GHG emissions

WA will advocate the role that the waterfront can play in achieving this target: including designing for sustainable transport (reducing emissions), increasing energy efficiency of buildings and public space; the potential for a low emissions precinct; the opportunity for renewable energy generation.

WA will plan and design development to be resilient to sea level rise and increasing storm events, based on expert advice.

WA will collaborate with Council and stakeholders on the implementation and monitoring of this target as well as the implications of sea level rise.

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Creating a stunning city centre with well connected quality towns, villages and neighbourhoods

Good design in all development.

SD10 – priority 2, Boxes 10.1 and 10.2 and LTP

WA has a goal to achieve outstanding design and architecture. WA will use an external design review process, a multifaceted design talent pool (including urban and environmental design, architecture, engineering and sustainability) and develop design standards or guidelines (interpreting the Auckland Plan "good design principles", the "land use and transport principles" and "environmental design principles" for the waterfront).

Realise a quality compact city SD10 - priority 1

WA will develop the Wynyard Quarter as a compact higher density walkable mixed use neighbourhood.

Uniting the waterfront with the city centre - the North-South stitch

SD8, CCMP transformational move 1

WA will investigate and develop the tram service from Wynyard to Britomart or an alternative low impact, high frequency, high volume waterfront-wide transit service.

WA will work with Auckland Transport, Council and other stakeholders on a range of initiatives (in the Waterfront Plan and CCMP) to improve the connectivity, safety and accessibility between the City and waterfront.

WA is a partner in the Harbour Edge Project to upgrade Quay Street.

Appropriately housing all Aucklanders

Increase housing supply, housing choice and improve quality of new housing.

SD11 - priorities 1, 2, 3

WA will seek to optimise the residential population in the Wynyard Quarter Area of Ownership and encourage a mix of housing typologies and apartment sizes.

Maintaining and providing quality infrastructure to make Auckland liveable and resilient

The provision of community infrastructure including public open space and marinas, for present and future generations

SD12- priority 3 WA will plan for appropriate community infrastructure and services to develop an eco-precinct and work with providers to ensure timely delivery

WA will develop public open space within its Area of Ownership in accordance with the District Plan. WA will further develop marinas in accordance with the Waterfront Plan and in consultation with the industry.

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Water, wastewater and storm-water; energy and telecommunications

SD12 - priorities 1, 2

WA will work with Watercare, Council and other infrastructure providers to ensure land use and infrastructure development is integrated.

Better connections and accessibility within Auckland, across New Zealand and the world

Integration of transport planning and investment with land use development with a particular emphasis on pedestrians and passenger transport

Increase non-car trips in the peak period from 23% to 37% of all trips by 2040

SD13- priority 2

SD13 - target

WA will work with Auckland Transport to ensure land use and transport integration and the delivery of the Waterfront Plan and Wynyard Quarter Transport Plan.

WA will support the establishment of a Travel Management Association for the Wynyard Quarter as it grows to achieve a mode share target of 30% non-car trips at peak.

WA will encourage pedestrians, cyclists and passenger transport use through the design of the waterfront.

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Table 9: Contribution to Long-term Plan Priorities

Long-term Plan Priorities How we will contribute

Outcome Priority Reference Lead and deliver Contribute and Collaborate

A productive high value economy

Sectors of focus – marine and tourism

Letter of Expectation page 3

Develop facilities and marine waterspace to increase the productivity of the marine and fishing industry.

Plan for commercial developments that add value to both marine and tourism industry.

Manage the development of a new facility to strengthen Auckland’s position in the market for superyacht refit and commissioning.

Manage the development of an innovation hub that will attract talent and investments on knowledge- intensive marine research.

Implement a progressive cruise strategy that will address the short, medium, and long term needs of the cruise and tourism market.

Facilitate the development of a hotel at Viaduct Harbour to increase activation and attract tourists to the waterfront.

Collaborate with council agencies, government and the private sector to deliver projects that contribute to the development and growth of the marine and tourism industry.

Collaborate with AT to extend the tramline from Wynyard Quarter to Britomart, increasing access of the waterfront to tourists.

Coordinate with ATEED in the delivery of events that contribute to the development of the marine sector and which attracts tourists to the waterfront.

Advocate for Council and government policies that help improve the business environment for marine and tourism investments.

Urban, rural, natural environments

Design standards and protecting built heritage


Develop design guidelines and plans that promote and protect Auckland waterfront’s uniqueness and built heritage.

Plan for the development of facilities and exemplar projects that enhance the public realm and built heritage.

Maintain a high-calibre group of design and heritage consultants, through a Design Talent Pool.

Collaborate with Council to deliver projects that promote high quality design and enhance built heritage.

Support Council’s urban design review process.

Support the development of external projects that promote high design quality and enhanced built heritage.

Contribute to the development and use of policy and market incentives to encourage use of urban design standards and protect built heritage.

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Long-term Plan Priorities How we will contribute

Outcome Priority Reference Lead and deliver Contribute and Collaborate

Commercial focus Waterfront Auckland is to act in a commercial way to achieve development outcomes, including investing in projects and places that secure high quality urban transformation outcomes


Lead the development of commercial projects that result in a positive net present value benefit to key sectors i.e. marine, fishing, tourism, and cruise.

Deliver a programme of public projects that offers opportunities for immediate activation, business development, agglomeration, and linkage with other businesses in the waterfront.

Plan and develop projects that promote the interest and continued satisfaction of customers.

Support external projects that contribute to the development of the waterfront’s key business sectors.

Venture with other government and private agencies to deliver projects that require significant capital investment.

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Table 10: Contribution to Local Board Priorities

Local Board plans reflect the community’s aspirations and priorities, desired projects and potential funding. These have been considered when developing the

LTP. The following table outlines relevant priorities and objectives at a service delivery level in the Waitemata Local Board Plan and outlines how we will contribute to these:

Local Board Priorities How we will contribute

Priority Objective Reference Lead and deliver Contribute and Collaborate

A distinctive high quality built environment that embraces its heritage

Represent the original coastline through a “thin blue line”

Local Board Plan page 13

Deliver a Waterfront Plan that promotes Foreshore Avenue as a key initiative to represent the original coastline.

Advocate and collaborate with AT to develop the Foreshore Avenue project to emphasise historical shoreline and provide opportunity for future heritage trail development.

Places for people Develop green links to develop our parks

Improve signage of public spaces

Create extra play spaces




Deliver public parks that contribute to the development of green links.

Deliver the waterfront walkway-cycleway from Westhaven to Wynyard QuarterDeliver legible and consistent signage across the waterfront.

Deliver new interactive opportunities or play spaces at Waitemata Plaza and Daldy Linear Park and plan for the development of future play spaces across the waterfront.

Advocate for a waterfront walkway and cycleway to connect public parks within, across, and beyond the waterfront area.

Support the development of the Green Link project of the City Centre Masterplan.

Contribute to Council’s CBD signage projects, ensuring they highlight the waterfront’s public places.

Strong, vibrant, engaged communities

Develop and support events that are locally specific and environmentally responsible


Develop event facilities, spaces, and public art that promote local culture and environmental awareness.

Lead the delivery of events that promote our local culture and businesses, and environmental awareness.

Collaborate with ATEED and Council to ensure that a significant number of community events occur regularly at the waterfront.

Coordinate with Council in developing event strategies that ensure environmental responsiveness.

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Local Board Priorities How we will contribute

Priority Objective Reference Lead and deliver Contribute and Collaborate

Connected, healthy transport options

Improve cycle infrastructure in the waterfront area through an increase in connected, dedicated cycleways


Deliver the walkway and cycleway from Westhaven to Wynyard Quarter

Deliver Daldy Linear Park (stage 1) which will include facilities for walking and cycling.

Advocate for a waterfront walkway and cycleway from Harbour Bridge Park to TEAL Park and subsidiary routes that connect to the main walkway.

Collaborate with AT, NZTA, and walking/cycling groups to determine capacity, facilities, connectivity of the waterfront walkway with existing networks.

Support the development of projects that improve the connectivity of the waterfront walkways/cycleway with the regional network.

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ATTACHMENT 4 – PERFORMANCE MEASURES

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ATTACHMENT 5 – ASSETS Waterfront Auckland owns over $430 million worth of assets, extending from Harbour Bridge Park in the west to Teal Park in the east, based on draft valuations received for 30 June 2012. Its asset portfolio comprises a range of assets including various investment land holdings, commercial property, marina, water-space and public space assets. In addition, there are also a number of wharves including a joint venture interest in Queens Wharf. Assets are classified as Commercial Property, Marina Assets, and Public Spaces as shown in the pie graph in section 4.2, Figure 1.

Marina assets

Westhaven Marina environs consists of buildings such as administration buildings, sailing clubrooms, public toilets, commercial buildings and water borne assets - piers, swing moorings and pile moorings. All buildings and car parks are considered commercial property assets under the Waterfront Auckland operating model. Curran St Extension, Westhaven Drive, and paths are considered Public Spaces. Assets included for the Marina activity include Westhaven Marina, Hobson West Marina and Viaduct Harbour Marina, specifically:

Westhaven marina land based structures such as boat ramps and breakwaters.

Westhaven marina floating structures: including 25 piers (1,474 berths), pontoons, 333 pile

moorings, 45 swing moorings, jetties and access bridges.

Westhaven marina connected utilities networks (power, potable water, storm water, security, IT)

Hobson West marina floating structures including piers and pontoons (22 inner berths, one outer

berth)

Hobson West connected utilities networks (power, potable water, security, IT)

Hobson wharf extension

Viaduct Harbour marina

Water-space and 23 marina berths around Te Wero island

Water-space and marina berths between the old Team NZ building and Halsey Street Extension

Wharf.

Travelift and vessel maintenance hard-stand area on Halsey Street Extension Wharf

Shares in Downtown Marinas Limited and Westhaven Marina Limited Notes:

Waterfront Auckland is also the investor, developer and operator of three 90 metre super yacht berths constructed in 2010 adjacent to the old Cement Wharf on the western edge of Wynyard Quarter. These are currently managed independently of the marina business unit due to the intensive customer service requirements. This arrangement is expected to be reviewed.

The Wynyard Crossing pedestrian and cycle bascule bridge (lifting) is operated on a 24 hour basis by the marina business unit but is owned and maintained by Auckland Council.

The Okahu Bay Landing is managed by the marina business unit although owned by Auckland Council, with a supplier agreement in place for hardstand and haul out. Discussions are progress as to how to best continue the arrangement once it expires in June 2012.

Commercial property

Waterfront Auckland owns a large number of property assets that were principally inherited from Auckland Regional Holdings. These are mainly in the form of commercial ground leases that were purchased from Ports of Auckland.

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On 1 November 2010, Waterfront Auckland also took over the lessee’s interests in the former Auckland City Council owned block on Pakenham Street and now owns both lessor’s and lessee’s interests in these sites. This block forms the majority of the Wynyard Central Precinct and these interests will be dealt with once the future for the precinct is agreed. Property includes:

Buildings and water spaces in Wynyard Quarter and Westhaven

Income-generating activities including car-parking and ground leases (approximately 93 leases for

rent)

Public spaces

Waterfront owns and maintains a range of public spaces, specifically:

Half share in Queens Wharf

Hobson Wharf (not including the Maritime Museum building)

Halsey Street Extension Wharf (not including the Viaduct Events Centre building)

North Wharf

Silo Park

Wynyard Wharf

Harbour Bridge Park

Wynyard Precinct Public Spaces e.g. Karanga Plaza

Wynyard Headland Public Space

Viaduct Harbour Public spaces e.g. Waitemata Plaza

Teal Park

Freehold land from Harbour Bridge Park to Z pier up to and excluding Westhaven Drive and

Curran Street extension.

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ATTACHMENT 6 – DESCRIPTION OF STRATEGIC PROJECTS Brief descriptions of the strategic projects set out in Table 6, Section 5 (II) are as follows: 1. Events and cruise facility, Queens Wharf - Delivery of a world class, multi-use events and cruise

facility at Queens Wharf. Total project cost is $12.125m.

2. Tram connection Wynyard to Britomart - Extension of existing Wynyard tram line to Britomart. Note: this does not include the cost of a bridge across to Te Wero Island.

3. Vos Yard development and waterspace (Stage 1) - Public funding contribution to protect the heritage ‘Vos Yard’ and reconfiguration of neighbouring site, to enable the development of an integrated working heritage yard.

4. Madden / Jellicoe Western Edge - Construction of a new seawall, wharf refurbishment and urban realm enhancement to the western edge between Jellicoe Street and Madden Street

5. Daldy / Halsey Streets - Construction /reconstruction and of new urban realms including streets and parks of the north south Daldy Street and Halsey Street axis between Jellicoe Street and Pakenham Street

6. Contamination remediation of public spaces - Provision for remediating public realm in ground contamination during the process of reconstruction / urban renewal

7. Waitemata Plaza landscaping upgrade - Landscaping upgrade to convert the existing hard paved surface into a green space with grass and shade trees.

8. West Edge Promenade and Park - Construction of a new seawall and urban realm enhancement to the western edge north of Silo Park

9. Madden Plaza - Construction of a new public plaza area at the eastern edge of Madden Street to the east of Halsey Street to provide a public connection to the Viaduct Harbour and interface with the Hotel development site

10. Jellicoe Plaza - A new public plaza area at the junction of Jellicoe Street and Daldy Street to provide a connection between adjacent private development sites and the adjacent Jellicoe Street public realm

11. Beaumont Plaza - New public plaza area at the junction of Beaumont Street and Madden Street to provide a connection between adjacent private development sites

12. Beaumont Street extension - Provision of a refurbished urban access way into the Headland Park

13. Brigham Street Seawall - Construction of a new seawall to the eastern side of Brigham Street

14. Pre-development expenditure - Other predevelopment and consultancy expenditure for public works

15. Westhaven Pier renewals - Continuing replacement programme of “end of life” G-S Piers within the Westhaven “Existing Trust” (constructed circa 1981)

16. Westhaven Marina operations asset renewal - Asset renewals for Westhaven Marina non-water based assets e.g. toilet blocks, utilities etc, per the Asset Management Plan (AMP)

17. Marina development - Replacing “end of life” pile moorings with 300 serviced berths, and “end of life” J Pier with a 30 berth/ 25m pier at the western edge (parallel to the foreshore) at Westhaven Marina

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18. Wynyard Quarter Marine Precinct (Superyacht re-fit) - The development of a dedicated marine industry facility at Sites 18 and 26 of Wynyard Quarter; creating up to six additional superyacht berths, a large marine hardstand facility, and temporary buildings for marine-related retail and industry. The project further develops the marine industry and activates Beaumont and Jellicoe Streets.

19. Site 38/38A Innovation Precinct (Stage 1) - Renovate Lysaght and Total Marine Services (TMS)

buildings as Stage 1 to the development of a major innovation hub that will create, attract and grow world-class research, talent and technology based ventures. Project includes construction of an atrium alongside Southern Spars building.

20. Wynyard Quarter Central Area private works - Predevelopment expenditure on Wynyard Quarter central sites for preparation of private investment such as Auckland Theatre Company, Hotel, Marina Precinct, commercial car parking etc. Provision has been made in the budget for the relocation of Emirates Team New Zealand if required.

21. Commercial Property asset renewals - Commercial property asset renewals per the Asset

Management Plan (AMP)

22. Waterfront Walkway & Cycleway - Construction of a continuous walkway and cycleway from Herne Bay to TEAL Park, ensuring that the east and west ends of the waterfront pathways are connected, existing pathways along the route are upgraded, and new pathways are provided, where needed.

23. Queens Wharf Public Park (Stage 1) - Ancillary works post Rugby World Cup to attract visitors to

Queens Wharf including events, public art, enhancements of public space and any temporary structures.

24. Vos Yard (Stage 2) - Refurbishment of the Vos Yard and slip-way to establish a working heritage

yard.

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ATTACHMENT 7 – MAP OF STRATEGIC PROJECTS

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ATTACHMENT 8 – ACCOUNTING POLICIES The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Auckland Council Group’s accounting policies. (a) Consolidation The consolidated financial statements are prepared by adding together like items of assets, liabilities, equity, income, and expenses on a line-by-line basis. All significant intra-group balances, transactions, income, and expenses are eliminated on consolidation. SUBSIDIARIES Subsidiaries are all those entities over which Waterfront Auckland has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether Waterfront Auckland controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to Waterfront Auckland. They are deconsolidated from the date that control ceases. Waterfront Auckland’s financial statements show the investment in subsidiaries at cost, less any impairment. Inter-entity transactions, balances and unrealised gains on transactions between Group entities are eliminated on consolidation. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the Group. (b) Foreign currency translation TRANSACTIONS AND BALANCES Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at period end exchange rates of monetary assets and liabilities, are recognised in the statement of comprehensive income. (c) Property, plant and equipment Property, plant and equipment consists of land, buildings, civil structures (including wharves), plant and machinery, computer equipment, furniture fittings and equipment and motor vehicles. INITIAL RECOGNITION Property, plant, and equipment is shown at cost or valuation, less accumulated depreciation and impairment losses, if any. In the case of the assets acquired by Waterfront Auckland on establishment at 1 November 2010, cost was the carrying value of the asset by the disestablished council or disestablished CCO. SUBSEQUENT MEASUREMENT Land, buildings and civil structures are revalued with sufficient regularity to ensure that their carrying amount does not differ materially from fair value and at least every three years. All other classes of assets are measured at historical cost less accumulated depreciation and accumulated impairment. Each year, Waterfront Auckland and group considers the adequacy of the valuation of its assets to ensure the carrying value reflects fair value. If there is a material difference, then the off-cycle asset classes are revalued. Revaluations of property, plant and equipment are accounted for on a class of asset basis. Net revaluation results are credited or debited to other comprehensive income and are accumulated to an asset revaluation reserve in equity for that class of assets. Where this would result in a debit

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balance in the asset revaluation reserve, this balance is not recognised in other comprehensive income but is recognised in the surplus or deficit in the statement of comprehensive income. If a revaluation increase reverses a decrease previously recognised in the surplus or deficit in the statement of other comprehensive income, the increase is recognised first in the surplus or deficit in the statement of other comprehensive income to reverse previous decreases. Any residual increase is applied to revaluation reserves in equity. ADDITIONS The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to Waterfront Auckland and group and the cost of the item can be measured reliably. Property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognized at fair value as at the date of acquisition. DISPOSALS Gains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the surplus or deficit in the statement of comprehensive income. When revalued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to accumulated funds. DEPRECIATION Depreciation on all property, plant and equipment, apart from land, is provided on a straight line basis at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives of major classes of assets have been estimated as follows. The estimated remaining useful lives of some assets is only one year due to the timing of when the assets were acquired from the disestablished councils. CLASS OF ASSET DEPRECIATED ESTIMATED USEFUL LIFE Buildings 1-100 Civil structures 2-100 Office equipment 4-15 Plant and machinery 1-27 Computer equipment 3 Motor vehicles 2 The residual value and remaining useful life of an asset is reviewed, and adjusted if applicable, at each financial period end. CAPITAL WORK IN PROGRESS Capital work in progress is recognised at cost less impairment and is not depreciated. The total cost of a project is transferred to the relevant asset class on its completion and then depreciated. CARRYING AMOUNT An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. (d) Investment property Properties leased to third parties under operating leases are classified as investment property unless the property is held to meet service delivery objectives, rather than to earn rentals or for capital appreciation. Investment property is measured initially at its cost, including transaction costs. After initial recognition, all investment property is measured at fair value as determined annually by an

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independent valuer. Gains or losses arising from a change in the fair value of investment property are recognised in the surplus or deficit in the statement of comprehensive income. Investment property is not depreciated. (e) Intangible assets Intangible assets are initially recorded at cost. Where acquired in a business combination, the cost is their fair value at the date of acquisition. The cost of an internally generated intangible asset represents expenditure incurred in the development phase only. Subsequent to initial recognition, intangible assets with finite useful lives are recorded at cost, less any amortisation and impairment losses and are reviewed annually for impairment losses. Assets with indefinite useful lives are not amortised but are tested, at least annually, for impairment and are carried at cost less accumulated impairment losses. Realised gains and losses arising from the disposal of intangible assets are recognised in the surplus or deficit in the statement of comprehensive income in the period in which the disposal occurs. Where an intangible asset’s recoverable amount is less than its carrying amount, it will be reported at its recoverable amount and an impairment loss will be recognised. Impairment losses resulting from impairment are reported in the surplus or deficit in the statement of comprehensive income. COMPUTER SOFTWARE Acquired computer software licences are capitalised based on the costs incurred to acquire and bring to use the specific software. Costs are amortised using the straight line method over their estimated useful lives (three to eight years). Costs directly associated with the development of identifiable and unique software products for internal use are recognised as an intangible asset to the extent it is probable such costs are expected to be recoverable. Computer software development costs recognised as assets are amortised using the straight line method over their estimated useful lives (not exceeding three years). RIGHTS TO OCCUPY Rights to occupy have an indefinite life. These assets are recorded at cost and tested annually to assess whether there has been an impairment of value. This is done by comparing the carrying amount of the asset with the recoverable amount. (f) Impairment of non-financial assets Intangible assets that have an indefinite useful life, or are not yet available for use, are not subject to amortisation and are tested annually for impairment. Assets that have a finite useful life are reviewed for indicators of impairment at each balance date. When there is an indicator of impairment, the asset’s recoverable amount is estimated. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is depreciated replacement cost for an asset where the service potential of the asset is not primarily dependent on the asset’s ability to generate net cash inflows and where Waterfront Auckland or group would, if deprived of the asset, replace its remaining service potential. The value in use for cash-generating assets is the present value of expected future cash flows. If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. For revalued assets, the impairment loss is recognised against the revaluation reserve for that class of asset. Where that results in a debit balance in the revaluation reserve, the balance is recognised in the surplus or deficit in the statement of comprehensive income. For assets not carried at a revalued amount, the total impairment loss is recognised in the surplus or deficit in the statement of comprehensive income. The reversal of an impairment loss on a revalued asset is credited to the revaluation reserve. However, to the extent that an impairment loss for that class of asset was previously recognised in the surplus or

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deficit in the statement of comprehensive income, a reversal of the impairment loss is also recognised in the surplus or deficit in the statement of comprehensive income. For assets not carried at a revalued amount, the reversal of an impairment loss is recognised in the surplus or deficit in the statement of comprehensive income. (g) Investments and other financial assets Waterfront Auckland and group classifies financial assets in the following categories:

loans and receivables

held-to-maturity investments and

available-for-sale financial assets The classification depends on the nature and purpose for which the financial assets were acquired. Waterfront Auckland and group determines the classification of financial assets when they are acquired. Financial assets are initially measured at fair value plus transaction costs. Purchases and sales of financial assets are recognised at trade date, this being the date on which Waterfront Auckland and group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Waterfront Auckland and group has transferred substantially all the risks and rewards of ownership. (h) Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the period end date, which are included in non-current assets. After initial recognition loans and receivables are carried at amortised cost using the effective interest rate method less impairment if any. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit in the statement of comprehensive income. (i) Held-to-maturity investment Held to maturity investments are non derivative financial assets with fixed or determinable payments and fixed maturities that the Group has the positive intention and ability to hold to maturity. They are included in current assets, except for those with maturities greater than 12 months after the period end date, which are classified as non-current assets. After initial recognition they are carried at amortised cost using the effective interest rate method less impairment if any. Gains and losses when the asset is impaired or derecognised are recognised in the statement of comprehensive income. (j) Available-for-sale financial assets Available for sale financial assets are non derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures, or the Group intends to dispose of it, within 12 months of the end of the reporting period. After initial recognition they are measured at fair value, with gains and losses recognised in other comprehensive income except for impairment losses, which are recognised in the statement of comprehensive income. (k) Impairment of financial assets Waterfront Auckland and group reviews at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of

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impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that Waterfront Auckland and group uses to determine that there is objective evidence of an impairment loss include:

Significant financial difficulty of the issuer or obligor;

A breach of contract, such as a default or delinquency in interest or principal payments;

It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

The disappearance of an active market for that financial asset because of financial difficulties; or

Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

(a) Adverse changes in the payment status of borrowers in the portfolio; and (b) National or local economic conditions that correlate with defaults on the assets in the portfolio.

The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted using the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the loss is recognised in the statement of comprehensive income in “other expenses”. If a loan or a held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, Waterfront Auckland and group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the surplus or deficit in the statement of comprehensive income. (l) Inventories Inventories held for distribution or consumption in the provision of services that are not supplied on a commercial basis are measured at cost adjusted for any loss of service potential. Where inventory is acquired at no cost or for nominal consideration, the cost is the current replacement cost at the date of acquisition. Inventories held for use in the production of goods and services on a commercial basis are valued at the lower of cost and net realisable value. The cost of purchased inventory is determined using the first-in first-out (FIFO) method. The amount of any write down in the value of inventories is recognised in the surplus or deficit in the statement of comprehensive income in the period of the write down. (m) Debtors and other receivables Debtors are amounts due from customers. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. When a trade receivable for which the provision for impairment has been recognised becomes uncollectible in a subsequent period, it is written off against the provision for impairment of receivables. Subsequent recoveries of amounts previously written off are credited to ‘other income’ in the surplus or deficit in the statement of comprehensive income. (n) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value, and bank

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overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. (o) Creditors and other payables Creditors and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost, using the effective interest method. (p) Borrowings Borrowings are initially recognised at fair value (net of transaction costs) and subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and amortised cost is recognised in the surplus or deficit in the statement of comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless Waterfront Auckland and group has an unconditional right to defer settlement of the liability for at least 12 months after the year-end date. (q) Borrowing costs Waterfront Auckland and group has elected to defer the adoption of NZ IAS 23 Borrowing Costs (Revised 2008) in accordance with its transitional provisions that are applicable to public benefit entities. Consequently, all borrowing costs are recognised as an expense in the period in which they are incurred. (r) Current and deferred income tax Income tax expense comprises both current tax and deferred tax, and is calculated using tax rates (and tax laws) that have been enacted or substantively enacted by balance date. Income tax expense is charged or credited to the surplus or deficit in the statement of comprehensive income, except when it relates to items charged or credited directly to equity or other comprehensive income. Current tax is the amount of income tax payable based on the taxable surplus for the current period, plus any adjustments to income tax payable in respect of prior periods. Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable surplus. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which Waterfront Auckland and group expects to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable surplus will be available against which the deductible temporary differences or tax losses can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of an asset and liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting surplus nor taxable surplus. Deferred tax is recognised on taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where Waterfront Auckland and group can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. (s) Goods and Services Tax (GST) All items in the financial statements are stated exclusive of GST, except for debtors and other receivables and creditors and other payables, which are presented on a GST inclusive basis. Where

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GST is not recoverable as input tax, it is recognised as part of the related expense or asset. The net amount of GST recoverable from, or payable to, the Inland Revenue (“IRD”) is included as part of receivables or payables in the statement of financial position. (t) Employee entitlements SHORT-TERM EMPLOYEE ENTITLEMENTS Employee benefits that Waterfront Auckland and group expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken at balance date, retirement gratuities and long service entitlements expected to be settled within 12 months, and sick leave. Waterfront Auckland and group recognise a liability for sick leave to the extent that absences in the coming period are expected to be greater than the sick leave entitlements earned in the coming period. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Group anticipates it will be used by staff to cover those future absences. SUPERANNUATION SCHEMES Obligations for contributions to defined contribution superannuation schemes are recognised as an expense in the surplus or deficit in the statement of comprehensive income as incurred. (u) Provisions Waterfront Auckland and group recognises a provision for future expenditure of uncertain amount or timing when:

Waterfront Auckland and group has a present obligation (legal or constructive) as a result of past events

It is probable that expenditure will be required to settle the obligation and

Reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense and is included in “finance costs”. (v) Revenue recognition Revenue is measured at the fair value of consideration received or receivable. (i) Provision of services Provision of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. (ii) Rental revenue Rental revenue from operating leases is recognised as income on a straight line basis over the lease term. (iii) Interest income Interest income is recognised on a time proportion basis using the effective interest method. (w) Leases

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(i) Waterfront Auckland and group as Lessee Waterfront Auckland and group leases certain property, plant and equipment. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the surplus or deficit in the statement of comprehensive income on a straight line basis over the period of the lease. Leases of property, plant and equipment, where Waterfront Auckland and group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. The leased assets (the leased properties) and corresponding liabilities (the lease payments) are recognised in the statement of financial position. Interest on finance leases is charged to the surplus or deficit in the statement of comprehensive income over the lease period. Leased assets are depreciated over the period the Group is expected to benefit from their use or the lease term if ownership at the end of the lease is uncertain. (ii) Waterfront Auckland and group as Lessor Assets leased to third parties under operating leases are included in investment property and property, plant and equipment in the statement of financial position. Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.

Documents

Waterfront Auckland · Page | 4 1. Executive Summary Introduction 1.1. Waterfront Auckland is an Auckland Council Controlled Organisation (CCO) set up to develop the Auckland waterfront