Border Issues

A Good Deal or a Dead End Street?

Since August last year, Tauranga City Council (TCC) and Western Bay of Plenty District Council (WBOPDC) have been working together through a range of matters relating to setting up a joint waters company by 1 July 2027.

This Thursday 2^nd April at 9.30am at Western BOP District Council Chambers (by Barkes Corner), we will hold joint council meetings to vote on whether to give final approval to proceed with a Tauranga-Western BOP waters company.

One of the less anticipated outcomes of the negotiations between the two councils over the past few months has been some contentious cross-boundary issues rearing their head in the last couple of weeks – particularly relating to a planned new development in Western BOP District near the new Papamoa East Interchange.

That came to the public’s attention at our two council meetings last week. Since then, I have been asked by several people to explain these “cross boundary issues”. I will endeavour to do that here.

Business As Usual?

It is standard practice for TCC and WBOPDC to work through boundary issues at SmartGrowth, which is the agreed forum for addressing growth in our sub-region. Of course, cross-boundary issues occur all over New Zealand, so one of the key points to understand is that only one council can levy rates on a particular ratepayer – based on no taxation without representation.

That leaves the question of who pays for the infrastructure needed to cater for growth if a few thousand people live and pay rates in, say, Western Bay of Plenty, but travel across the highway to use a TCC library or aquatic centre, rather than WBOPDC’s library or pool in Te Puke? Who should pay for that Tauranga infrastructure in the first place? And who should pay for the ongoing operating costs of running that pool or library, etc.

Discussions between the two mayors have resulted in a standoff, with both councils apparently seeing the issue as a matter of principle and something of a bottom line. Hence last week’s council meetings (both held on 24 March) came up with slightly differently worded proposals to address this issue, but agreed to resolve the issue by March 2027.

Interestingly, in the debates at TCC and WBOPDC, both Western BOP councillors and I independently used the same analogy: it’s like entering a marriage this coming Thursday and then deciding the ‘prenup’ agreement by March 2027. A somewhat unorthodox sequencing, I would suggest.

What’s It All About

This issue is partly about Tauranga City Council protecting its waters assets – in particular, the expensive Waiari water treatment plant. However, both councils seem to agree that issue needs to be addressed, with Western BOP councillors suggesting the best way to do that is “by putting the onus on the waters company to provide for future growth”.

However, the more contentious aspect is that Mayor Drysdale has conveyed that TCC will potentially keep some of our waters assets out of the new waters company unless WBOPDC agree to TCC’s terms around non-waters assets, as well as waters assets.

In other words, unless WBOPDC or its ratepayers contribute towards Tauranga’s libraries or pools or other facilities that are heavily used by Western Bay residents, we will likely hold back some key waters assets from the proposed waters company.

Cr Joyce’s perspective seemed quite representative of how WBOPDC viewed TCC’s approach:

“TCC wants to go into these discussions with a gun to our head. If we don’t do what they want, they want to unilaterally pull the plug on the negotiations and take operational decisions on behalf of the waters company, leaving them with the option of refusing to supply water to a new subdivision. We’ve offered good faith negotiations. And if we get stuck, to go to mediation and then, if needed, arbitration. But TCC has actually informally rejected arbitration…

TCC wants the ultimate leverage, so they decide what they want, at a time when it is too late for Western Bay to look at other options. They seem more interested in leverage than good faith, and that is no way to write a prenup. But it gets worse. Tauranga wants to tie in some cross-boundary funding issues that have nothing to do with waters. Effectively to tie the operations of the waters company to issues that have nothing to do with it.”

The WBOPDC Mayor and several other councillors all spoke along similar lines. My understanding is that they wish to resolve those other issues using standard practice, including the Local Government Act, Rating Act, Development Contributions, SmartGrowth, etc. And they want to leave the waters company to get on with determining what waters assets will supply which new subdivisions – not the two councils.

A Better Deal for Tauranga? Or a Dead End Street?

On the other hand, TCC is wanting to ensure that future Western BOP residents will pay a fair share of the ongoing costs of infrastructure that is built and operated by Tauranga City Council. Our council seems to want a specific deal to ensure that happens, or else hold back access to our ratepayers’ assets.

My view is that it would be best practice to determine the outcome of this issue before deciding whether or not to proceed with our proposed waters company - not a year later.

Yet here we are, getting ready to make the final decision this Thursday, and we’re in the middle of this dispute. With clear majorities of both councils’ elected members having opposite viewpoints, yet both sides stating this is a bottom line!

Which leaves me with a question: What if we say ‘yes’ to the proposed Tauranga-WBOP waters company this week, and then we don’t resolve this issue over the coming months… while spending $millions on setting up the new company?

Will TCC really exclude the Waiari water plant (one of the most expensive waters asset in the sub-region) from the new waters company? And if we do, will Western BOP Council be happy to go ahead with this collaboration?

I’ll let Western BOP Councillor Tracey Coxhead have the final word (from last Tuesday’s WBOPDC meeting):

“I do wonder where this has all come from? … Why would you want to scupper something that was going very well in terms of collaboration… We’ve talked about this being maybe a ‘prenuptial’. Sadly for me, this is a ‘marriage’ I’m not feeling that keen on embarking upon; nor do I want to consummate it!”

For those local government ‘geeks’ who may be interested, here are the Draft Minutes of the full Waters resolutions from each Council’s meetings last Tuesday 24^th March (still to be confirmed).

Draft Minutes of 24 March 2026 Tauranga City Council Resolutions:

11.1 Local Water Done Well Project Update

That the Council:

(a) Receives the report “Local Water Done Well - Project Update”.

(b) Notes that future project updates will be provided via the quarterly reporting against the Water Services Delivery Plan (beginning April 2026) to the Department of Internal Affairs.

(c) Adopts the principle of maintaining Tangata Whenua participation, engagement and arrangements, with existing commitments and practices either retained or bettered during, and following, the transition to a Water Organisation. Notes that involvement by tangata whenua in this process will require a new terms of reference and a review of remuneration.

(d) Notes the future key milestones in this report, and the list of topics scheduled for consideration and further work post-April 2026 as provided by Attachment 3.

(e) Attachment 1 can be transferred into the open following negotiations with affected staff and IAWAI

11.2 Local Water Done Well – Commercial Terms

That the Council:

(a) Receives the report “Local Water Done Well - Commercial Terms” and Attachment 1.

(b) Approves and endorses the Commercial Term Sheet at Attachment 1:

(ii) With the exception of commercial term(s):

17, Joint committee membership. Members representing TCC must be elected members

44 Selection of Chair of Board of Directors - Option (b) Councils select and appoint the Chair

(c) Subject to a decision by both TCC and WBOPDC to approve the LWDW due diligence (proposed for 24 March 2026), and a decision by both TCC and WBOPDC to establish the Water Organisation (proposed for 2 April 2026):

(i) TCC and WBOPDC shall work together in good faith to resolve any outstanding commercial terms not yet approved by both TCC and WBOPDC.

(ii) Notes that staff will prepare the Water Organisation’s Shareholders’ Agreement and Company Constitution:

(1) In a manner that is consistent with the approved Commercial Term Sheet and any additional commercial terms subsequently agreed by TCC and WBOPDC; and

(2) To enable incorporation of the Water Organisation by 1 July 2026, with operations commencing on 1 July 2027.

(d) In relation to whether Tangata Whenua may hold Class A (voting) shares in the Water Organisation, confirms that Class A (voting) shares in the Water Organisation may:

(ii) be held only by shareholding councils.

(e) Notes all parties on the Joint Working Group have reached a consensus on all terms within the Commercial Term Sheet at Attachment 1, with the exception of whether Tangata Whenua should hold Class A (voting) shares in the Water Organisation

(f) Notes staff will report back to TCC and WBOPDC in relation to the draft Shareholders’ Agreement and Company Constitution for the Water Organisation for endorsement and approval prior to execution by the Mayor and Chief Executive.

(g) Notes that the Joint Committee’s role is recommendatory only, and that final decision- making authority rests with Class A Shareholders.

(h) That Council’s position is that the Water Organisation’s draft Statement of Expectations will incorporate transparency provisions governing how the organisation conducts its business.

11.3 Local Water Done Well – Due Diligence

That the Council:

(a) Receives the report “Local Water Done Well - Due Diligence”.

(b) Notes the contents of the due diligence reports for legal, people and workforce and AMOS (asset management, operations and stormwater).

(c) Accepts that no issues or risks were identified which jeopardise the feasibility of proceeding to establish a joint Water Organisation with Western Bay of Plenty District Council. Notes that cross boundary issues are being addressed through a separate paper.

(d) Notes that implementation actions recommended by the due diligence reports will be incorporated into the forward work programme, if Council decides to proceed with establishing of a joint Water Organisation with Western Bay of Plenty District Council.

(e) Attachment 1 will not be transferred to public as it is legally privileged, a redacted version is available as Attachment 2 to this Council report.

(f) Attachment 3 can be transferred into the open once workforce negotiations are completed.

11.4 – Local Water Done Well – Financial Implications

That the Council:

(a) Receives the report “Local Water Done Well - Financial Implications”.

(b) Notes that updated financial modelling has delivered results consistent with the previous results reported to Council, and that a multi-council Water Organisation remains the most cost-effective option for the community.

Financial Due Diligence Report

(c) Accepts, noting (g) to (j) below, that the financial due diligence report identified no issues which would jeopardise the successful establishment and operation of the proposed Water Organisation

(d) Notes that implementation of next steps recommended by the financial due diligence report will be incorporated into the forward work programme if Council decides to proceed with establishing a joint Water Organisation with Western Bay of Plenty District Council.

Cost Impacts of Establishing a Water Entity

(e) Notes there are likely to be an estimated $9m to $10m pa of costs remaining in Council, which were previously allocated as overheads to the water services activity, which will need to be managed downwards as part of the transition to a Water Organisation and right sizing of Council.

(f) Approves the following principles to guide the exit of water services from Council and the right sizing of the remaining corporate functions at Council.

(i) Set the Water Organisation up for success.

(ii) De-risk the transfer of functions.

(iii) Ensure the costs of set-up for the organisation and reset for the remaining Councils are minimised.

(iv) Follow a process that is fair to staff affected by the change.

(v) Have a medium-term view that the water organisation will be an efficient standalone Organisation.

Cross-boundary

(g) Approves progressing good faith negotiations with Western Bay of Plenty District Council to agree two separate growth-related comprehensive funding agreements by 31 March 2027 for future and current (to be specifically defined) infrastructure, one agreement for each of:

i) Waters infrastructure and services

ii) Non-water infrastructure and services

(h) Agrees to the good faith negotiations being guided by the principles of:

i) Growth pays for growth

ii) everyone pays their fair share

iii) Water organisation foundation documents only deal with water growth issues (not other infrastructure issues)

iv) Water organisation set up for success

(i) Agrees to the good faith negotiations process steps to include the following:

i) Problem statement definition developed and agreed

ii) Perspectives of each Council shared, listened to, and develop pathway options together

iii) Define the principles, process and arrangements that will be applied going forward.

(j) Commits to best endeavours negotiation to reach agreement with Western Bay of Plenty District Council, and in the event that a resolution is unable to be reached by 31 March 2027, Tauranga City council will consider options to preserve its financial interests and ensure a fair and equitable position.

(k) Attachment 5 can be reviewed for potential transfer into public after 12 months.

Draft Minutes of 24 March 2026 Western BOP District Council Resolutions:

9.1 LOCAL WATER DONE WELL - PROJECT UPDATE

RESOLUTION CO26-6.3

Moved: Cr R Joyce

Seconded: Cr G Elvin

1. That the Programme Manager – Water Organisation Establishment’s report dated 24 March 2026 titled ‘Local Water Done Well – Project Update’ be received.

2. That the report relates to an issue that is considered to be of medium significance in terms of Council’s Significance and Engagement Policy.

3. That Council notes that future project updates will be provided via the quarterly reporting against the Water Services Delivery Plan (beginning April 2026) to the Department of Internal Affairs.

4. That Council adopts the principle of maintaining Tangata Whenua participation, engagement and arrangements, with existing commitments and practices, either retained or bettered during, and

following, the transition to a Water Organisation. These are outlined in Tabled Item 2, Western Bay of Plenty District Council Tangata Whenua Relationship Arrangements.

5. That Council notes the future key milestones in this report, and the list of topics scheduled for consideration and further work post-April 2026 as provided by Attachment 3 (Items for consideration and inclusion in forward work programme).

6. That Council notes that Attachment 1 (Local Water Done Well Joint Water Organisation – Support Budget Details) can be transferred into the open following negotiations with suppliers.

CARRIED

9.2 WATER ORGANISATION ESTABLISHMENT - DUE DILIGENCE

RESOLUTION CO26-6.4

Moved: Cr G Elvin

Seconded: Cr R Joyce

1. That the Programme Manager – Water Organisation Establishment report dated 24 March 2026 titled ‘Local Water Done Well – Due Diligence’ be received.

2. That the report relates to an issue that is considered to be of medium significance in terms of Council’s Significance and Engagement Policy.

3. That Council notes the contents of the due diligence reports for legal, people and workforce and AMOS (Asset Management, Operations and Stormwater) (Attachments 1, 3 and 4).

4. That Council accepts that no significant issues or risks were identified in the above reports which jeopardise the feasibility of proceeding to establish a joint Water Organisation with Tauranga City Council.

5. That Council notes that implementation actions recommended by the due diligence reports will be incorporated into the forward work programme, if Council decides to proceed with establishing of a joint

Water Organisation with Tauranga City Council.

6. That Council notes Attachment 1 (Local Water Done Well – Legal Due Diligence Report) will not be transferred to the public, as it is legally privileged, however, also notes that a redacted version is available as Attachment 2 (Local Water Done Well – Legal Due Diligence Report - Redacted) to this Council report.

7. That Council approves for Attachment 3 (Local Water Done Well – People and Workforce Due Diligence Report) to be transferred into the open once workforce negotiations are completed.

CARRIED

Cr Rae voted against the motion and requested for her vote to be recorded.

9.3 LOCAL WATER DONE WELL - DUE DILIGENCE - FINANCIAL MATTERS

RESOLUTION CO26-6.5

Moved: Deputy Mayor M Murray-Benge

Seconded: Cr A Sole

1. That the Programme Manager – Water Organisation Establishment report dated 24 March 2026 titled ‘Local Water Done Well – Due Diligence – Financial Matters’ be received.

2. That the report relates to an issue that is considered to be of high significance in terms of Council’s Significance and Engagement Policy.

CARRIED

RESOLUTION CO26-6.6

Moved: Cr R Joyce

Seconded: Cr T Coxhead

Financial Due Diligence Report

3. That Council accepts, noting (3) above, that the financial due diligence report (Attachment 1) identified no significant issues which would jeopardise the successful establishment and operation of the proposed Water Organisation.

4. That Council notes that implementation of next steps recommended by the financial due diligence report will be incorporated into the forward work programme if Council decides to proceed with

establishing a joint Water Organisation with Tauranga City Council.

CARRIED

Cr Rae voted against the motion and requested her vote to be recorded.

RESOLUTION CO26-6.7

Moved: Cr G Elvin

Seconded: Cr D Dinsdale

Cost Impacts of Establishing a Water Entity

5. That Council notes there are likely to be an estimated $1 million per annum of costs remaining in Council, which are currently costs aligned to the water services activity, which will need to be managed

downwards as part of the transition to a Water Organisation and right sizing of Council.

6. That Council approves the following principles to guide the exit of water services from Council and the right sizing of the remaining corporate functions at Council:

a. Set the Water Organisation up for success.

b. De-risk the transfer of functions.

c. Ensure the costs of set-up for the organisation, and reset for the remaining Councils, are minimised.

d. Follow a process that is fair to staff affected by the change (as outlined in the establishment principles).

e. Have a medium-term view that the water organisation will be an efficient standalone Organisation.

CARRIED

Cr Rae voted against the motion and requested that her vote be recorded.

RESOLUTION CO26-6.8

Moved: Cr R Joyce

Seconded: Cr D Dinsdale

7. That Council approves for Attachment 3 to be reviewed for potential transfer into public after 12 months.

CARRIED

RESOLUTION CO26-6.9

Moved: Cr R Joyce

Seconded: Deputy Mayor M Murray-Benge

Cross-boundary

8. That Council:

a. Approves progressing good faith negotiations with Tauranga City Council to agree a separate growth-related comprehensive funding agreement by 31 March 2027 for future and current (to be specifically defined) infrastructure, for Waters infrastructure and services.

b. Agrees to the good faith negotiations being guided by the principles of:

i. Growth pays for growth

ii. Everyone pays their fair share

iii. Water organisation foundation documents only deal with water growth issues (not other infrastructure issues)

iv. Water organisation set up for success

c. Agrees to the good faith negotiations process steps to include

the following:

i. Problem statement definition developed and agreed.

ii. Perspectives of each Council shared, listened to, and develop pathway options together.

iii. Define the principles, process and arrangements that will be applied going forward.

d. Commits to best endeavours negotiation to reach agreement with Tauranga City Council, and in the event that a resolution is unable to be reached by 31 March 2027, Western Bay of Plenty District Council and Tauranga City Council will enter into mediation and, if necessary, escalated to arbitration.

A division was called and recorded as following:

For: Mayor Denyer, Deputy Mayor Murray-Benge, Cr Sole,

Cr Dinsdale, Cr Elvin, Cr Dally, Cr Rae, Cr Joyce, Cr Beech and

Cr Coxhead.

Against: Nil

The motion was declared carried on show of hands.

CARRIED 10/0

9.4 LOCAL WATER DONE WELL - COMMERCIAL TERMS

RESOLUTION CO26-6.10

Moved: Mayor J Denyer

Seconded: Cr R Joyce

1. That the Programme Manager – Water Organisation Establishment report dated 24 March 2026 titled ‘Local Water Done Well – Commercial Terms’ be received.

2. That the report relates to an issue that is considered to be of medium significance in terms of Council’s Significance and Engagement Policy.

CARRIED

RESOLUTION CO26-6.11

Moved: Cr G Dally

Seconded: Cr T Coxhead

3. That Council approves and endorses the Commercial Term Sheet

(Attachment 1 of this report):

b. With the following amendments to the below commercial term:

i. Term 4: Stormwater charging: In the event WO assumes responsibility for stormwater

Retain original Option (a) being:

The Water Organisations operational matters (including charging) are set by the Water Organisation Board with some operational direction from the shareholders.

CARRIED

Cr Joyce abstained from voting.

RESOLUTION CO26-6.12

Moved: Cr T Coxhead

Seconded: Deputy Mayor M Murray-Benge

3. That Council approves and endorses the Commercial Term Sheet (Attachment 1 of this report):

b. With the following amendments to the below commercial term:

ii. Term 17: Joint Membership Elected Members

Option (x):

For Tauranga City Council and Western Bay of Plenty District Council:

Tauranga City Council and Western Bay of Plenty District Council will each appoint their own representatives.

For Western Bay of Plenty District Council, all representatives will be Elected Members and appointment of their representatives will be by Council resolution.

For Tangata Whenua:

Tangata Whenua nominate three Representatives and Tauranga

City Council/Western Bay of Plenty District Council will confirm and appoint.

A division was called and recorded as follows:

For: Mayor Denyer, Deputy Mayor Murray-Benge, Cr Sole, Cr Dally, Cr Rae,

Cr Joyce, Cr Beech and Cr Coxhead.

Against: Cr Elvin and Cr Dinsdale.

The motion was declared carried on show of hands.

CARRIED 8/2

RESOLUTION CO26-6.13

Moved: Cr G Dally

Seconded: Cr T Coxhead

3. That Council approves and endorses the Commercial Term Sheet

(Attachment 1 of this report):

b. With the following amendments to the below commercial term:

iii. Term 32: Decision Making of Joint Committee

Option (x).

The Joint Committee is an advisory / recommendation body only, with no formal voting rights for members.

A division was called and recorded as follows:

For: Mayor Denyer, Deputy Mayor Murray-Benge, Cr Sole, Cr Dally, Cr Rae,

Cr Joyce, Cr Beech and Cr Tracey.

Against: Cr Elvin and Cr Dinsdale.

The motion was declared carried on show of hands.

CARRIED 8/2

RESOLUTION CO26-6.14

Moved: Mayor J Denyer

Seconded: Deputy Mayor M Murray-Benge

3. That Council approves and endorses the Commercial Term Sheet

(Attachment 1 of this report):

b. With the following amendments to the below commercial term:

iv. Term 40: Protection against privatisation:

Option (a) Include additional anti-privatisation clauses within the foundation documents (over and above what is provided in the Act) and before such clauses can be amended, noting that a binding poll of residents is an option under consideration.

CARRIED

RESOLUTION CO26-6.15

Moved: Cr Coxhead

Seconded: Cr Dally

3. That Council approves and endorses the Commercial Term Sheet

(Attachment 1 of this report):

b. With the following amendments to the below commercial term:

v. Term 44: Selection of Chair of Board of Directors

Option (b) That the Board Chair is selected and appointed by the Councils.

A division was called and recorded as follows:

For: Mayor Denyer, Deputy Mayor Murray-Benge, Cr Sole, Cr Rae, Cr Joyce,

Cr Beech, Cr Coxhead, Cr Dally and Cr Dinsdale.

Against: Nil

Abstained: Cr Elvin

The motion was declared carried on show of hands.

CARRIED 9/0

RESOLUTION CO26-6.16

Moved: Deputy Mayor M Murray-Benge

Seconded: Mayor J Denyer

4. That subject to a decision by both Western Bay of Plenty District Council and Tauranga City Council to approve the Local Water Done Well due diligence (proposed for 24 March 2026), and a decision by both Western Bay of Plenty District Council and Tauranga City Council to establish the Water Organisation (proposed for 2 April 2026):

a. Western Bay of Plenty District Council and Tauranga City Council

shall work together in good faith to resolve any outstanding commercial

terms not yet approved by both Western Bay of Plenty District Council

and Tauranga City Council.

b. That Council notes that staff will prepare the Water Organisation’s

Shareholders’ Agreement and Company Constitution:

i. In a manner that is consistent with the approved Commercial Term

Sheet and any additional commercial terms subsequently agreed

by Western Bay of Plenty District Council and Tauranga City Council;

and

ii. To enable incorporation of the Water Organisation by

approximately 1 July 2026, with operations commencing on 1 July

2027.

CARRIED

RESOLUTION CO26-6.17

Moved: Cr A Sole

Seconded: Cr Dally

5. That Council, in relation to whether Tangata Whenua may hold Class A

(voting) shares in the Water Organisation, confirms that Class A (voting)

shares in the Water Organisation may be held only by shareholding councils.

A division was called and recorded as follows:

For: Mayor Denyer, Deputy Mayor Murray-Benge, Cr Sole, Cr Dally, Cr Rae,

Cr Joyce, Cr Beech and Cr Coxhead.

Against: Cr Elvin and Cr Dinsdale

The motion was declared carried on show of hands.

CARRIED 8/2

RESOLUTION CO26-6.18

Moved: Cr G Dally

Seconded: Cr R Joyce

6. That Council notes that all parties on the Joint Working Group have reached a consensus on all terms within the Commercial Term Sheet (Attachment 1), with the exception of whether Tangata Whenua should hold Class A (voting) shares in the Water Organisation.

7. That Council notes staff will report back to Western Bay of Plenty District Council and Tauranga City Council in relation to the draft Shareholders’ Agreement and Company Constitution for the Water Organisation for endorsement and approval prior to execution by the Mayor and Chief Executive.

CARRIED