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PENLINK FINAL S 122 C REPORT

Events affecting PENLINK and occurring since November 2000

A tabulation of subsequent events and commentary

The investigation and draft reporting of events associated with the PENLINK project had a "cut off" of November 2000. This section of the report records the events of significance to the project that have occurred since that date and up until February 2002.

The process of completion - closure for this assignment - was a subject for discussion between the CEO, councillors and the writer. Selection of the best time to complete a final report was an important issue so that the best value possible could be obtained from the exercise consistent with the need for both completeness and timeliness.

Advice was sought in September of 2001 from the Office of the Controller and Auditor General, (the OAG) relating to the manner in which this final report should be completed. S 122C, the general provisions of the Act and the SOLGM guidelines which were used to determine the terms of reference for this assignment made no mention of the manner in which closure could be achieved and reporting responsibilities completely discharged.

The difficulty with S 122C responsibilities is that reporting of the events and issues concerned with a project or proposal deal with over time "a moving target". The events concerned with PENLINK have been very protracted as is evidenced from the draft report that covered a period of at least five years, from 1995 to 2000. A further fifteen months have elapsed to date since the draft report was prepared.

The OAG advised that a convenient and timely final reporting point should be chosen and the report completed at the date selected. The final report should address all outstanding issues irrespective of their stages of resolution. It would then be the responsibility of the Council, to whom the report is addressed to resolve any outstanding issues or to at their discretion resolve any further uncertainties.

A convenient time to issue a final report has been chosen. February 28th 2002 is the date selected, principally because it will have allowed elected members following their election in March of 2001 sufficient time to "come to grips" with all of the issues. The February 2002 date also allows the Council sufficient time to properly address all outstanding issues before the PENLINK contract is signed, at present this is scheduled for "June-August 2002".

The following table factually records the significant events that have occurred since the date of the draft report. A brief commentary for each event is added and these reflect, where appropriate any further issues arising from them.

This section of the report concludes with more expansive commentary of issues arising from the subsequent events.

PENLINK significant events- since November 2000 to the present.

Event date and reference	Nature of Event	Commentary
14 May 2001	Draft PENLINK S 122C Report - Author Larry N Mitchell	This report was delivered to Councillors on 14 May 2001 - prior to the 31 May Council Meeting for their consideration.
21 May 2001	Special Council (workshop) Meeting [ref; 123/5/01]	This was a workshop to which the public was admitted that briefed the new Council on the PENLINK project. Members of the project team were in attendance and they answered Councillors queries. Numerous issues raised were documented and responded to including a response from KPMG (Risks) and Simpson Grierson (Council liability for further market research).
29 May 2001	Memo from Project Manager of PENLINK to Mayor and Councillors [ref; RF/53/2]	Councillor Walker had raised 20 questions during the course of the 21 May workshop. The Council's professional advisors responded to these and they were circulated under the cover of the memo. The responses included a report of GMD Management, Engineering and Environ-ment consultants titled "Report on Traffic Capacity issues West of Vipond Road" dated July 2000.
31 May 2000	Council Agenda paper and attached report from John Brown - Project Manager - PENLINK dated titled "PENLINK Access to Whangaparaoa Peninsula [ref; RF/53/2]	This very detailed report stated its purpose to be "To enable the Council to make an informed decision on whether to proceed with PENLINK (Weiti Toll Road)." The "package" of papers presented included: Memo from J Brown The "Designation" decision The consent orders and their conditions The map of the proposed route The draft Empowering Bill The land purchase requirements Pages 4 & 5 of Section 7 of the Larry Mitchell Draft S 122C report - the "Issues enumerated" Responses from KPMG, Beca Carter and Simpson Grierson to the S 122C "Issues".

31 May 2001	Decision of Council at their Council Meeting [ref; RF/53/2]	This decision stated: That the report be received. That the Council affirms its support for proceeding to the next stage of the project. That the Council call publicly for Expressions of Interest in the project as the first step in the tender process. That the Council proceed con-currently with the processing of a local Bill to enable the development of the toll road by private enterprise, the Bill to be sponsored by the local Member, the Hon. Dr Lockwood Smith. That the Council re-iterates its commitment to encourage local employment and traffic minimisation. That the Council prepare a "fall back" option for the relief of Whangaparaoa traffic congestion to be implemented in the event that the PENLINK project cannot be proceeded with on terms acceptable to the Council.
26 July 2001	Report of Wayne Donnelly - Chief Executive of Rodney District Council to the Council titled "PENLINK Tender Process - Evaluation Team" [ref; RF/53/2]	This report suggested suitable persons, (with CVs) to form the project evaluation team.
26 July 2001	Other Reports/Papers associated with Appoint-ments of Evaluation Team Members [ref; RF/53/2]	A seven-person evaluation team was appointed as approved by the Council at its 26 July 2001 meeting.
26 July 2001	PENLINK Progress report from John Brown to Councillors for the 26 July 2001 meeting [ref; RF/53/2]	This report (reporting progress on the project) included information relating to: expressions of interest legislation land purchases the S 122C Compliance Report Included also was a copy of a letter (W Donnelly to Cr W Walker) giving further details relating to traffic volume projections. The view was expressed by the CEO that the traffic volume evidence as supplied was consistent with projections used for the Council's project traffic volume calculations.
26 July 2001	Decision of Council [ref; RF/53/2]	The PENLINK progress report was received and the Council resolved to hold a half-day workshop to discuss the issues of the Draft S 122C report.
26 July 2001	Report to and Resolution of council re Appointment of the PENLINK Probity Auditor [ref; RF/53/2]	(Procedural) A probity auditor (as recommended) was appointed.
30 August 2001	Supplementary Agenda Report of Bill Horne (RDC Special Projects Manager) Titled "Access Alternatives" [ref; RF53/2 & RF54/1]	The report's purpose was to evaluate certain "fall back" options if PENLINK did not proceed. This arose from Councils 31 May 2001 meeting at which it was resolved "to prepare a fall back option."
17 September 2001	Agenda Paper and Report from John Brown re Expressions of Interest Protocols [ref; RF/53/2]	(Procedural)
17 September 2001	Minutes of Decision to Approve the Protocols for Evaluation of PENLINK Expressions of Interest. [ref; RF53/2 & RF/53/4/1]	(Procedural)
17 September 2001	Report and Appendix 5 from John Brown Titled "Submission to Select Committee" [ref; RF53/2 & RF54/1]	The purpose of this report was to "obtain approval for a submission to the Parliamentary select Committee considering the Bill".
17 September 2001	Minutes of Special Council Meeting Appointing the Mayor to Present its Submissions to the Select Committee. [ref; RF/53/2 & RF/54/1]	The minutes record the approval of a majority of Council to the appointment but five Councillors (Crs Rose, Smith, Walker, Foster and Harding) recorded their opposition on the grounds of: misleading information contained in the explanatory note to the Bill and because the submission had not been debated and because of insufficient time/ restrictions upon debate.
27 September 2001	Notice of Motion re PENLINK project tendered by Cr W Walker. [ref; RF/53/2 & RF/54/1]	Eight points raised by Cr Walker resulted in the Council agreeing to two matters: regular (monthly) PENLINK expenditure reporting and reasonable time being allowed for public and Councillor digestion of future PENLINK reports.

8 October 2001	Confidential Minutes Relating to a Special PENLINK (Workshop) Meeting [ref; RF/53/2 & P 274]	This special workshop afforded the writer (Larry Mitchell) the opportunity to discuss the content (in particular the "sixteen questions") of his draft S 122C PENLINK report. Discussion at the meeting lead to commissioning of a study to "report upon an "RDC/DIY" option.
15 October 2001	Dispatch of email to Group Manager Finance and Support Services specifying terms for the preparation of a "Public Sector comparator".	To satisfy the requirements of the S 122C analysis this email outlined the suggested terms of reference for a study into the (principally financial) implications of an RDC/DIY option - as a possible alternative to a BOOT funded PENLINK.
25 October 2001	Agenda Paper - "PENLINK Expenditures 2001/2002"	John Brown - Project Manager PENLINK reported current Annual Plan budget approvals for PENLINK totalling $740,000. Expenditure to date (30/9/01) $210,550.
25 October 2001	Agenda Paper - "PENLINK - Expressions of Interest".	Consideration of recommendations of a short list of tenderers determined by the PENLINK evaluation process.
25 October 2001	Agenda Paper - "Alternatives to PENLINK".	The collection of papers associated with this Council Meeting agenda item included: The CEO's views resulting in his submission to Council (which was accepted) that "there is in fact little value to the community in examining further alternatives to PENLINK." A suggested brief for the alternatives study - not proceeded with. A submission by Cr Walker on the matter of alternatives. A record of an address given at the meeting to councillors by the Stillwater R&R Association. Minutes of all of the above.
25 October 2001	Notice of Motion - Cr Walker - PENLINK	Cr Walker moved a number of motions relating broadly to his request for further information being made available - for example the "Toll Response Modelling Report". Two motions, relating to traffic volume information were put to the meeting and were "Lost".

5 November 2001.	Receipt of report from CSL titled "Weiti Toll Road Option".	This report commissioned by the CEO was "limited to identifying the key differences between the DIY and BOOT options and assessing the impact of these differences" The report did not consider the full financial impact of receipt of the "DIY" Transfund subsidy for PENLINK.
15 November 2001	Special Council Meeting Agenda Papers	Various PENLINK matters including the material relating to the withholding of sensitive commercial information.
15 November 2001	PENLINK - Expressions of Interest	The CEO report to the Council (in confidence) regarding: The evaluation of expressions of interest. The CEO's recommendation "that the Council should not consider further the DIY alternative". CSL's report - their "Executive Summary" was tabled. Land purchases for the project were recorded together with approvals (granted) relating to Powers of Entry to the land.
6 December 2001	Notice of Motion - Cr Walker - PENLINK	Cr Walker moved for a "possible delay of PENLINK because of lower traffic volumes on Whangaparaoa Road.". The motion was "Lost".
6 December 2001	Agenda Paper	The Project Manager - PENLINK tabled the project brief for review. It was approved for use by the Council. Cr's Rose and Walker had their opposing votes recorded.
6 December 2001	PENLINK Expenditure	Preliminary costs to 16 November 2001 of $405,937 and land purchases to the same date of $845,489 were reported.
20 December 2001	Emergency Committee Meeting - PENLINK Geo-technical Investigations	Approval was sought for a sum (in addition to the existing PENLINK budget) of $200,000 to conduct ground drilling etc at the PENLINK site. Approval was granted.
31 January 2002	PENLINK Expenditure	Preliminary costs to December 31 2001 of $581,965 - excluding geotechnical costs, and land purchases expenditures to the same date totalling $2,151,600 were reported.

5 February 2002	Media Release from the RDC titled PENLINK project update	This media release quoted the RDC's CEO as stating, "that the withdrawal of Fulton Hogan is not an encouraging development. I believe it is a signal that the BOOT approach as structured does not have great commercial margins".
24 February 2002	Press Release from Cr Walker	Cr Walker includes detailed argument against the PENLINK proposal largely relating to the lower than expected traffic volumes.

Further Commentary and Events still to unfold.

Generally the events of the past fifteen months have been useful and helpful in informing elected members - the decision- makers to come to grips with this complex project. In general support from Councilors for the project to proceed - at least to a next stage of the approval process has grown and has been in evidence at meetings of Council.

But some disquiet has been expressed by a growing number of Councillors. The more common grounds for disquiet have been somewhat narrowly confined to some environmental concerns, the extent of any future liabilities of Council, the method of proposed funding and assessment of an alternative to PENLINK - the widening of Whangaparaoa Road.

In addition, astute observers have noted the emergence of a growing advocacy, a partiality within the Council that is in favor of the project proceeding although final judgments are still to be reached. This, as will be discussed and referred to elsewhere is not an unusual response from proponents of Council sponsored initiatives such as PENLINK.

Council meetings and the workshops conducted associated with the project have permitted a range of opinions, including the authors to be expressed. Not all of these meetings have been held in public usually because the commercial confidentiality of the material under discussion has been cited as the reason for exclusion of the public from the proceedings. As a result, only Council members themselves, based on advice they have received on these matters from the Council's solicitors and management and from their own observations, can judge if these restrictions have been appropriate.

It is not the business of this report to either take sides in the ongoing debate nor to question management's and politician's motivations for emergence of some favouritism. It is competent however and it is the precise purpose of the S 122C legislation, as it is with the prudent financial management of Council affairs, and specifically the terms of a S 122C report, to caution the decision-makers to be very careful to achieve and insist upon balanced and independent advice particularly for the matters they remain uncertain about. The complexity and scale of the issues demands earnest and properly motivated enquiry. The commitments being entered into are long term and involve huge sums of money. The stakes are high and as was pointed out in the draft report [ref; page six of Section 7]:

"Elected members must themselves be satisfied, subject to reasonable residual risk, (concern) that the responses they receive concerning these issues (the remaining uncertainties) provide them with an adequate level of comfort. For it is the Council, its elected members in the final event that would bear the brunt of public criticism if these issues had not been satisfactorily resolved prior to commissioning the PENLINK project".

Since the time that this statement was made, whilst the statement still holds true, an added pressure upon decision-makers has appeared.

As is so often the case with projects of this large scale and complexity, the phenomenon of "inertia" begins to exert itself. As the costs and committed resources to a project build up, there emerges an understandably human response from decision-makers and others to these circumstances. The build up of sometimes uncritical support for a project occurs. The impatience and inertia to get the process completed very roughly translates into "a car becoming a truck and then a bulldozer and anyone in the way had better stand clear". In other words a combination of forces combine with the potential to cloud the judgments called for.

A perusal of the table of events and the commentary (above) gives some evidence of these forces of inertia and of a pro-project advocacy.

The business of this report in these circumstances is to quite properly sound a caution and where balanced views are challenged to provide where possible an independent and informed voice on the matters of residual concern. The content and timing of this report have been designed to fulfill these functions.

As can be seen from the commentary of the table, the matters which are dealt with within the next section of this report, most relating to gaining the "best deal" are drawn to the attention of elected members. Whatever the forces at work, including the effects of inertia which will be more fully described later in this report, elected members must rationally and carefully progress through the final stages of the processes to their satisfaction. The issues remain to be finally and fully debated.