Official Information Request - 28 July 2020

Sent: Wednesday, 5 August 2020 1:00 pmSubject: LGOIMA request - Trility wastewater proposal

I refer to your email of 28 July 2020 under LGOIMA requesting information regarding the Trility wastewater proposal, and provide the following responses:

• What would happen if the Trility had to withdraw from the contract (once it was signed) - what are the potential costs and or implications of that to the council if that were to occur?Trility would be in breach of the contract and the contractual remedies of $15 million guarantees and a $2 million performance bond would be called upon.
• Did the council make the summary of the contract available to all elected members before the council meeting of July 29?A summary of the contract was provided to elected members who specifically requested it.
• Please provide me with the executive summary of the proposed contracted with Trility and the full contract.This information is commercially sensitive and is withheld under section 7(2)(i) of the Act 'enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)'.
• If the council enters into the proposed contract is all financial risk (for example, for all and any shock events) transferred to Trility?Under the contract, the risk of network failures and consequent statutory liabilities resulting from poor network management practice is transferred to Trility. Council retains earthquake insurance for major natural events outside the contractor's control. However the contractor is required to make best endeavours to ensure essential services continue depending on the scale of such an event.
• How much does the council expect Trility's five-year profit to be worth? [If you cannot provide an exact figure, please provide an approximation.]If Council was in breach of its contract obligations (a highly unlikely possibility) the contractor is entitled to seek damages (basic contractual law) equivalent to five years of forgone margins. It is important to note that the contractor would have to validate through audited accounts what these margins actually might have been as, in a long term contract, margins vary from year to year depending on the contractor's efficiency. The exact figure is commercially sensitive information and is withheld under section 7(2)(i) of the Act 'enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)'.
• Is it correct that the council could be liable for five years of profit if the council was in breach of the contract (for example, by terminating it) - under what circumstances would this result be triggered?Any breach of contract by either party will result in financial consequences which are included in the contract as financial remedies. This is consistent with the majority of business contracts. Council has no intention of breaching the terms of the contract and has no track record of breaching contracts that would imply that this is at risk of happening.
• What would be the consequences to the council if it decided to terminate or vary the proposed contract (once signed) with Trility?Council would be in breach of the contract if it did so unilaterally i.e. terminated the contract without reason, and the contractual remedies would apply, recognising the contractor's expectations and incurred costs up to that point in time. However the contract, like any contract, can be varied by mutual agreement. The effects would depend on the nature of such variation.

The following questions do not refer to specific documents held by Council. For this reason the questions are declined under section 17(e) of the Local Government Official Information and Meetings Act 'that the document alleged to contain the information requested does not exist '. However, the following comments are provided:

• Is it possible this could be triggered by an offer from the Government with regard to the proposed three waters reform programme?It is highly unlikely. Central Government's 3 Waters reforms do not constrain Council's ability to enter into the contract. Council will be entering in good faith into a Memorandum of Understanding with the Government to explore options as proposed by the Government. The contract has no impact on that MOU. However Council must satisfy itself that the Government's proposals are beneficial to our community before it makes a decisions in coming years.
• What was the original timeline for decision-making on this proposal (ie when was it originally to go to the council, SP+F), when did that change and why?This proposal first went out for public consultation in April/May 2019 as part of the 2019/20 Annual Plan consultation. Council then decided to wait until after the 2019 election to make a decision on the proposal in order to give newly elected members the chance to be informed and be part of the decision making process. In May/June 2020 a special public consultation process about this proposal was initiated as part of the 2020/21 Annual Plan consultation. This process was completed and reported through the appropriate forums in July 2020.
• What was the purpose of the workshop on the morning of July 23 and why was it scheduled for that date and time?To introduce all the parties who had contributed to the proposal, to elected members, to give them an opportunity to seek further clarifications if needed. The workshop was scheduled at that time to help elected members consider the recommendations in the Strategy, Policy and Finance Committee meeting later that day.
• Who attended that meeting and what was presented to councillors? (Please provide documents where applicable)The workshop was held for elected members. They received an overview of the issues faced by Council, the proposal and the process that has been undertaken during the past three years to develop the proposal. This included hearing from consultants and consortium representatives who have been involved. Elected members had the opportunity to ask questions ahead of their deliberations. Presentation slides from the workshop are available HERE.
• Is the council comfortable the timing of the workshop allowed councillors enough time to consider the information presented in the workshop?Elected members have been kept up to date with how the procurement process has progressed over its three-year duration. The workshop provided a recap of the proposal and the case for change and offered the opportunity for elected members to seek clarification about any points they were unclear on.
• Is the council comfortable councillors have enough information and time and that that information is clear enough to make an informed decision?A number of workshops and forums have been held for elected members about the proposal, with some elected members also having 1:1 meetings with the General Manager Infrastructure. Council officials have also been available to answer any questions elected members may have had about the process throughout the three year procurement process. The report to the Strategy Policy & Finance Committee on 23 July 2020 listed the opportunities when Council was regularly appraised on the progress of the procurement process.

You have the right to seek an investigation and review by the Ombudsman of this decision. Complaints can be sent by email to info@ombudsman.parliament.nz, by fax to (04) 471 2254, or by post to The Ombudsman, PO Box 10152, Wellington 6143.

Publication of responses to LGOIMA requests

Please note: Our LGOIMA responses may be published on the Rotorua Lakes Council website after they have been responded to, with requesters' personal details withheld. If you have any concerns about this please contact the Council on info@rotorualc.nz .

Regards