Masterton Civic Facility Project

26 May 2022

David Hopman
Chief Executive
Masterton District Council
PO Box 444
Masterton 5840

Tēnā koe David

MASTERTON CIVIC FACILITY PROJECT

As you are aware, concerns were raised with us about aspects of Masterton District Council’s (the Council) decision to fund a new civic facility,1 which at that time was estimated to cost $30.8 million.2 The civic facility is a significant project for the Council and the community, and there has been public interest in the options considered.

Because of the project’s significance, and the concerns raised with us, we decided to look at aspects of the project. We have not carried out a full inquiry. However, we have some suggestions about processes and documentation relating to the issues we looked at, which we outline below. 

Concerns were also raised with us about the adequacy of the Council’s consultation process for the civic facility. We understand the Ombudsman is looking at this issue. Accordingly, we have not considered it.

Background

In June 2016, Masterton’s current town hall was closed because it was discovered to be an earthquake risk. Since then, the Council has considered options to rebuild or replace the town hall. It has also considered options for additional facilities the community might benefit from. There has been public debate about what the Council should do.

On 26 June 2019, the Council decided to progress the option of a new civic facility to public consultation.

On 16 December 2020, the Council agreed to building a new civic facility, including a flexi-form black box theatre, library and archives, and an information hub. The Council also agreed that the preferred location for the new civic facility was a site owned by Masterton Trust Lands Trust.3

On 2 June 2021, as part of its 2021-31 long-term plan process, the Council made a further decision to fund the new civic facility using $26.8 million from Council borrowing and $4 million from external sources.

At the time the Council made these decisions, four councillors were also trustees of Masterton Trust Lands Trust.

Issues considered

We received complaints about aspects of the Council’s decision-making on the civic facility. These included concerns about the business case for the civic facility and whether the Council had appropriately considered alternative options, particularly refurbishing and redeveloping the current town hall. One complainant also suggested the four councillors, who were trustees of Masterton Trust Lands Trust, might have had a conflict of interest.

The process by which a public organisation makes decisions to spend money in situations like this, and the management of conflict of interests, are areas of interest to our office. Given that, and because of the public interest in the civic facility and Council’s decision-making, we asked the Council some questions about:

  • what options analysis it carried out before deciding to proceed with the civic facility, including its consideration of alternative options and any costings, cost-benefit analysis, or expert advice considered; and
  • how it managed the potential conflicts of interest.

Analysis before deciding to proceed with the civic facility

Based on the documents we reviewed, the Council considered various options for the civic facility. These included strengthening and refurbishing the existing town hall and rebuilding on various locations and with different features. The Council has explained why key decisions were made – including why strengthening and refurbishing the current town hall, or building the new civic facility on the current town hall site, were ruled out.

The Council also obtained and considered expert advice to inform its decisions, including market demand analysis and cost estimates.

Comments

The steps outlined above show that the Council considered how it might responsibly spend ratepayers’ money on the civic facility.

We note that when the Council decided on 26 June 2019 to progress the option of a new civic facility to public consultation, it had advice from the project Steering Group not to proceed with the project at that time.4 The Steering Group noted that “there is not a demonstrated need for the project, it does not represent value for money and the group has significant concerns about the affordability of the project.” This advice has been made publicly available on the Council’s website.5

The resolutions for the 26 June 2019 Council meeting show that the Council considered the paper from the Steering Group. However, there is no record of the Council’s reaction to the Steering Group’s concerns or why it did not follow the Steering Group’s advice.

Elected members can make decisions that differ from recommendations put to them. However, where a decision is made contrary to advice, it is advisable to record the reasons for the decision in order to be able to evidence the rationale for it. This step can allay any potential concerns that advice was ignored, or not properly considered, when making decisions about spending public money. It also supports public trust and confidence.

In the future, the Council should ensure that it records the reasons for key decisions, particularly where those decisions differ from advice it has received. The Council told us that, since these events, it has taken steps to improve the transparency of decision-making, including keeping fuller minutes of key discussions and decisions.

Management of conflicts of interest

A concern was raised with us about a potential conflict of interest because four of the councillors involved in the decisions are Masterton Trust Lands Trust trustees.

From the information the Council provided, we see that it took steps to manage the potential conflicts of interest by:

  • identifying the potential conflict between the four councillors’ roles as councillors and as trustees of Masterton Trust Lands Trust;
  • obtaining legal advice about the four councillors participating in decisions relating to the preferred location and participating in the Council’s 2021-31 long-term plan deliberations; and
  • putting in place processes to ensure that the four councillors do not receive, or have access to, relevant commercially sensitive information.

We understand that the four councillors considered their position and decided:

  • not to participate in the Council’s decisions on 16 December 2020 relating to the preferred location of the civic facility; and
  • to participate in the Council’s 2021-31 long-term plan deliberations because they considered the discussion was about the project’s cost and funding, rather than the location of the civic facility.

Comments

Deciding on whether an elected member has a conflict of interest and – if so – how to manage it is rarely straightforward. An elected member with a potential conflict of interest needs to weigh up a complex mix of competing concerns. Unless there is a clear financial interest, they will need to decide for themselves whether it is appropriate to take part in a council decision.

In this case, the Council appears to have had processes in place to identify conflicts of interest. It took advice about the best way to manage the conflicts of interest it had identified and considered that advice. Those steps were reasonable and appropriate.

However, the councillors’ decision to participate in some civic facility decisions and not others had the potential to be confusing to the public or those wanting to understand the process. On this point, we note that the councillors did not formally record their interest and their decision to participate in the minutes for the Council’s 2021-31 long-term plan deliberations (although their interests and their decision to participate were recorded in email correspondence between elected members).

As we say in our conflicts of interest guidance, the public needs to have confidence that decisions involving activities carried out in the public interest or paid for using public funds are made impartially, for the right reasons, and not influenced by personal interests or ulterior motives. Formally recording interests and how any conflicts between those interests will be managed supports trust and confidence in the Council’s decision-making process. It also gives reassurance that elected members are acting in the interests of the community.

The Council has told us that:

  • declarations of conflicts and decisions to participate in discussions are now clearly made and documented; and
  • conflict of interest declarations and discussions occur in the public part of meetings, which are live streamed and available to the public for future reference.

We also understand that the Council intends to carry out conflicts of interest training for elected members and staff. As part of that training, or separately, we encourage elected members and staff to familiarise themselves with our conflicts of interest resources, including our guidance on the Local Authorities (Members’ Interests) Act 1968.

Concluding comments and next steps

Given the significance of the civic facility project to the Council, our appointed auditor will take an ongoing interest in the project. Because of the public interest in this matter, we also intend to publish this letter on our website.

We thank staff from the Council for their assistance with this matter.

Nāku noa, nā

David Lemmon
Manager, Inquiries

1: For clarity, we use the term “civic facility” throughout this letter. However, we note the scope of the project has changed over time, and the terminology has changed as a result. We understand during earlier stages of the project it was referred to as the “events centre” or “civic centre” project.

2: The Council issued a press release on 23 May 2022 noting the estimated costs for the project have now increased and in light of that increase Council has decided to review the project, with next steps to be determined after the local government elections in October 2022: see Masterton District Council (23 May 2022), “New Council to decide next steps on Civic Facility project – Masterton District Council” at mstn.govt.nz.

3: We understand that the Council has since decided not to use the Masterton Trust Lands Trust site for the civic facility. See RNZ (3 March 2022), “Civic centre: Masterton council ditches land purchase efforts” at rnz.co.nz.

4: The Steering Group was made of three elected members, an iwi representative, and Council staff.

5: See Masterton District Council (29 August 2019), “Town Hall options released” at mstn.govt.nz.