Crown Property Management. Property Plan

Crown Property Management Property Plan 2012-2015 1

Table of Contents 1. EXECUTIVE SUMMARY... 3 2. HISTORICAL CONTEXT... 4 3. OPERATING ENVIRONMENT... 4 4. PURPOSE OF THE PLAN... 5 5. CPM FUNCTIONS... 6 6. THE CPM PORTFOLIO... 9 7. GUIDING PRINCIPLES FOR PORTFOLIO MANAGEMENT... 13 8. CURRENT AND FUTURE INITIATIVES... 15 9. THE CENTRE OF CROWN LAND EXPERTISE (CCLE)... 17 10. PROPERTY STRATEGY 2012-2015... 19 11. REFERENCES... 21 12. RELEVANT LEGISLATION... 23 13. APPENDIX A NON PASTORAL PORTFOLIO STATISTICS... 24 2

1. Executive Summary Land Information New Zealand (LINZ) manages 8% of New Zealand s total land area, some of it among the most iconic land in New Zealand. Within LINZ, the land portfolio is managed by the Crown Property Management (CPM) team based in Wellington. LINZ also administers 215 high country pastoral leases 1 in the South Island. The pastoral lease portfolio is managed by the Pastoral team, based in Christchurch. This Property Plan specifically deals with LINZ s non pastoral portfolio of properties. To date, there hasn t been an overarching plan documenting LINZ s strategy for managing its non-pastoral land portfolio. A recent review by the Office of the Auditor General have found that the lack of strategic plan for property management is a significant deficiency for landholding Crown agencies 2. This Property Plan is primarily designed to aid strategic planning and decision making, and for staff training purposes. The Property Plan outlines CPM s operating model and seeks to align property portfolio management activities to LINZ s wider strategic outcomes and objectives. LINZ has three core roles; transaction management, information management and effective management of Crown assets. One of LINZ s strategic outcomes is to enable appropriate economic, environmental and recreational use of Crown-owned and used land. Over time, guiding principles have been developed to ensure the portfolio is managed efficiently and effectively. The current overarching strategy for the portfolio is to balance relevant economic, recreational and environmental considerations to deliver fiscally efficient property management outcomes which contribute the government s strategic direction. There are a number of strategic initiatives currently underway for the portfolio, including: Consolidating surplus or other Crown land with LINZ; Contributing to the Treaty of Waitangi settlements process; Supporting the Canterbury earthquake recovery; Implementing a new property management information system; and Reviewing the current outsourcing strategy. These initiatives are pivotal to LINZ s future strategy of developing a Centre of Crown Expertise (CCLE) within LINZ. Part of being the CCLE will mean that LINZ undertakes best practice property management of Crown owned land. This document describes the functions and strategies for only the property management and disposal functions that CPM undertakes. It does not apply to CPM s regulatory, statutory decision-making or technical advisory roles. 1 as at 31 August 2011 2 Controller and Auditor General Part 3: Strategic management of the school property portfolio Ministry of Education: Management of the school property portfolio. pp1 and 2. 2006 LINZONE ref : A1096861 3

2. Historical Context The Crown has historically been a significant owner of land in New Zealand, in order to encourage development and settlement of land and to administer those properties required for government activities and infrastructure. The main landholding agency of government was historically the Department of Lands and Survey (1876-1987). The department had functions to develop land for settlement purposes and to administer lands of the Crown, both leased land and reserves and national parks. In 1982 Lands and Survey administered an estimated total of 12 million hectares (or just under 50%) of New Zealand s land area. 3 A significant reorganisation of the public sector began in 1987. Much of the Crown's commercial or productive land was transferred to State Owned Enterprises, such as Landcorp, which operate on a commercial basis. Land remaining in Crown ownership is administered by either: Crown agencies where the land is operationally required for service delivery (e.g. Education, Transport, Defence and Corrections); The Department of Conservation (DOC) in the case of national parks, reserves and conservation land etc; or Land Information New Zealand (LINZ), in the case of residual Crown owned lands. There is no formal government policy relating to the ownership of land by Crown agencies. Most non-conservation land is held for operational reasons and for the delivery of public works and services. When no longer required, agencies generally look to dispose of properties. This is primarily to obtain revenue from any sale and to eliminate any holding costs associated with surplus property. As each Crown agency must account for the assets under its control, there is an incentive for agencies to manage their land and dispose of those properties that are no longer required. From time to time, Cabinet may issue policy on specific land-related issues. 3. Operating Environment LINZ has three core roles; managing transactions, managing information, and managing land. It is through managing land that the Crown Property Management (CPM) team deliver outcomes for LINZ. Outcome three of LINZ s Statement of Intent 2012-15 is to enable appropriate economic, environmental and recreational use of Crown-owned and used land. LINZ manages 8% of New Zealand s total land area, some of it among the most iconic land in our country. LINZ aims to efficiently and effectively manage and safeguard land so that it can be put to its best use now and in the future. 3 Another of LINZ s predecessor agencies, the Ministry of Works & Development held a range of land for public works and infrastructure purposes. 4

LINZ s land portfolio presents a number of challenges, including risk identification and mitigation, biosecurity, managing tenancies, resolving unauthorised uses, general maintenance and, where appropriate, developing strategies for future disposal. To be successful in managing land, CPM must constantly balance relevant economic, recreational and environmental considerations. Impacting on these considerations are the competing demands of central, regional and local government, lessees and licensees, iwi, and public interest groups. 4. Purpose of the Plan This Property Plan specifically deals with LINZ s non pastoral land portfolio. LINZ s pastoral estate is managed as a unique portfolio and has its own specific legislation and management requirements. The Pastoral team administers 216 4 high country pastoral leases in the South Island and is based in LINZ s Christchurch office. To date, there hasn t been an overarching plan documenting LINZ s strategy for managing non-pastoral land. A recent review by the Office of the Auditor General have found that the lack of a strategic plan for property management is a deficiency for Crown agencies with significant land portfolios 5 This Property Plan is the overarching document for managing the non-pastoral portfolio of Crown owned land. It is primarily designed to aid strategic planning and decision making, and for staff training purposes. The Property Plan outlines CPM s operating model and seeks to align property portfolio management activities to LINZ s wider strategic outcomes and objectives. The Property Plan sets out: CPM functions and roles; an overview of the property portfolio 6 ; the key strategies and guiding principles for managing the portfolio; and the key initiatives and property strategy for 2012-2015. 4 as at 31 March 2012 5 Controller and Auditor General Part 3: Strategic management of the school property portfolio Ministry of Education: Management of the school property portfolio. pp1 and 2. 2006 6 Refer to Appendices A and B for property portfolio statistics. 5

5. CPM Functions Acquisitions Properties are constantly being added to LINZ s property portfolio. primarily come about through: The acquisitions new discoveries of Crown owned land; portfolios transferred to LINZ from other Crown agencies; passing of new legislation; and other miscellaneous acquisitions. Crown land ownership is complex and in many cases, for example riverbeds, ownership may not have been established. Often Crown land does not have a title or is not defined by survey. In cases where LINZ and/or other parties wish to ascertain ownership, Crown land status reports are commissioned. These involve researching the history of land ownership, and the application of legal doctrines, such as ad medium filum aquae (AMF) rights 7. In recent years the ownership and administrative responsibility for a number of property portfolios were transferred from other Crown agencies to LINZ. The Ministry for the Environment and Ministry of Economic Development (Tourism and State Coal lands) are recent examples of this. Occasionally one off transfers of land parcels to LINZ occurs. An example of this is a current proposal to transfer freehold land into which the Clutha River has eroded and the owner wants to transfer this land to the Crown as part of a subdivision of the neighbouring land. The Land Act 1948 provides the ability for the Commissioner of Crown Lands to acquire private land. This occurs rarely, such as in the case of the properties acquired under the Huntly East Subsidence Policy (see section 6 for further information). Another way land can revert back to Crown ownership under the Land Act 1948, is through the doctrines of bona vacantia (abandoned land) or escheat (bankrupt s land). CPM s Regulatory team deals with approximately 20-30 bona vacantia and escheat cases a year. In most of these cases the reversionary rights are successfully asserted by parties other than the Crown and very few properties end up as Crown land. The Canterbury Earthquake Recovery Authority (CERA) is in the process of acquiring several thousand earthquake affected residential properties classified as red zone. These properties are to be demolished due to underlying land instability. LINZ has entered into a Memorandum of Understanding with CERA to manage acquired residential red zone land once demolition processes have been completed. Property Management LINZ administered properties are generally managed until they can be disposed of. There are however exceptions to this such as the many areas of lake and riverbed which 7 See Hinde G.W., McMorland D.W. Butterworths Land Law in New Zealand 1st Edition. (1997). 2.232. pp. 378-382 6

are held long term as they are unlikely to ever be disposed of. A number of areas of lake and river bed are managed in partnership with holders of hydro operating easements and iwi. An example of LINZ working in partnership with iwi is the Waikato River Crown Land Accord with Waikato-Tainui. Increasingly, a key feature of Treaty settlements is comanagement of riverbeds lands. This generally involves a long term Crown/iwi partnership to ensure the health and wellbeing of our rivers are protected for future generations. Property management entails tasks such as; paying rates, leasing/occupations, maintenance, capital works, biosecurity, risk management, responding to public and media enquiries and maintaining property records. Much of the on-the-ground property management work is currently outsourced to a number of service providers with the actual works carried out by qualified contractors engaged by those service providers. Both LINZ staff and contractors must ensure that the requirements of all relevant legislation and standards are complied with in this work. Biosecurity The programming and delivery of weed and pest control over riverbeds, lakes and lake margins is undertaken as a specific work stream. The project management of biosecurity is outsourced to a specialised service provider due to the scientific nature and the significant environmental considerations involved. Biosecurity has a high public profile in certain locations, notably the control of aquatic weeds in iconic lakes such as Lake Wanaka and the control of rabbits in riverbeds. Weed and pest control for most other CPM administered land is managed as part of the property management work stream because biosecurity over these particular lands tends to be either small scale or the responsibility of occupiers. Where land is leased or licenced, a typical condition of the lease or licence is that the tenant is made responsible for weed and pest control. The Biosecurity Law Reform Bill, currently before Parliament, contains provisions to bind the Crown to Regional Pest Management Strategies, prepared by regional councils under the Biosecurity Act 1993. If passed, this legislation has the potential to increase LINZ s biosecurity responsibilities. Disposals Each year LINZ identifies a priority schedule of properties that are suitable for disposal. In addition, there is provision for Crown owned land to be used in Crown to Crown transfers, for example, LINZ to DOC where the land has significant conservation values or for transfer to other government agencies and local territorial authorities for public works. Land held by LINZ under the Public Works Act 1981 and no longer required for the acquired public work purpose may be required to be offered back to the former owners or their successors. LINZ has a Risk Based Disposal Methodology 8 and properties selected for the disposal programme generally fall within the following categories: 8 Land Information New Zealand Risk Based Property Disposals Methodology, 2011. 7

Economic Where the projected revenue from sale exceeds the cost of disposal and contributes towards the achievement of LINZ revenue targets; Strategic Where the disposal is undertaken to avoid or mitigate some future or potential liability for LINZ or the Crown or to assist in realising another Crown objective; or Public Interest Where the disposal of the property is in the interests of the inhabitants of a particular locality or members of the public who wish to apply to purchase land i.e. adjoining owner. Properties selected for disposal are split into disposal contracts with external providers. The LINZ disposal process 9 is subject to the legislation under which the land is held, the standards and guidelines prepared by Crown Property Regulatory and include the obtaining of a number of statutory or government directed clearances. The revenue target for these disposals is set every year (approximately $6 million in 2012) by agreement with the Minister. Achievement of that revenue is dependant on a number of factors including statutory clearances, market conditions and disposal funding. Crown Forest Licence administration Under the Crown Forest Assets Act 1989, the Crown has reserved land for Treaty Settlement purposes. Crown Forestry Licences have been granted to forestry companies (Licensees) to enable them to grow and harvest plantation forests on the land. CPM is responsible for management and administration of the land under direction from The Treasury. The rental fees are collected by CPM and transferred to the Crown Forestry Rental Trust (CFRT) until the land has been settled in a Treaty Claim. Once settled the CFRT apportions the rent collected to the successful claimant. The Forests, Treaty of Waitangi and Disposals team manages 48 Crown forestry licences (CFLs), covering approximately 306,000 hectares, under delegation from shareholding ministers (Finance and State-Owned Enterprises). As at 1 July 2011, annual licence fees total approximately $11.8 million. Licence fee reviews are undertaken at three yearly intervals. The fees are paid to the Crown Forestry Rental Trust to be held in trust for future Treaty settlement of the land they are derived from. The number of CFLs will reduce over time as they are returned to iwi as a part of Treaty settlements. CPM are responsible for setting the rental fees for Crown Forest Land, monitoring Licensees compliance with the terms of the licence, and considering applications for easements over the land. Contributing to Treaty of Waitangi settlements The Office of Treaty Settlements (OTS), is the lead agency for the negotiation of historical Treaty of Waitangi claims, and co-ordinates the input of other Crown agencies as necessary. CPM plays a vital role in the Crown s ability to negotiate Treaty settlements. CPM provides significant areas of Crown owned land for redress and holds and manages licensed Crown forest land until it can be returned as redress. 9 Land Information New Zealand. Crown owned land diposal process. 2012. 8

Investigation and remediation of contaminated sites Contaminated sites are a type of Crown Contingent Liability and have specific annual Crown funding. CPM deals with contaminated sites on LINZ administered land and on some private (ex Crown) land. In 1994, Cabinet issued directives for managing contaminated sites on private land which we use when considering how contamination issues on Crown land should be dealt with. CPM also acts in accordance with Ministry for the Environment guidelines. CPM typically outsources contaminated land work (soil testing, environmental impact reports, ongoing site management reports) to specialist environmental consultants. Investigation and remediation of liabilities Occasionally LINZ may receive claims whereby through some error, omission or default the Crown has acted incorrectly in dealing with a property related matter. CPM handles all such claims and is responsible for reporting on all known Crown contingent liabilities which LINZ has management responsibilities for. CPM also deals with a large number of historical claims which have arisen from the actions of LINZ s predecessor agencies e.g. the Ministry of Works and Development and the Department of Lands and Survey. CPM will consider the claimants information and, if appropriate, research the background to the claim. Until a claim is proven or resolved it is recorded by LINZ as a contingent liability. CPM has developed an Operating Framework for the Investigation and Management of Land-related Crown Contingent Liabilities 10. The framework document is intended for use by CPM staff and external service providers. 6. The CPM Portfolio CPM administers a diverse portfolio of land, ranging for large forest holdings to parcels of land alongside railways or rivers. The portfolio numbers approximately 5000 properties. Most of this land is not being actively used for government purposes. The properties are held under a range of legal statutes and subject to a range of legislation. Refer to Appendix B for CPM portfolio statistics. Crown Land held under the Land Act 1948 Crown land is the largest single estate of land that CPM administers. This land is defined in s4 of the Land Act 1948 as land vested in the Crown which is not set aside for any public purpose or held by any person in fee simple. The Commissioner of Crown Lands (CCL) is the statutory administrator for Crown Land held under the Land Act 1948. Some of the CCL s powers and functions have been delegated to certain CPM staff. Crown land is not held in computer freehold registers and not all parcels of Crown land are identified in LINZ s records. Where not recorded, confirmation that a parcel of land is 10 Land Information New Zealand. Framework for the Investigation and Management of Land Related Crown Contingent Liabilities, 2011. 9

Crown land under the Land Act 1948 is typically determined by a status check that complies with relevant LINZ standards 11. This Crown land portfolio is diverse and has a number of unique aspects: Electricity Generation Operating Easements Over many years significant areas of land adjacent to lakes and riverbeds were acquired by the Crown under the Public Works Act 1981 for the purpose of hydro power generation. Following the passing of the State Owned Enterprise Act in 1986, all that land was declared by gazette to be subject to the Land Act 1948 and the CCL granted operating easements to relevant State Owned Enterprises from 1993 onwards. There are approximately 30 operating easements that enabled Electrocorp and its successors to conduct electricity generation business activities (such as flooding of land, stockpiling of gravel, inundation), while retaining the ownership of the riverbed or lakebed with the Crown. Huntly East Houses and underlying land These properties are acquired under the Huntly East Subsidence Policy 12. This policy provides for either repair or purchase of properties which suffer the effects of subsidence caused by the Crown's historical mining of the south section in the Huntly East coal mine. The policy states that any property damage caused by mining subsidence will be repaired at no cost to the owner. Also, if a registered owner of a property located in an area of active subsidence wishes to sell, but is unable to do so because public concern about subsidence has caused the property to become devalued, the property can be purchased by the Crown at current market value as if no subsidence had occurred or was expected to occur. After acquisition, these properties become Crown land under the Land Act. River and lake beds Unless legislation placed administration of a certain riverbed or lakebed in another party, riverbeds and lakebeds have historically been held as Crown land under the Land Act 1948. 13 A Crown-owned riverbed is not just the area over which a river flows but can also include the adjacent riverbanks, flats etc i.e. the river course. These river and lakebeds are administered in the same way as other Crown land. As part of the Treaty settlement process, the CCL has entered into arrangements with iwi, such as deeds of recognition and accords which provide for the CCL to seek and take into account the views of iwi on issues to do with the management of riverbeds or lakebeds. Such tools may be used in future settlements as well. The subsequent management of these properties must comply with the requirements of these arrangements. 11 Land Information New Zealand. Standard to Determine Authority to Act and Record Crown Land LINZS45000, 2007. 12 Land Information New Zealand. Land Subsidence Policy South Section Old Workings, Huntly East, 1997. 13 Note that water issues are governed by statutes such as the Resource Management Act 1991 and are principally the responsibility of agencies such as Regional Councils and the Ministry for the Environment. 10

Rotorua Lakes Stratum (Air and water column) While in most cases a land owner owns the space/air above land in their title, there are exceptions. As a result of the Te Arawa Lakes Settlement Act 2006, the Crown vested the beds of certain lakes around Rotorua in Te Arawa. The Crown retains ownership of the air and water columns above the lakebed (the Crown stratum). This Crown stratum is held as Crown land under the Land Act 1948. CPM liaises with Te Arawa in management activities that affect both parties stratum interests. Residence Site Licences Residence Site Licences (RSLs) are a form of tenure initially legislated in the late 1800s to assist and encourage employment and business in isolated areas of New Zealand. They are administered by the CCL under the Mining Tenures Registration Act (MTRA) 1962. As at 2012, 53 of these licences remain. Most RSLs are over Crown land with a small portion over private land. The number of these licences is steadily decreasing over time. CPM s role is to maintain records of the current RSL holders and acknowledge any assignments to new holders. The main focus is in encouraging the RSL holder to freehold the land. In cases where an RSL holder has failed to renew their RSL in the required time frames LINZ, has to make an assessment under the terms of the MTRA whether or not to renew the RSL. State Coal Reserves State Coal Reserves are administered under the Land Act 1948 and the Public Works Act 1981. Until 2011, when administration was transferred to LINZ, State Coal Reserves were administered by the Ministry of Economic Development (MED). Much of the land is used for coal mining under mining permits administered by MED with access arrangements administered by LINZ. Soil Conservation Reserves Soil Conservation Reserves are either administered under the Soil Conservation and River Controls Act 1941 or the Land Act 1948. Until 2010, when administration was transferred to LINZ, Soil Conservation Reserves were administered by the Ministry for the Environment. Under the legislation, operational management of the Soil Conservation Reserves generally lies with regional councils. There are currently certain restrictions on the disposal of Soil Conservation Reserves and CPM s role in administering these lands is limited due to the regional councils responsibilities. Endowment Land Endowment land is not owned by the Crown but vested in various Trusts. The Trustees distribute the income in accordance with the terms of specific legislation such as the Taranaki Scholarship Trust Board Act 1957 and the Havelock Commonage Act 1905 to specified local communities. Pursuant to the power under section 169 of the Land Act 1948, various gazette notices declared the endowment lands to be subject to provisions of the Act. While the Crown does not own this land, CPM undertakes administrative actions on behalf of the CCL. These include granting interests over the land such as leases and licences or disposing of the land. Proceeds from these interests and disposals are transferred the appropriate Trust(s). 11

Crown Forest Land In 1989 most of the Crown s plantation forestry assets were sold to private interests (by way of Crown Forestry Licences) and the status of the underlying State Forest Land became Crown Forest Land on the passing of the Crown Forest Assets Act 1989. CPM administers this land in trust for future iwi owners on behalf of the responsible Ministers (Ministers of State Owned Enterprises and Finance). Accumulated forestry rentals are paid into the Crown Forestry Rentals Trust. The Office of Treaty Settlements determines the timeline for the disposal of the land through Treaty Settlements. Railway Land This portfolio of properties transferred from the then Railways Corporation (now Ontrack) to the Department of Survey and Land Information (now LINZ) in January 1994. This was followed by a Cabinet directive in August 1995 enabling LINZ to manage and dispose of the surplus railway lands. The management and disposal of the portfolio is determined by the New Zealand Railways Corporation Act 1981 and the New Zealand Railways Corporation Restructuring Act 1990. Public Works Land CPM administers properties held under the Public Work Act 1981. This includes some State Coal and Soil Conservation Reserves and surplus properties that are still to be disposed of. It also includes land no longer required for power generation this land was identified and managed by The Treasury but progressively has been transferred to LINZ for disposal. This process is still underway with one schedule of properties, known as Schedule X, still under the control of The Treasury. Reclaimed Land In 2011, LINZ was given a number of new responsibilities under the Marine and Coastal Area (Takutai Moana) Act 2011. This Act created a new regime for the common marine and coastal area, from the mean high water springs out to the 12-nautical mile limit. Under the Act, all coastal reclaimed land that has not previously been granted to another party is now owned by the Crown and administered by LINZ. The Act provides a new regime for the granting of interests in reclaimed land formed from the common marine and coastal area. LINZ is responsible for processing applications from parties who wish to acquire an interest in reclaimed land. Decisions are made by the Minister. The Act sets out the matters the Minister must consider in making a determination, for example, any conditions that must be fulfilled before an interest is granted. Reserve Land Included in the portfolio of land transferred from the Ministry of Economic Development were three properties that have reserve status pursuant to the Reserves Act 1977. As at 2012 only one of those three properties remains under LINZ s administration. LINZ has authority to issue leases (with some restrictions) which are deemed by section 122 of the Reserves Act to be under the Tourist and Health Resorts Act 1908. 12

7. Guiding Principles for Portfolio Management There are several key property management principles which CPM applies in administering its portfolio. Ensuring compliance with relevant legislation and regulations Crown owned land is subject to legislation, such as the Land Act 1948 or Public Works Act 1981, that sets out specific requirements in addition to normal commercial property management and disposal practice. Decision-making on the portfolio is made within statutory frameworks, under delegation from the CCL, Chief Executive or the Minister. Ensuring that the correct statutory requirements or standards are being complied with is a fundamental part of portfolio management. It also means that some of the actions that a commercial property manager may ordinarily undertake on its land are not appropriate on Crown land. Achieving flexible occupancies With the exception of lakes and riverbeds, generally most other properties may eventually be disposed of. Given the disposal focus, a key management principle is to maintain flexible occupation arrangements. This translates into short term tenancies, the careful use of termination provisions, redevelopment provisions (where the owner can move fixtures if they impede future redevelopment plans etc.) and term easements. Other than in exceptional circumstances, such as providing legal right of way access, easements are no longer granted in perpetuity. For easements for infrastructure such as electricity and telecommunications the term of the easements are generally tied to the life of the infrastructure. It is acknowledged that in years to come water could become a very valuable commodity and consequently easements for pipelines to take water are often limited to the term of any resource consents for the water rights, usually 35 years. Charging market rentals Except where the governing statute prescribes otherwise or where a tenancy is for community purposes, LINZ generally charges market rents for tenancies. Registered valuers are often used to determine market rents in accordance with the Rental Assessment and Easement Guidelines 14. Where the use of registered valuers to ascertain market rentals is not practical, rentals are often determined with reference to an appropriate percentage of rating valuations. Tenancies are tendered where there is potential competition. Applying disciplined risk management From 2002-2006 CPM undertook a major project to record physical risks present on the properties it administered. This project was known as the LINZ Property Risk Assessment Project (LPRAP). During the LPRAP, properties were assigned a level of risk; 14 Land Information New Zealand. June 2009. Land Information New Zealand Crown Property Management Railways/Public Works Land: Rental Assessment and Easement Guidelines. 13

red, orange, yellow and green. The red properties were those which contained the highest risk that required urgent mitigation. All these red property risks have since been addressed as well as a number of the orange ones. Subsequent to the LPRAP, CPM has developed a property risk management framework 15 which acts as an ongoing guideline. This guideline will be utilised by CPM staff in their day to day decision making and management of their portfolios and will be applied to all the new portfolios which are transferred to LINZ from other agencies. Engagement with key stakeholders and iwi Engagement with key stakeholders and iwi is a very important part of CPM s day to day work. As a result of Treaty settlements there are various agreements between the Crown and iwi which require LINZ to have an ongoing relationship with iwi groups. For example, in the Te Rūnanga o Ngāi Tahu settlement there are deeds of recognition over various South Island rivers which requires CPM to consult with iwi over any proposed developments and/or dispositions of Crown land. Collaborating with other governance agencies CPM seeks to maintain close working relationships with central and local government, particularly land management and natural resources sector agencies including DOC, Ministry for the Environment, Ministry of Primary Industries, Ministry of Economic Development and the Office of Treaty Settlements. Utilising expert external assistance where beneficial Where appropriate, CPM utilises external expertise for property management, valuation, environmental planning, economic, ecological, forestry, legal (except where service is provided by LINZ Legal or Crown Law), project management and other work. Maintaining accurate and complete records Accurate record keeping and database maintenance is essential to effective portfolio management. Since 1998, CPM has used a purpose built property database known as the Land Information Property System (LIPS). In mid 2012 a new property database called National Property and Land Information System (NaPALIS) will replace LIPS. NaPALIS is being jointly developed for LINZ and DOC. Search tools such as the electronic LINZ file index (ELFI) are important tools to use when searching for historic files. 15 Land Information New Zealand. 2012. Framework for Managing Risks on LINZ administered Crown Land (Draft). 14

8. Current and Future Initiatives In the LINZ Statement of Intent 2011-2014 16 there are two key initiatives for CPM under outcome three, enabling appropriate economic, environmental, and recreational uses of Crown-owned and used land. These are Consolidating surplus and other Crown land with LINZ and Contributing to the Treaty of Waitangi settlements process. The Centre of Crown Land Expertise (CCLE) relates to the consolidation of Crown land within LINZ key initiative whereby a centre of expertise for Crown land management will be developed. The CCLE is discussed further in chapter 9. Contributing to the Treaty of Waitangi settlements process 2011-14 will see CPM making contributions to the settling of historic Treaty of Waitangi claims. The Government is continuing to place importance on completion of fair and final settlement of historic Treaty of Waitangi grievances. The Office of Treaty Settlements (OTS) within the Ministry of Justice is the lead agency for the negotiation of settlements of historical Treaty of Waitangi claims, and coordinates the input of other departments as necessary. LINZ has a key role in supporting the Treaty settlements process and this has, and will continue to require a re-prioritisation of our capability and capacity to enable LINZ, OTS, and Government to meet their objectives in this area. Once Deeds of Settlement have been signed the work does not end for CPM. There will be an ongoing body of work (in some cases 'in perpetuity') required to implement, administer and manage the settlement obligations as detailed within those Deeds of Settlement and subsequent settlement legislation. In order to contribute to this outcome, CPM will need to: Ensure our work programme is aligned to and delivered to OTS s programme and timelines; Effectively implement all settlements in accordance with LINZ compliance plans and Crown implementation plans; Engage with OTS at appropriate times for relevant input to programme and any variations; and Ensure LINZ disposal standards are met for properties included in redress. 16 Land Information New Zealand, Statement of Intent 2011-2014. pp. 27, 28 15

Contributing to the Canterbury Earthquake Recovery LINZ is involved in a range of activities to support rebuilding in the Canterbury region. In the land management space, LINZ has a significant role in managing acquired residential red zone properties on behalf of CERA. Supporting the Canterbury earthquake recovery is a Ministerial priority for LINZ and, given that LINZ has considerable skills and expertise in managing Crown owned land, LINZ is in a position to assist CERA with land management in an ongoing capacity. Best Practice Property Management As a general principle, CPM maintains best property management practice through staff training. In some cases, Continuing Professional Education is maintained through professional institutes of the land related professions, notably the Property Institute of New Zealand (PINZ). One initiative currently underway is for LINZ to work alongside PINZ in developing specific training modules on Crown land management. As aspects of Crown property management are unique in New Zealand, it is necessary for CPM to keep in touch with initiatives and trends with other Crown land administrators overseas. LINZ is a regular participant in the Australasian Crown Land Administrators Forums (CLAF) hosted each year by one of the Australian State Governments. In recent years the Indonesian and Singaporean governments have also participated in CLAF 17. Best Sourcing Review CPM commissioned a best sourcing review of its service provider arrangements and the contractual model for service providers involved in the provision of property services. The plan is to optimise the level of outsourcing with reference to best commercial practice. Deloitte were commissioned to undertake the review 18. Improved Efficiencies Reducing costs through efficiencies is an important ongoing component of CPM s operations. Eliminating inefficiency, duplication and over-engineered solutions are central to this initiative. In some cases targeting unit cost reductions through improved competition for property work can lead to sustainable cost reductions. Biosecurity and property maintenance programmes are carefully prioritised so as to achieve optimal targeting of resources. 17 See http:// claf.lands.nsw.gov.au and LINZ Jurisdictional Update for Land Information New Zealand (for CLAF) 2010 18 Deloitte. October 2011. Best Sourcing of Crown Property Management Services. 16

Leveraging off whole of Government initiatives is an important aspect of day to day work at CPM. Examples include utilising standard Government base contracts for the provision of some services, and sharing tools such as database infrastructure etc. Increasing Rentals Increasing revenues from rentals is an ongoing objective of managing CPM s portfolio. Market rentals are charged where possible and appropriate. For certain properties, strong marketing, competitive tendering and commercial negotiations are involved in setting the rents. Riverbed Ownership Identifying riverbed ownership can be highly complex. Some parts of riverbeds can be privately owned as a result of AMF rights, where the adjoining property boundary extends to the centreline of the riverbed. CPM is involved in an ongoing process of facilitating determinations to ascertain if sections of riverbed are Crown land under the Land Act 1948. This enables CPM to further develop a picture of the property that we are responsible for in order to determine where our responsibilities for matters such as granting interests or biosecurity responsibilities lie. NaPALIS The new National Property and Land Information System (NaPALIS) has been an important project for LINZ since 2009 and is scheduled for implementation in mid 2012. NaPALIS is being jointly developed with DOC and will interface spatially with the DOC s upgraded Geographic Information System (DOCGIS). NaPALIS will also interface with LINZ s new financial management information system. NaPALIS will benefit CPM by automating property management processes and providing an efficient platform for recording and reporting on activities. 9. The Centre of Crown Land Expertise (CCLE) Positioning LINZ as Government s Crown Land Management Centre is related to the key initiative of Consolidating surplus and other Crown land with LINZ in the LINZ Statement of Intent 2011-2014 19. This key initiative is also a critical aspect of the 2011/12 Crown Property and Investment Business Group Plan 20. In the introduction to the Statement of Intent 2011-2014, LINZ s Chief Executive Colin MacDonald said: In recognition of our land management expertise we have also been approached by other agencies to transfer land from their administration into ours. We will put in place a clear framework for any further transfers to ensure we can continue to manage our land portfolio effectively in the best interests of New Zealanders. 19 See Land Information New Zealand, Statement of Intent 2011-2014. pp. 27, 28. 20 See LINZ Crown Property & Investment Business Group 2011/12 Business Group Plan. Pp 8, 14, 22, 29. 17

LINZ has increasingly taken on land from other Crown agencies. This is in recognition of the better results our specialist team offers in managing property portfolios, the risks associated with Crown land and its acquisition and disposal, and in managing the rights to Crown land that provide both economic and recreational opportunities to New Zealanders. LINZ sees potential to consolidate further surplus (and other) Crown land under our administration. LINZ is confident that it can deliver more effective management, and free up other agencies resources to focus on their core business. LINZ should also be able to reap scale benefits across our overall portfolio through the addition of this land, contributing to more efficient public sector management. This proactive strategy involves initially developing a framework and subsequently the ongoing investigation and transfer of targeted portfolios of Crown owned land for possible transfer to LINZ. It is contemplated that the proposed framework will include a schedule of the value added by portfolios transferring to LINZ as well as outlining the minimum standards and approach to due diligence and conditions of transfer. Although there could be exceptions to this, the types of portfolios potentially in scope could typically be where: Property held is non operational; property management is not core business; the portfolio is too small to achieve efficiencies of scale; agencies don t have property management expertise; the portfolio has divestment potential; and the portfolio has risk management issues. At this stage, large scale operational portfolios are considered to be out of scope. Similarly, the Government s commercial office portfolio is out of scope as the lead management has been tasked to the Ministry of Social Development 21. The plan is to develop the framework within 2011/12. Once the Framework is completed and in place the intention is to adopt a front footed approach to identifying the potential transfers. While consolidating surplus and other Crown land with LINZ is a critical aspect of the CLMC, the CLMC concept is primarily about establishing LINZ as the centre of expertise for Crown land management. This translates to LINZ being at the leading edge of best practice property management, greater recognition of our land guardianship role, and demonstrating our contribution to important land related Government outcomes. It is important to recognise that the CLMC extends beyond LINZ s management of land. Crown Property Management is also responsible for providing expert technical advice to Government and other agencies on Crown property matters, and for regulating Crown property activity. 21 http://www.msd.govt.nz/about-msd-and-our-work/about-msd/our-structure/pmcoe/propertymanagement-centre-of-expertise.html 18

10. Property Strategy 2012-2015 CPM s property strategy for 2012-2015 is to concentrate on the development of the CCLE and the components which underpin it, as they relate to the properties that CPM manages. This will enable us to better meet our outcome for managing land to enable appropriate economic, environmental and recreational use of Crown-owned and used land. This strategy is broadly depicted in Figure 1. The CPM property strategy will be achieved by: Making well informed decisions about the land that we manage to ensure that use of the land align with our outcomes; Implementing approaches to property management that are leading edge and are best practice; Demonstrating our ability to act as a trusted guardian of sensitive and iconic environments; Partnering with iwi other key stakeholders to manage and protect lakes and riverbeds for future generations; and Demonstrating our expertise and all of Government focus by contributing to wider government outcomes, such as the settlement of Treaty claims and the rebuilding of Canterbury; Absorbing new portfolios of land from other Crown agencies, where LINZ is best placed to efficiently and effectively manage that land (all of Government efficiencies); Focusing on the effective disposal of surplus Crown owned land and realising a net return to the Crown; Partnering with the private sector to leverage expertise while reducing overall operating costs; and Ensuring agility and responsiveness to the changing needs of Government. 19

Reducing costs Leading edge e-property technology Leveraging off partners and service providers Market leading best sourcing of suppliers Front footed, innovative and adaptable Partnering with the Private Sector Best Practice Property Management Highest and best use of land Increasing Partnerships and Collaboration (e.g. PINZ and PMCoE Generating Disposal Revenue for the Crown Responsive to the Needs of Government Disposal of Surplus Crown Owned Land Centre of Crown Land Expertise (CCLE) Land Guardianship Role Contributing to the Canterbury Earthquake Recovery Protection for future generations Expert Land management across Government Lead Agency for Property Disposals Across Government Absorbing New Crown Owned Land Portfolios Contributing to Treaty of Waitangi Settlements Property management of red zone land Freeing up other Agency Resources Partnering with iwi Efficiency in Crown Land Management Making land available for treaty settlements and other purposes Figure 1: CPM s Property Strategy 20

11. References Land Information New Zealand Statement of Intent 2011-2013, 2011. Land Information New Zealand Annual Report 2010/11, 2011. Land Information New Zealand Biosecurity Strategy 2010-2013. Land Information New Zealand Centre of Crown Land Expertise Value Proposition, 2012. Land Information New Zealand Crown Owned Land Disposals Process, 2012. Land Information New Zealand Crown Property & Investment 2011/14 Business Group Plan, 2011 Land Information New Zealand Output Plan 2011/12, 2011 Land Information New Zealand Land Information New Zealand Land Information New Zealand Land Information New Zealand Land Information New Zealand Jurisdiction Report Land Information New Zealand: Crown Land Administrators Forum, Bunbury, WA. 2011. International Federation of Surveyors: State Land Management Questionnaire, 2010. Standard to determine authority to act and record Crown land LINZS45000, 2007. Framework for Managing Risks on LINZ Administered Crown Land, 2012. Framework for the Investigation and Management of Land Related Crown Contingent Liabilities, 2011. Land Information New Zealand Risk Based Property Disposals Methodology, 2011. Cabinet Minute Cabinet Minute Land Information New Zealand Management of Crown Contaminated Site Liabilities CIE(94)M 42/8, 1994. Cabinet Guidelines for Management of Contaminated Sites on Private Land, CAB94M 14/6 (3H) 1994. Land Information New Zealand Crown Property Management Railways/Public Works Land: Rental Assessment and Easement Guidelines, 2009. 21

Land Information New Zealand Te Arawa Lakes Rotorua: Rental Valuations for Lake Structures. (2 nd Edition), 2011. Deloitte Best Sourcing of Crown Property Management Services. 2011. 22

12. Relevant Legislation Statute Primary Application to LINZ Land Act 1948 Acquisition, alienation and disposal of land under the Land Act 1948. Crown Pastoral Land Act 1998 Crown pastoral leases and licences. Biosecurity Act 1993 Regional Pest Management Strategies (RPMSs). Mining Tenures Registration Act 1962 Residence site licences. Marine and Coastal Area (Takutai Moana) Act 2011 Reclamations. New Zealand Railways Corporation Restructuring Act 1990 Acquisition, alienation and disposal of railways land. New Zealand Railways Corporation Act 1981 Acquisition, alienation and disposal of railways land. Crown Forest Assets Act 1989 Crown forest licences. Public Works Act 1981 Acquisition, alienation and disposal of land under the Public Works Act. Tourist and Health Resorts Control Act 1908 Administration of certain reserves (Arikikapakapa) vested under the Reserves Act 1977 Soil Conservation and Rivers Control Act 1941 Acquisition, alienation and disposal of land under the Soil Conservation and Rivers Control Act 1941. Crown Minerals Act 1991 Access agreements over Crown land for minerals 23

13. Appendix Non Pastoral Portfolio Statistics 22 As at 30April 2012 National Summary Number of Properties Annual Revenue ($000) Land Book Value Improvements Book Value ($000) Land Type* Hectares Crown Forest 23 Licences 48 311,929 14,597 216,752 0 Ex Railway 679 2,535 1,417 55,924 1,527 Lake Beds 43 100,237 107 0 6 Soil Conservation 1029 3,665 0 7,097 1,370 Other Crown Land, e.g. riverbeds 3170 78,251 1,731 120,387 10,206 Total 4,973 496,617 3,255 24 400,416 13,109 North Island Status Number of Properties Land Area (Hectares) Revenue Book Value Active 25 1,214 274,004 2,890,792 299,474,246 Non-active 26 1,703 4,426 0 7,766,368 South Island Status Total 2917 278,429 2,890,792 $307,240,614 Number of Properties Land Area (Hectares) Revenue Book Value Active 1,175 196,488 364,907 80,356,747 Non-active 881 21,700 0 12,818,359 Tenancies 27 Total 2056 218,188 $364,907 $93,175,106 North Island Type Number Current Revenue Access Agreements 2 21,000 Easements 32 198,309 Leases 235 1,794,383 Licences 28 67 108,061 22 Excludes properties managed on behalf of CERA. 23 24 This total excludes the non crown income from CFLs which is held in Trust for distribution to Maori Claimants. 25 Active is where there are income or outgoings on a property. 26 Inactive is where there are no income or outgoings on a property. 27 Where LINZ is landlord. 28 Includes RSLs and CFLs. 24