Late Items Agenda of Elected Members' Briefing Session

Late Items Agenda

Item 5 To Be Tabled

5.2 Future Redevelopment of Quinns Rocks Caravan Park, Mindarie

File Ref: 3320 – 12/120634

Responsible Officer: Director, City Businesses

Disclosure of Interest: Nil

Attachments: 2

Issue

To consider the future redevelopment of the Quinns Rocks Caravan Park, Mindarie.

Background

The Quinns Rocks Caravan Park (the Caravan Park) is located on a portion of the City’s freehold Lot 211 Quinns Road, Mindarie. Lot 211 has a total area of 11.042ha of which the Caravan Park comprises approximately 2.1ha. It is set on the western boundary of Lot 211 behind lightly vegetated coastal sand dunes. The northern border of the Caravan Park adjoins the Quinns Mindarie Surf Life Saving Club and Portofinos Restaurant development. The eastern and southern extents of the Caravan Park are bounded by natural coastal heath which is designated as portion of Bush Forever Site 397.

Property details:

Address:	2 Quinns Road, Mindarie WA 6030
Legal Description:	Estate in Fee Simple Lot 211 on Diagram 27023
Certificate of Title:	Volume: 481 Folio: 181A
Land Area:	11.042ha
MRS Zoning	Regional Reservation – Parks and Recreation
DPS2 Zoning	Regional Reservation – Parks and Recreation

The Caravan Park was originally constructed in the late 1960’s and is licensed to provide 60 powered caravan sites. The City leased out the caravan park in 1976 and since then, has had various management and lease arrangements in place. Attachment 1 outlines the administrative history of the Caravan Park, including the development of a Structure Plan for Lot 211 commencing in 2000, lease and operational requirements in 2002 and Site Master Planning in 2005.

Detail

The caravan park was originally constructed in the 1960’s when Quinns Rocks was relatively isolated and sparsely populated. The caravan park is licensed to provide 60 powered sites comprising a mixture of grassed and concrete pad sites and is accessed by a one-way circular road through the caravan park.

The two main structural improvements comprise two brick buildings with asbestos roofing. One contains the Manager's residence and office, the other consisting of the main ablution and laundry block. The building comprising the Manager's residence appears structurally sound however the adjoining office area has been subject to significant termite infestation rendering the office unusable. This area is currently closed to the public.

The ablution block, would be considered substandard but in an operational condition. There are signs of cracking to wet area tiling, uneven floor levels and associated water drainage issues. In addition the disabled access ramps to the ablution block and the showers and toilets are not compliant with current disabled access requirements.

Recently the City has undertaken remediation works at a cost of approximately $25,000 to mitigate known minor risks which included issues within the ablution block. Pathways constructed from old concrete slabs that did not comply with current standards, inadequate lighting and issues with internal ceilings have also been rectified.

Additionally there are limited and very basic amenities for use by the public, with substandard laundry facility and the lack of a ‘camp kitchen’. The barbecue area is not protected and comprises one single portable gas barbecue.

The ablution block and the Manager's residence are the only facilities on the site currently connected to the main sewer line. Throughout the caravan park all existing sullage diposal points and those caravan sites fitted with individual septic facilities, are connected to soak wells or septic tank systems.

Whilst some essential minor maintenance and compliance works have been undertaken by the City in recent years, there are still significant compliance issues at the Caravan Park that are reflective of the age and general deterioration of the facility.

Improvements to the Caravan Park and Surrounds:

Since 2005 the following improvements have been made to the existing Caravan Park facility:

· Redesign/relocation of entry point road to 6 metre width;

· Resurfacing of existing internal road;

· Minor upgrade of power supply and fire service;

· Provision of temporary disabled access ramp to the men's ablutions;

· Provision of entry swing gate and lighting;

· Upgrade/replacement of power outlets servicing the sites;

· Fencing to southern boundary and installation of lighting;

· Additional lighting at rear of ablution block;

· Provision of steps and lighting to access non-powered area;

· Provision of new washing machines, dryer and clothes lines;

· Removal of on-site vans owned by the City;

· Connection of residence and ablution block to sewer;

· Minor upgrade to the residence;

· Repair to damaged concrete pads;

· Repair ceilings in male ablutions;

· Replace ablution slab pathway;

· Upgrade ablution lighting;

· Provide baby bathing facilities; and

· Provision of separate kitchen facilities for campers.

In addition to the minor improvements to the Caravan Park, Lot 211 has undergone a significant transformation with the removal of the old foreshore public toilet block and the development of the foreshore reserve and Quinns Mindarie Surf Lifesaving facility as well as the more recent lease and private development of the Portofinos Café/Restaurant and public toilet facilities.

Risk and Compliance issues:

Health and Building inspections have revealed nearly 40 areas of non compliance and risk and Administration has taken the following actions, as outlined below.

Strategic Risk Assessment

The City recently commissioned the services of Local Government Insurance Services (LGIS) to prepare a strategic risk assessment of the Caravan Park. The assessment was presented to the City in August 2012. A full copy of the assessment is provided as (Attachment 2 refers). The scope of works required LGIS to assess four practical options for the Caravan Park, assess those options and provide practical solutions in the form of treatment options.

1. Undertake no additional works to the site but close caravan park (Park Closure);

2. Complete upgrade of all existing site infrastructure and facilities to meet management, operational and compliance requirements (Complete Upgrade);

3. Upgrade of existing site infrastructure and facilities to satisfy compliance requirements (Interim Upgrade); and

4. Undertake no additional works to the site but continue to operate as a caravan park (Do Nothing).

LGIS also identified three risk groups and rated them according to the 'City of Wanneroo Risk Assessment Tables (as at 4 April 2012)'. The results indicate high levels of risk for failing to provide a safe and fit for purpose caravan park, and failing to comply and maintain compliance with relevant legislation and standards with a lesser risk of failing to contain on-site hazards/materials resulting in environmental damage (refer pages 6 and 7 of the LGIS report). In the Executive Summary of the report it was identified that the Park Closure option is the suggested option based on the risk assessment, but that the City have a clear communication and relocation strategy and engage the Department of Commerce to assist, obtain a legal opinion on liability issues and adequately secure the site once closed to prevent unauthorised entry.

The report also suggests that consideration be given to expanding the Park Closure option to providing a smaller compliant caravan park located within the boundaries, at a cost less than the compliance upgrade option, to cater for highly dependent tenants therefore reducing the reputation impacts of this option.

Subsequently Administration has taken recent immediate action to, as far as is practicable, mitigate known risk including restricting casual use of the Park to a minimum. The following summary outlines three phases of remediation identified:

1 - Immediate Remediation and Mitigation of Minor risks:

Administration has, at the date of this report, resolved or remediated some 23 issues at a cost of approximately $25,000; the more significant being:

· Secured unsafe ceiling in ablution block;

· Repaired damaged concrete areas throughout; and

· Provided weatherproof lighting to the ablution block.

2 - Medium Term required risk mitigation works:

The following works are still required but involve significant time and expenses to be outlaid, noting that no approved funding is in place for these works:

City issues;

Part of the Managers' residence/office and concrete shed has been condemned by Building Approvals under a Building Order Notice to the City. This will require some demolition and the provision of a new Colour bond shed (subject to planning approval) on a concrete pad at an estimated cost of $10,000. This is an interim measure only to allow intrusion into the asbestos roofing to permit inspection in the remainder of the structure. The total structure may then need demolishing and replacement at an approximate cost of $200,000.

The Ablution block floor tiling needs to be completely replaced at an approximate cost of $30,000. Again temporary shower facilities may need to be provided at a hire cost of $1,000 per week whilst retiling is undertaken, or where partial retiling cannot be undertaken with access being maintained.

Other significant items identified requiring remediation by the City are:

· New stairs and balustrade to camp site at an approximate cost of $20,000;

· Sullage disposal points need replacing and can only be provided in the event of a major upgrade; and

· Road width is inconsistent and not the required width in many places and the internal road needs to be completely redone at an approximate cost of $105,000.

It is considered that the City would need to expend in the order of $367,000 as shown in the table below to provide a compliant Caravan Park.

Tenant/Resident issues;

These issues as listed below, need to be remedied by the occupier and the City will be required to issue appropriate notices for rectification however it should be noted that the majority of these issues would be resolved under the closure option:

· Remove/replace unsafe structures such as sheds and "lean to's";

· Resolve mobility issues with four sites as these caravans appear to be incapable of being towed or moved as per the requirements of the Caravan Parks and Camping regulations 1997;

· Resolve structural caravan issues with three sites;

· Relocate caravans to achieve legal setback (if indeed they can be moved without extensive damage);

· Resolve separation issue between two sites; and

· Ensure toilet waste is not being discharged into sullage points (soak wells).

A Risk Matrix of unresolved issues (Residual Risk) is shown below. This table shows the issues, the risk score, the approximately cost and relevant legislation, under which the compliance is required.

QRCP Risk Matrix - Residual risk
		Likelihood	Consequence	Relevant
Item	$	1 - 5	1 - 5	Law

CITY ISSUES
Demolish Office/residence and Sheds (to be confirmed post inspection)	50,000	5	3	Building Act 2011
Park home to suit	125,000			plus connection etc
Fees in connection with above	25,000
Tiling to ablutions	30,000	4	2	Caravan & Camping Grounds Act
Temporary ablutions (3 months, if required)	12,000			$1,000 per week
New stairs and balustrade to camp site	20,000	5	2	National Construction Code
Sullage disposal points (on full upgrade only)				Caravan & Camping Grounds Act
Road width (on full upgrade only)	105,000	5	2	Caravan & Camping Grounds Act
Chemical toilet disposal facility (on full upgrade only)				Caravan & Camping Grounds Act
Disability access (on full upgrade only)				National Construction Code
Pathways (on full upgrade only)				Caravan & Camping Grounds Act
Subtotal	367,000
RESIDENT ISSUE
Unsafe structures - Sheds				Building Act 2011 and Caravan & Camping Grounds Act
Mobility issues for 4 sites				Caravan & Camping Grounds Act
Structural issues with caravans on 3 sites				Caravan & Camping Grounds Act
Caravan set backs from road				Caravan & Camping Grounds Act
Caravan separation issues for two sites				Caravan & Camping Grounds Act
Inappropriate use of sullage points				Caravan & Camping Grounds Act
Subtotal	0
Total	367,000
NOTE: The majority of Residents non-compliance issues would be resolved with the issue of 180 day notices to those that do not meet the criteria to remain at the Caravan Park.

3 – Major upgrade of existing facility to contemporary standards:

Some of the remediation issues are too large and complex to undertake whilst residents are in situ and would form part of a comprehensive upgrade. The cost of this upgrade is assessed at $3.1 million for which no approved funding is identified. The main elements of the upgrade are as follows:

	$
New Office / Manager Residence	400,000
New ablutions block	500,000
Electricity upgrade	300,000
Water/Sewer upgrade	500,000
Internal Roads	105,000
Asbestos removal	100,000
Chemical toilet disposal facility	incl above
Assessment, Design, contingency	600,000

Subtotal	2,505,000

Relocation of (say) 8 residents
Self contained Park homes to suit	600,000

Minimum expected cost to upgrade	3,105,000

It is considered that there would minimal return on this investment and it would be difficult to justify under the current configuration of the Caravan Park.

Administration has reviewed the LGIS risk treatment options and, together with the identification of issues outlined by Building and Health, considers that Council has four options in relation to the future of the Caravan Park:

1. Undertake no additional works but continue to operate 'as is' (Do Nothing)

For the City to maintain the status quo at the Caravan Park is not an option and is in no way supported by Administration. As a City owned and operated asset it is subject to the same occupational safety and health umbrella as any other workplace operated by the City. To retain the Caravan Park as is, the City would be derelict in its duty of care to contracted management and patrons.

2. Residual Risk Upgrade (Interim Upgrade)

This option relates to an interim solution only and would only temporarily address some of the major compliance issues identified, including the replacement of the Manager's residence and office, a minor renovation of the ablution facilities, road and pathway issues, wastewater disposal issues and caravan mobility concerns. The Caravan Park would remain open during this scenario and temporary ablution facilities would need to be provided during the renovation process.

It has been estimated that funding in the order of $367,000 would be required to rectify these issues which can be partially funded from Caravan Park Reserve - Capital Works project PR-1010 which contains $290,000 in 2012/13. This option allows for the Caravan Park to remain open in a highly restrictive and interim manner through to June 2014, whereby there is no casual usage, 180 day notices provided to all tenants except for those identified as "eligible for ongoing support for 2 years". These remaining tenants would have a 2 year tenancy period and would be required to make their caravans compliant.

3. Major Upgrade/Renewal (Complete CoW Upgrade)

Under this option all compliance, safety and health issues that have been identified will be fully addressed. As part of the initial project management of this upgrade a full assessment, design and contingency process will be required to be undertaken. City issues related to this upgrade will incorporate a new Manager's residence/office, new ablution, full upgrade of all services, road upgrade and removal of all hazardous material.

This option requires the consideration of the relocation of those existing residents that can be identified on compassionate grounds as suffering genuine hardship as it would be impossible to retain any existing structures or sites during a major upgrade of this nature. It is proposed that they could be accommodated into on-site self contained park home/chalet type accommodation provided by the City. Funding of the chalets is estimated at $600,000 however the chalets would provide a regular annual income stream of $42,000 which would offset depreciation and borrowing costs. This option, should it be addressed would require only minimal additional expenditure on compliance issues since the Caravan Park would effectively be closed in 180 days, however is subject to the lengthy planning and approvals process with the Western Australian Planning Commission (WAPC).

In the event that the City pursues such an option, under the Caravan Parks and Camping Grounds Act 1995 and Caravan Parks and Camping Grounds Regulations 1997 a manager is required to be resident onsite at all times even with minimal occupants.

Estimated costing for the chalets/cabins is as follows:

· 8 x 1 Bedroom/1Bathroom chalet $420,000

· Delivery, installation, additional fixtures $60,000

· Connection to services, access construction $120,000

$600,000 (ex GST)

It has been estimated that provisional funding of approximately $3.1 million would be required to complete this comprehensive upgrade. This option allows for no casual usage, 180 day notices provided to all tenants except for those tenants identified as "eligible for ongoing support", whereby they would be relocated to alternative accommodation.

Post the full upgrade of the Caravan Park which would take at least 12 months, it would then be opened for business with the status quo configuration of approximately 50 sites available for casual use, with 8 chalets for residential use. Administration has no reason to believe that the development would not be supported in principle by the WAPC.

Based on current fees and charges, 50 sites (with a current annual occupancy rate of 63%) equates to $318,000 income plus the chalet lease income at $101 per week x 8 sites = $42,000 being total annual income of $360,000 (inclusive of GST if applicable).

This option is not supported by Administration predominantly as the current configuration provides a marginal result to the City even before the impact of depreciation and funding costs, which would result in a significant loss to the City as shown in the table below:

Quinns Rocks Caravan Park – Financial Performance
	2009/10	2010/11	2011/12	Post $3.1m Upgrade
Income
Leased site rental	125,596	118,457	111,621	42,000
Casual/Holiday fees	154,443	195,657	194,989	318,000
Washing machines	6,495	6,114	5,976	0
Electricity recoup	11,647	13,061	11,092	0
Total	298,181	333,289	323,678	360,000

Expenditure
Contract Expenses*	111,371	119,959	130,233	134,000
Maintenance/consumables	11,020	10,768	10,190	11,000
Utilities	40,594	67,701	52,257	55,000
Sundry exp/memberships etc	2,021	1,531	2,003	2,000
Insurance and ESL	6,062	7,507	5,876	6,000
Refuse removal	0	7,765	9,396	10,000
Internal costs/cost allocations	77,232	94,576	47,372	50,000
Depreciation	4,229	4,333	5,009	7,000
Total	252,529	314,140	262,339	275,000

Net Profit	$45,652	$19,149	$61,339	$85,000

Under the $3.1 m major upgrade the following costs need to be taken into account:
Depreciation at 2.5% Borrowing Costs @ say 6% Resulting in a Loss of			77,500
			186,000	263,500
				$178,500

*Contract Expenses include annual management fee.

4. Park Closure (Staged)

This option is supported by Administration and includes the staged closure of the Caravan Park by ceasing casual bookings and issuing 180 day notices to those residents that do not meet the criteria to remain (refer Confidential Report). It includes two options for the relocation of those residents identified under compassionate grounds that do qualify to remain (refer Confidential Report).

a) This option includes the construction of on-site self contained park home/chalet type accommodation. Funding of the chalets, estimated at $600,000 is critical, however the chalets would provide a regular annual income stream of $42,000 which would offset depreciation and borrowing costs. This option, should it be addressed, would require only minimal additional expenditure on compliance issues since the Caravan Park would effectively be closed in 180 days. Budgeted funds of $290,000 under Capital Works project PR-1010 would not be directed towards the cost of the chalets.

In addition to not requiring expensive remedial works, the City would incur only minor operating costs whilst any redevelopment of the closed portion of the site is being evaluated. It is also considered that the chalets could be incorporated into any future redevelopment proposal thereby recovering the acquisition costs. It would be intended that if the City purchased these, as the timing will not await a developer, then there is a potential for the depreciated cost to be recovered from the developer, as there may be a need for such accommodation units within a mixed accommodation low impact tourist facility.

The supply and installation of the chalets and associated services would be conducted in accordance with the City's tender processes, and would be subject to WAPC Planning Approval.

Consultation

Health and Building officers as well as Infrastructure officers have assisted in identifying and remedying some of the risk and compliance issues existing.

Administration will continue to consult with the residents' representative group over the coming months as to how those residents who may be offered agreements will be accommodated, including potential relocation within the Caravan Park and/or offsite. As stated any discussions regarding relocation offsite will include close liaison with the Department of Commerce and the Department of Housing to assist with advice and assistance for those affected.

In addition the City will need to monitor those residents that will not be offered extensions so that they are able to leave the Caravan Park in a dignified and organised manner, again with the assistance of the Department of Commerce if required.

Comment

With the continuing development of the northern coastal corridor and subsequent increase in population, it is important that community assets be maximised, particularly those with the capacity to deliver unique benefits and experiences. The City has committed significant funds in enhancing Lot 211 and this has been complemented by the construction of a café/restaurant, the upgrade of Ocean Drive and Quinns Mindarie Surf Club.

It is considered that the closure and redevelopment of the caravan park site provides a unique opportunity for the City to continue creating a multi purpose tourist precinct at Lot 211.

The Quinns Rocks Caravan Park facility is dated and would require a significant upgrade to be able to bring it up to an acceptable standard for a caravan park in today's terms.

Whilst it is recognised that caravan parks can provide a valuable service to the tourism industry, it is questionable that the City should continue to operate the Quinns Rocks Caravan Park, particularly in its current configuration. The recent LGIS risk assessment combined with assessments by the City's Building and Health Services areas confirm that the Caravan Park would require significant funds to bring it up to today's standards and it would be more appropriate to redevelop the facility, as it is located in a significant tourism precinct within the City.

It is recognised that there are sensitive and compassionate issues with any closure proposal as some of the permanent residents have called the Caravan Park home for many years. These matters will need to be addressed and every effort will be made to support those in most need of assistance by providing them with a limited short term extended tenure.

Up until 31 August 2012 occupation of the Caravan Park "residents" was split into three distinct categories, however the treatment of many of these residents changed as at 1 September 2012. The three categories of residents are detailed as follows:

1. Semi-permanents (3 sites)

There are 3 sites that have caravans/park homes that are owned by individuals however they are not occupied as their principal place of residence rather they are treated as holiday sites. There are no formalised agreements in place.

2. Long-stay Sites (2 sites)

These two sites are also occupied by individuals that own their caravans.

3. Residential Tenancy Agreement Sites (17 sites)

These 17 sites were under Residential Tenancies Act 1987 agreements for a term of 9 years and 11 months that expired on 31 August 2012.

Legal advice has confirmed that from 1 September 2012 the 17 sites currently under Residential Tenancies Act 1987 agreements that expired on 31 August 2012 together with the 3 semi-permanent sites and 2 existing long-stay sites would now all be subject to the Residential Parks (Long-stay Tenants) Act 2006 however, until new fixed term agreements are in place the residents would be on a week to week periodic tenancy.

This situation is clearly not ideal on compassionate grounds and an agreed fixed term is preferred at very least to provide those residents that meet the criteria with some degree of certainty beyond week to week occupancy, which was the arrangement prior to the 9 year 11 month lease.

As a result Administration supports the gradual and staged closure of the Quinns Rocks Caravan Park with the initial stage including the following:

1. Cease taking holiday/casual bookings – 1 December 2012 ;

2. Extension of Management Agreement – 1 October 2012 to 30 September 2013. This has already been approved under delegated authority;

3. Issue 180 day notices of termination on 1 December 2012 to occupants of all sites who do not meet the criteria seeking vacant possession on 1 June 2013; and

4. Make offers on 1 December 2012 to the occupants of those sites that do qualify for a new 2 year agreement.

The criteria and determination of those occupants who are deemed to qualify for the new 2 year agreement are outlined in the associated Confidential Report.

The following is a matrix summary of the options available to Council:

	Risk	Cost	Timing	Dates
Do Nothing	Risk remains	$35,000	N/A	N/A
Interim Upgrade	Mitigates risk	$370,000	180 day notices to all except eligible. Eligible residents to remain on current site and comply.	Notices given 1 December 2012 Leases to eligible residents due to expire 30 November 2014.
Complete Upgrade	Eliminates risks	$3,100,000	180 day notices to all except eligible. Eligible to receive 24 month extension. Relocate eligible to within the Park in new park homes.	Notices given 1 December 2012 Leases to eligible residents due to expire 30 November 2014.
Park Closure	Eliminates risks	$600,000	180 day notices to all except eligible. Eligible to receive 24 month extension. Relocate eligible to within the Park in new park homes, as one option pending planning approval.	Notices given 1 December 2012 Leases to eligible residents due to expire 30 November 2014.

Planning and Development Issues

It is essential to note that although Lot 211 is owned by the City as freehold land, it is reserved for Parks and Recreation under the Metropolitan Region Scheme (MRS), which is administered by the Western Australian Planning Commission (WAPC). Any use or development of the land will therefore need to comply with the MRS and the approval requirements thereof.

If Council decides to provide alternative transportable accommodation on the subject lot for some of the existing park residents, then it must first obtain planning approval for that development from the WAPC under the MRS, in addition to obtaining any subsequent approval/permit to clear vegetation that might need to occur as a result of that accommodation. Therefore, Council should not make any decision to acquire, install or construct alternative accommodation on the subject site, until or unless it has obtained approval for that development under the MRS.

If additional accommodation is to be provided on site in the form of transportable pre-fabricated accommodation units, then plans and specifications will need to be sourced from a specialist manufacturer of that type of accommodation (of which there are many) in order to actually prepare and lodge a development application. Having said that, Council would first need to decide whether additional accommodation is to be provided on site and if so how much accommodation and incorporating what design elements? To address these issues, Administration proposes the following sequence of steps to prepare and lodge an application for planning approval for additional on-site transportable accommodation and then pursue that application if approved by the WAPC:

1. Administration to prepare a separate report to Council (by February/March 2013) to endorse a plan for the installation of seven one bedroom, one bathroom transportable pre-fabricated accommodation units on site, to form the basis of an application for planning approval under the MRS. In preparing such plans for Council's endorsement, Administration will most likely need to explore and present to Council different design and manufacturer options for the accommodation units and their estimated costs;

2. Once the WAPC makes a decision on the above-mentioned application for planning approval, Administration will submit a further report to Council to review that decision and provide further direction to Administration. If the application is approved subject to appropriate conditions, the report to Council would also contemplate lodgement of any clearing permit/application for the works (if required) and authorising Administration to obtain quotations/call tenders for the supply and installation of the transportable accommodation units;

3. If (upon considering the quotes/tenders) Council appoints a manufacturer who's accommodation design or other details differs materially from those approved by the City, then that will necessitate either revised plans being lodged for WAPC approval, or (if the variation is more significant) lodgement of a fresh application for planning approval; and

4. Only once all of the above steps are completed and necessary approvals obtained, will the City be in a position to commission installation of the accommodation units.

The two year fixed term occupancy that is being recommended by Administration (in Recommendation 6) is expected to provide sufficient time for the above-mentioned sequence of steps to be completed. If however, this would seem to no longer be the case at any stage of the process, Administration would submit a report to Council to consider extending the two year fixed term for those affected residents to account for the delay, or to provide alternative direction to Administration, which could include the provision of accommodation for residents off site.

Concurrently with the above steps, Administration will also separately develop a framework and sequence for Council's consideration, to ultimately establish a clear Council-endorsed vision for the site.

Statutory Compliance

As the operator of the Quinns Rocks Caravan Park the City must comply with the requirements of the Caravan Parks and Camping Grounds Act 1995 and Caravan Parks and Camping Grounds Regulations 1997.

All residential tenancy arrangements for long term residents of the Caravan Park are in accordance with the Residential Parks (Long-stay Tenants) Act 2006.

Any development will require WAPC approval.

Strategic Implications

The proposal accords with the following Outcome Objective of the City’s Strategic Plan 2006 – 2021:

“4 Governance

4.6 Provide and maintain a high standard of governance and accountability”

Policy Implications

Nil

Financial Implications

The closure of the Caravan Park to casual/holiday bookings from 1 December 2012 will result in a reduction of the gross income to the City of up to $120,000 in 2012/13. Whilst there will be no direct saving under the Management Agreement in 2012/13 a saving the following year may be expected if the Caravan Park was closed to casual/holiday use.

The City has expended approximately $25,000 to date on small remediation issues and this coupled with the provision of a storage shed at $10,000 can be expensed from the Caravan Park Reserve (Capital Works project PR-1010) which contains approximately $290,000.

Depending on Council decisions, $255,000 is available for further works or consultancy. Any shortfalls in Council approved funding, will be addressed at the mid-year review for 2012/13 if required.

Voting Requirements

Simple Majority

Recommendation

That Council:-

1. APPROVES cessation of holiday/casual usage at the Quinns Rocks Caravan Park from 1 December 2012;

2. AGREES to offer a two year 'fixed term site only' long stay agreement under the terms of the Residential Parks (Long-stay Tenants) Act 2006 to those occupants to be determined by separate resolution of Council;

3. AGREES to issue 180 day notices of termination in accordance with Section 42 of the Residential Parks (Long-stay Tenants) Act 2006 to those occupants to be determined by separate resolution of Council;

4. REQUIRES Administration to submit a report to Council to consider options for and endorsement of plan(s) for the installation of seven one bedroom, one bathroom transportable pre-fabricated accommodation units on the Quinns Rocks Caravan Park site, to provide alternative accommodation for occupants affected by 2 above, in order for such plan(s) to form the basis of an application for planning approval of the same under the Metropolitan Region Scheme; and

5. REQUIRES Administration to submit a report to Council to consider a framework for establishing a clear vision for the site.

Attachments:

1 View.	Administrative Background to the Quinns Rocks Caravan Park	12/134656
2 View.	LGIS Strategic Risk Assessment	12/105189

CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 06 November, 2012 35

5.3 Consider the Possible Development and Lease of the Civic and Cultural Site Located at 41 Park Lane, Alexander Heights.

File Ref: 6305 – 12/121198

Responsible Officer: Director, City Businesses

Disclosure of Interest: Nil

Attachments: 3

Issue

To approve in principle the development and lease of the proposal by the Vietnamese Community in Australia/WA Chapter Inc. for the development and lease of the Civic and Cultural site located at Lot 5483 (41) Park Lane, Alexander Heights.

Background

In June 2010 the City was approached by Vietnamese Community in Australia/WA Chapter Inc. (Vietnamese Community) with an interest in leasing a suitable site to construct a multipurpose community and cultural centre. Initial discussions identified the City owned vacant land located at 44 Azelia Street, Alexander Heights adjoining Highview Park as a potential development site.

The Azelia Street site is zoned ‘Parks and Recreation’ under the City’s District Planning Scheme No.2 (DPS2) and comprises an area of 2000m² and is undeveloped. The land is covered with native vegetation and is separated from Highview Park by a 61 bay car park. This property was transferred to the City from the developers in March 1989 as a community purpose site.

The City subsequently received a formal request from the Vietnamese Community to lease the Site for the purpose of the construction of a community and cultural centre.

Following the development of an Expression of Interest (EOI) package an advertisement was placed in The West Australian Newspaper on 23 April 2011 with submissions closing on 13 May 2011. One expression of interest was received from the Vietnamese Community In Australia/WA Chapter Inc.

Additionally a community consultation process was carried out, with 512 information letters and questionnaires distributed to residences within a 400 metre radius of the subject site. In return the City received a total of 152 responses, of those respondents 72% (110) were not in favour of the development of the site for community purposes given its close proximity to housing, potential traffic and parking issues and the apparent good condition of the existing vegetation. Accordingly the Azelia Street site was considered by Administration as not the most appropriate site for development. An alternate freehold 'Civic and Cultural' site was identified by Administration at Lot 5483 (41) Park Lane, Alexander Heights.

Council at its Ordinary Meeting on 26 July 2011 (CS11-07/11) considered a report for the potential development of a community facility at this site.

Council resolved as follows:

“1. APPROVES the advertising of a 2 stage Expression of Interest for the potential development of a community facility on Lot 5483 (41) Park Lane, Alexander Heights, together with an appropriate community consultation process being undertaken to the residents of the 380 dwellings within 400 metres of Lot 5483;

2. NOTES that the Expression of Interest and the community consultation processes for the development of the 44 Azelia Street, Alexander Heights has been completed; and

3. NOTES that a further report will be presented to the Council on the outcomes of the Expression of Interest and community consultation processes for Lot 5483 (41) Park Lane, Alexander Heights, in order to compare both proposals.”

Detail

An expression of Interest (EOI) Stage 1 Information Package was compiled for the Park Lane site seeking general expressions of interest from suitably qualified and resourced community groups and organisations for the lease and development of this site as a community facility. Stage 1 submissions were instructed to address the following criteria:

· A brief overview of the organisation, purpose and primary function and incorporated status. (Please enclose copies of Certificate of Incorporation and Constitution)

· Briefly outline the proposed development and use of the facility. (Please include draft concept plans)

Please note that access to the site must be from Greenpark Road via the existing Alexander Heights Park car park, and not via Park Lane. This should be taken into account within the design of the proposal.

· Outline the benefits of your organisation’s proposal to the community, including potential for use by the wider community.

Public advertising of the EOI Stage 1 resulted in the City receiving formal submissions from the Vietnamese Community and “Save the Trees in Our Park” Action Group (Action Group) by the closing date of 24 February 2012.

Following the report to Council Forum on 13 March 2012 Administration forwarded further correspondence on 17 April 2012 to both the Vietnamese Community and the Action Group seeking submissions under Stage 2 EOI requesting detailed information.

The Stage 2 letter and documentation forwarded to the Vietnamese Community sought detailed information addressing the ‘selection criteria’ included in an enclosed information document. The selection criteria were as follows:

	Criteria
	Essential
1	Proposed use of the built facility, and adjacent Alexander Heights Park and carpark.
2	Proven financial capacity to undertake the project and ability to service the Agreement for Lease and Lease requirements ie. how will the construction phase and the ongoing lease service costs be financed?
3	Final concept plans (pre development application) for the proposed development of the site in accordance with the District Planning Scheme standards for non-rural and non-residential development showing at least the following: · Site Plan (to scale) detailing footprint of building, setbacks, landscaping, onsite parking, access via the existing Alexander Heights Park carpark only, retention of trees etc. · Building footprint showing internal layout/design. · Elevations Plans (all sides).
4	Agreement to essential terms of the Agreement to Lease and Lease arrangement (all subject to Council approval). Such terms to be incorporated into formal documentation upon approval by Council to the essential terms.
	Preferred
1	Proven experience in similar types of development proposals

Arising out of the Stage 2 submission received from the Vietnamese Community, Administration has negotiated the following potential lease terms subject to Council approval.

Agreement for Lease
Conditions Precedent	The Agreement for Lease (AFL) will commence following approval: i) of Council to the AFL and Lease; ii) of Western Australian Planning Commission consent to the lease term; iii) of Council to the development application and building licence; and iv) payment to the City of the building guarantee by the due date.
Development by Lessee	The development is to be undertaken in accordance with development approval and building licence issued by the City of Wanneroo and shall be completed within 8 months from the date of development approval.
Building Guarantee	As an incentive to have the development completed within a reasonable timeframe a security bond is to be paid to the City in the amount of $50,000 (refundable upon practical completion of the development by the due date, or such other date as agreed between the parties).
Practical Completion	Practical completion of the development will result in the commencement of the Lease agreement
Lease (Land Lease)
Land	Being Lot 5483 on Diagram 56331 and being the whole of the land comprised in Certificate of Title Volume 1549 Folio 728 owned in freehold by the City of Wanneroo.
Premises	Being that portion of the land shaded Yellow on the attached plan. NOTE: Portion of Lot 5483 hatched Red on the plan is not included in the leased area. (Attachment 1)
Term (Proposed)	Twenty years with an option to renew for a further term of ten years. This is necessary to enable the proponent to amortise their investment. **
Use of the Premises	Community Centre
Rent	For a not for profit organisation under the City’s Tenancy Policy an annual rental of $1 is proposed.
Commencement Date	Following practical completion of the development (refer Agreement for Lease)
Ownership of improvements to the land	Ownership of all improvements to the land constructed by the Lessee will remain with the Lessee until the expiration or sooner determination of the Lease. Following this period the ownership of all improvements revert to the Lessor (CoW)
Rent Review	N/A
Rates and taxes	All rates (including Council rates) and taxes are payable by the Lessee.
Outgoings/services	All outgoings associated with the Premises, including electricity, water and gas, telephone etc are payable by the Lessee.
Maintenance and cleaning	The Lessee will be responsible for all maintenance and cleaning costs, including any items of a structural nature.
Insurance	The Lessee shall take out and keep in force all appropriate insurances for workers compensation, public liability, all buildings and improvements, Lessee’s fixtures and fittings, plate glass and the like.
Lease costs	The Lessee is liable for the reasonable costs of the City for the preparation of all Agreement for Lease and Lease documentation.

** NOTE: Within the EOI Stage 2 documentation Administration outlined the lease term to be 5 years with a 5 year option. The Vietnamese Community's submission requested a 25 year lease term with a 25 year option. Following further negotiations a lease term of 20 years with a 10 year option was negotiated in principle.

The Agreement for Lease would address the construction phase of the proposed project which is being financed by the Vietnamese Community, with the lease commencing at practical completion of the facility. It is proposed that the lease be a 'land only' lease under the following essential terms, subject to Council and Western Australian Planning Commission (WAPC) approval.

Under the City’s Tenancy Policy adopted in April 2004, leases approved to Non Commercial (Not for Profit) organisations, the lease fee is one dollar per annum (peppercorn), in recognition of the benefits provided to the community by those organisations. In addition all rates and taxes are to be paid by the Lessee unless waived by Council. Since the adoption of the City's Tenancy Policy, Council has approved 34 Non Commercial (Not for Profit) leases. Of those, 30 were granted annual rent of one dollar with four (4) having higher fees due to the existence of a head lease and sub-leased commercial activity. It should be noted that some incorporated bodies are funded, and hence treated as 'Government' under the policy.

As the initial Stage 1 submission from the Action Group was considered ‘non-conforming’ as a formal Expression of Interest for development, the Stage 2 letter and documentation sent to the Action Group provided the opportunity to “… submit any additional information in support of your submission against any development of the site…” The letter also provided the Action Group with the details sought from the Vietnamese Community.

In relation to the invitations forwarded to both the Action Group and the Vietnamese Community as part of the EOI Stage 2, the Action Group reiterated its strong stance against any development of the Park Lane site. The Vietnamese Community submission was received for the development of the Park Lane site through the second stage of the EOI. Copies of both submissions have been available in the Elected Members Reading Room since this point in time.

Following the review of the submissions presented to the City, it was deemed that further investigation was required to ascertain community support of any development on the site, particularly in light of the submission against development by the Action Group. Therefore it was clarified that the consultation process for the Park Lane site should not take into account those submissions presented to the City as part of the EOI Stage 2, rather it was to gauge community support for any development on the site. Subsequently the Community Consultation and Engagement Strategy was designed and endorsed as per the scope. The following is a summary of the consultation strategy undertaken:

1. Letter to Alexander Heights Residents:

An information letter and questionnaire was sent to all households within the suburb of Alexander Heights and included an invitation to attend the Public Information Evening to be held at the Alexander Heights Community Centre.

2. Questionnaire:

The questionnaire provided a basic introduction of the site and asked for responses to up to three questions plus an additional comments section.

3. Information Evening:

A Public Information Session was held on 30 July 2012 at the Alexander Heights Community Centre. It was estimated that there was in excess of 150 members of the public at the Information Session.

4. City’s Website:

To ensure the consultation process engaged the wider community an electronic version of the questionnaire was posted on the City’s website for submission by the closing date. A list of frequently asked questions (FAQ’s) was posted on the City’s website following the closure of submissions for questionnaires.

5. Wanneroo Link:

To ensure that the wider community had the opportunity to attend the Public Information Session an advertisement was placed in the Wanneroo link.

Within the Community Consultation Strategy for the Park Lane site copies of the relevant covering letter and questionnaire were distributed to all 3327 property owners and occupiers within the suburb of Alexander Heights. By the closing date of 13 August 2012 the City had received 649 responses.

A report (CB03-09/12) outlining details of the community consultation strategy was presented to Council at its meeting on 18 September 2012.

Council resolved as follows:

"That Council:-

1. NOTES that the results of the community consultation process for both 44 Azelia Street site and 41 Park Lane site in Alexander Heights have been considered;

2. NOTES that the community consultation process established that:

a) 110 (72%) of 152 responses were NOT supportive of the development of a community facility on lot 369 (44) Azelia Street, Alexander Heights;

b) 382 (59%) of 649 respondents were NOT supportive of any development of a community facility on lot 5483 (41) Park Lane, Alexander Heights;

c) Of the estimated 150 members of the public present at the Public Information Session, all attendees indicated unanimously they were not supportive of any development on lot 5483 (41) Park Lane;

d) A 1544 signature petition was presented by the Save The Trees In Our Park Action Group against any development of Lot 5483, (41) Park Lane, Alexander Heights;

3. AGREES that, notwithstanding the results of the community consultation process, to retain the use of lot 5483 (41) Park Lane, Alexander Heights as a Civic and Cultural community purpose site; and

4. NOTES the community views expressed through this consultation process and in response to these views, RELEASES full details of the submission received to develop the site."

Consultation

Currently copies of an information letter (Attachment 2 refers) and building design concept plans (Attachment 3 refers), which were provided by the Vietnamese Community for the potential development of the Civic and Cultural site have been placed on the City's website and copies made available at various Council outlets for public viewing from 3 October 2012. Reference to this information was published in local print media.

The Vietnamese Community information letter outlines its history and integration into Australian society. Furthermore it refers to public information sessions that it has now organised to assist in addressing the concerns of the public and local residents and also to communicate its aims, objectives and benefits as a community group for the local community. These sessions were independently funded and coordinated by the Vietnamese Community and are presented at no cost to the City. The first of the public information sessions organised by the Vietnamese Community was held on Thursday 25 October 2012 at the Koondoola Hall, with a second session conducted at the Park Lane site on Sunday 28 October 2012.

The City has received two petitions in respect to this issue. The first was presented to Council at its meeting on 6 March 2012 by Cr Cvitan on behalf of the "Save the Trees in Our Park" Action Group opposing the proposal and the second from the Vietnamese Community in support, tabled at the 18 September 2012 Council meeting by Cr Mackenzie. A summary of the petitions signatories is tabled below:

SIGNATURE DETAIL	ACTION GROUP PETITION	VIETNAMESE COMMUNITY PETITION
Within Alexander Heights (AH)	1167	293
Within C.O.W (excludes AH)	330	1563
Outside C.O.W.	24	2783
Invalid (unsigned/invalid address/multiple signings)	23	1165
TOTAL	1544	5804

Comment

The Park Lane site is considered by Administration to be suitable for the development of an appropriate civic and cultural use, based on its zoning under the City's District Planning Scheme No.2 and its general location.

Whilst a formal proposal had been received for the development of the Park Lane site through the second stage of the EOI from the Vietnamese Community it was considered important that during the community consultation process that the residents of Alexander Heights be given the opportunity to express their views on whether the site should be developed at all without concentrating too much on one proposal.

However the submission provided by the Vietnamese Community was the only conforming formal submission received by the City that satisfactorily addressed the criteria as outlined in the EOI Stage 2. The Vietnamese Community has expressed their desire to encourage and welcome community participation and the benefits of community involvement, indicating that the facility will provide a communal hall with stage, meeting and conference rooms, arts and craft room, and the capacity for indoor sports such as basketball, netball and badminton. Other intended community activities include professional and technical learning, dance and drama, cooking, music, language, tai chi, meditation, yoga and self-defence classes.

The provision of a facility on the community purposes site will provide an active hub within the overall public open space of Alexander Heights Park and further activate the other amenities including the play areas and sporting facilities. Through this activation the area will be provided with passive surveillance as a result of the increased number of users which will assist in deterring anti-social behaviour. It has been the City's experience that if a space is activated and well used the levels of antisocial behaviour are greatly reduced.

The community would benefit from the provision of an additional facility and the City would retain ownership of the land and ultimately receive the benefit of an asset that has been constructed by others, at the end of the lease. Although the City of Wanneroo has provided essential community facilities for this locality at the Alexander Heights Community Centre there is still unmet need within the community for a range of other services and activities. In other similar situations the City has conducted Expressions of Interest for community based and not for profit organisations to develop Cultural and Community Purposes sites to meet these other community aspirations. These include educational, religious and sporting facilities that foster the development of local, social networks and provide additional spaces for community generated programs.

Within the EOI Stage 2 documentation Administration outlined the lease term in accordance with the City's Tenancy Policy as 5 years with a 5 year option. A lease term of 20 years with a 10 year option has been negotiated in principle. These conditions are subject to Council and WAPC approval. Furthermore the annual lease fee of one dollar (peppercorn) and the requirement for the Lessee to pay all rates and taxes is also in accordance with the policy for 'Not for Profit' organisations. However Council may wish to vary this annual lease fee.

Given Council resolved in September 2012 that the site be retained as a civic and cultural community purpose site, this proposal and the potential community benefits realised from the facility, it is considered by Administration that the proposal by the Vietnamese Community is an appropriate use of the land and recommends that Council agree to the proposal subject to public advertising in accordance with section 3.58 (3) of the Local Government Act 1995, WAPC approval of the lease term and compliance to all relevant development and building approval processes.

Administration advises that it was not considered appropriate to consider divestment of the freehold in this case as it was not a site listed for disposal as surplus to requirements in the Community Facility Sites Review (March 2006); as was the case with the Fowey Loop site.

A further report will be presented to Council in early 2013 to consider any responses received as a result of the placing of the public notice.

Statutory Compliance

Should any proposed development of this site be approved then any subsequent leasing arrangement will need to comply with the requirements of Section 3.58 of the Local Government Act 1995 in relation to property disposition.

Section 3.58(3) of the Local Government Act 1995 states that a local government can dispose of property (including leasing) other than by public tender or auction if, before agreeing to dispose of the property:-

“(a) it gives a local public notice of the proposed disposition –

(i) describing the property concerned;

(ii) giving details of the proposed disposition’ and

(iii) inviting submissions to be made to the local government before a date to be specified in the notice, being a date not less than 2 weeks after the notice is first given.”

Section 3.58(4) provides what details are required under (a) (ii) above:-

“(a) the names of all other parties concerned;

(b) the consideration to be received by the local government for the disposition; and

(c) the market value of the disposition as ascertained by a valuation carried out not more than 6 months before the proposed disposition.”

It is intended that a public notice period of four (4) weeks will be implemented in this instance.

Under the Planning and Development Act 2005 any lease term in excess of 20 years requires the approval of the WAPC.

It is important to note that any Council decision to grant or not grant a lease to the Vietnamese Community over Lot 5483, will be altogether independent of and will not fetter the City's decision under District Planning Scheme No. 2 (DPS 2) in respect of any future application for planning approval submitted by the Vietnamese Community for development on that lot. All applications for planning approval in the City of Wanneroo are assessed and determined on their individual merits, having regard to the specific 'matters to be considered' under DPS 2 and irrespective of any commercial lease arrangement entered into between a landowner and lessee.

Therefore, any decision by Council to grant a lease to the Vietnamese Community will not presuppose or guarantee a planning approval for any future application for development of that site, either in the form recently proposed by the Vietnamese Community or necessarily at all.

Strategic Implications

The proposal accords with the following Outcome Objective of the City’s Strategic Plan 2006 – 2021:

“2 Social

2.2 Improve the City’s identity and community well-being through arts, culture, leisure and recreation”

Policy Implications

Any potential future lease will be in accordance with the provisions of Council's adopted Tenancy Policy.

Financial Implications

Costs associated with local advertising of public notice estimated at $300.

Voting Requirements

Simple Majority

Recommendation

That Council:-

1. NOTES and SUPPORTS the Agreement for Lease and Lease to the Vietnamese Community in Australia/WA Chapter Inc. for portion of Lot 5483 (41) Park Lane, Alexander Heights in accordance with the essential terms and conditions outlined below, subject to compliance with all relevant planning and building requirements and Western Australian Planning Commission approval of the lease term:

Agreement for Lease
Conditions Precedent	The Agreement for Lease (AFL) will commence following approval: v) of Council to the AFL and Lease; vi) of Western Australian Planning Commission consent to the lease term; vii) of Council to the development application and building licence; and viii) payment to the City of the building guarantee by the due date.
Development by Lessee	The development is to be undertaken in accordance with development approval and building licence issued by the City of Wanneroo and shall be completed within 8 months from the date of development approval.
Building Guarantee	As an incentive to have the development completed within a reasonable timeframe a security bond is to be paid to the City in the amount of $50,000 (refundable upon practical completion of the development by the due date, or such other date as agreed between the parties).
Practical Completion	Practical completion of the development will result in the commencement of the Lease agreement
Lease (Land Lease)
Land	Being Lot 5483 on Diagram 56331 and being the whole of the land comprised in Certificate of Title Volume 1549 Folio 728 owned in freehold by the City of Wanneroo.
Premises	Being that portion of the land shaded Yellow on the attached plan. NOTE: Portion of Lot 5483 hatched Red on the plan is not included in the leased area. (Attachment 1)
Term (Proposed)	Twenty years with an option to renew for a further term of ten years. This is necessary to enable the proponent to amortise their investment.
Use of the Premises	Community Centre
Rent	For a not for profit organisation under the City’s Tenancy Policy an annual rental of $1 is proposed.
Commencement Date	Following practical completion of the development (refer Agreement for Lease)
Ownership of improvements to the land	Ownership of all improvements to the land constructed by the Lessee will remain with the Lessee until the expiration or sooner determination of the Lease. Following this period the ownership of all improvements revert to the Lessor (CoW)
Rent Review	N/A
Rates and taxes	All rates (including Council rates) and taxes are payable by the Lessee.
Outgoings/services	All outgoings associated with the Premises, including electricity, water and gas, telephone etc are payable by the Lessee.
Maintenance and cleaning	The Lessee will be responsible for all maintenance and cleaning costs, including any items of a structural nature.
Insurance	The Lessee shall take out and keep in force all appropriate insurances for workers compensation, public liability, all buildings and improvements, Lessee’s fixtures and fittings, plate glass and the like.
Lease costs	The Lessee is liable for the reasonable costs of the City for the preparation of all Agreement for Lease and Lease documentation.

2. AUTHORISES the Chief Executive Officer to publish a local public notice of Council's intention to enter into the Agreement for Lease and Lease in 1 above, in accordance with the requirements of Section 3.58(3) of the Local Government Act 1995; and

3. NOTES that a further report will be presented to Council following the conclusion of the four week public notice period in 2 above to consider any submissions received.

Attachments:

1 View.	Map of Park Lane Site	12/131827
2 View.	Vietnamese Community Information Letter	12/121220
3 View.	Vietnamese Community Concept Development Plans	12/115423

CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 06 November, 2012 51

5.4 Financial Activity Statement for the Period Ended 30 September 2012

File Ref: 5509 – 12/134600

Responsible Officer: Director, Corporate Strategy and Performance

Disclosure of Interest: Nil

Attachments: 4

Issue

To consider the financial activity statement for the period ended 30 September 2012.

Background

Regulation 34(1) of the Local Government (Financial Management) Regulations 1996 requires a local government to prepare each month a statement of financial activity, presented according to nature and type, by program, or by business unit. Administration has opted to present the statement of financial activity by nature and type and in a similar format to that presented in the 2012/2013 Annual Budget. This format separates Revenue and Expenses from Other Revenue and Expenses and provides improved disclosure of the City’s underlying Operating Result.

The Financial Activity Statement is in the form of an Income Statement, which compares year to date actual income and expenses with the year to date budget, shows variances and the adopted and revised budgets (if any). Revised budget figures are inclusive of endorsed amendments from Council (including the Mid Year Budget Review). It is accompanied by a Balance Sheet together with information relating to Capital Projects, an Investment Portfolio Summary, Statement of Net Current Assets and Rate Setting Statement.

In addition to the above, Regulation 34(5) of the Local Government (Financial Management) Regulations 1996 requires a local government to adopt a percentage or value, calculated in accordance with Australian Accounting Standards, to be used in statements of financial activity for reporting material variances. For the 2012/2013 financial year Council has adopted 10% for the reporting of variances, which is in line with previous years.

Detail

The Financial Activity Statement and September year to date financial performances of the City are detailed in Attachments 1, 2, 3 and 4. Our Auditors, Grant Thornton Audit Pty Ltd (Grant Thornton) have recently completed the City's 2011/2012 audit. A separate report will be tabled to Council for approval at its 13 November meeting. Upon the approval of the Council to adopt the audited financial statements for the year ended 30 June 2012, the final figures for the 2011/2012 year end and appropriate adjustments, if any, will be reflected in the brought forward Surplus/(Deficit) of the Rate Setting Statement and Balance Sheet.

Consultation

Nil

Comment

In accordance with the requirement of Regulation 34(5) of the Local Government (Financial Management) Regulations 1996, the commentaries on 10% variances to revised budgets in the Financial Activity Statement for the period ended 30 September 2012 are provided below:

Income Statement (Refer to Attachment 1)

Net Result $ million

Year to Date Actual 84.119

Year to Date Revised Budget 76.506

Year to Date Variance 7.613 (+10%)

Full Year Adopted Budget 42.043

Full Year Revised Budget 43.283

The following information is provided on key aspects of the year to date financial results:

Revenues $ million

Year to Date Actual 109.281

Year to Date Revised Budget 107.388

Year to Date Variance 1.894 (+2%)

Full Year Adopted Budget 138.286

Full Year Revised Budget 138.351

Fees and Charges

As at 30 September a favourable variance of +11% (+$0.600 million) is recorded against Fees and Charges income. This result is due mainly from the favourable variances achieved from Application Licence Fees and Parking Fines, which exceeded year to date budgets by +$0.468 million and +$0.116 million respectively.

Interest Earnings

For the financial year to date ending September, Council’s investment portfolio return has exceeded the bank bill index benchmark by 1.25% pa (5.32% pa vs. 3.5 % pa). September to date interest earnings amounts to $2.751 million reflecting a favourable variance of $0.783 million (+40%) compared to year-to-date budget, primarily as a result of the bi-annual coupon payments from bonds portfolio, hence this variance is expected to be reduced over the coming months. The City intends to continue with a “cautiously optimistic” prudent investment strategy throughout the year and has budgeted for a total of $6.675 million to be achieved by year end considering the current economic climate.

Expenses $ million

Year to Date Actual 29.475

Year to Date Revised Budget 34.692

Year to Date Variance 5.217 (+15%)

Full Year Adopted Budget 140.595

Full Year Revised Budget 140.595

Employee Costs

Under Employee costs a favourable year to date variance of +13% (+$1.768 million) has been reflected, into the third month of the financial year. Whilst the main contributors towards this are from the Salaries and Wages accounts, due to the recruitment for vacant and newly created positions approved for the new-year, there are also favourable variances to year to date budget against Conference and Training expenses, as much of the activities within these areas are not scheduled to progress until later in the financial year.

Materials and Contracts

Under Materials and Contracts a favourable variance to year to date budget of 23% is represented (+$2.327 million). This is a result of slower than expected recording of costs to some accounts within this category for the first quarter of the financial year (major favourable variances being under Contract Expenses +$1.477 million and Refuse Removal Costs +$0.825 million). It is anticipated that figures reported for the coming months will be more reflective of the budget provision.

Utility Charges

The year to date expenses under this category are lower than budget mainly due to timing differences in processing the bills, particularly for Street Lighting which is the largest component. The year to date figure reflects $0.948 million which is $0.956 million lower than year to date budget. There is a timing difference in expenditure to budget and it is anticipated this will align more closely during the balance of the year.

Insurance

Whilst the City has recorded some insurance premium payments to September, expenditures still remain under year to date budget by $0.165 million (+15%). At this stage, it is anticipated that the full year budget will be met with the balance of budgets being for additional annual premium expenses and an allowance for excesses.

Other Revenue and Expenses $ million

(Excluding Contributions of Physical Assets)

Revenue in excess of expenses:

Year to Date Actual 4.313

Year to Date Revised Budget 3.810

Year to Date Variance 0.503 (+13%)

Full Year Adopted Budget 14.352

Full Year Revised Budget 15.527

Town Planning Scheme (TPS) Revenue

TPS Revenue as at September month end reflects a +34% favourable variance (+$1.040 million) to year to date budget. These incomes relate to contributions from developers owners towards future works to be undertaken within a Scheme arrangement. The annual budget figure identified is an estimate of what is likely, however may vary substantially depending on progress within certain Scheme areas. Monies received will not have an effect on the City’s operations as they are separately accounted for.

TPS Expenses

With TPS Expenses $1.187 million in costs have been recorded year to date. Against year to date budget this presents a favourable variance of 49%. These expenditures relate to specific costs and land purchases within the particular Scheme locations, which can only be allocated for particular Scheme purposes and where unspent, will be carried forward to future years.

Profit and Loss on Asset Disposals

No profits or losses on asset sales have been recorded to the September month end, resulting in variances to year to date budgets of -$0.742 million and +$0.125 million respectively. Over the remainder of the financial year sales of plant and fleet items will progressively take place.

Contributions of Physical Assets $ million

Year to Date Actual 0.000

Year to Date Budget 0.000

Year to Date Variance 0.000 (0%)

Full Year Adopted Budget 30.000

Full Year Revised Budget 30.000

Each year Developers hand over physical assets (such as parklands) to the City, for its ongoing management and control. These assets can be of considerable value and will be calculated and booked to the accounts during the preparation of end of year Financial Statements. It should be noted that variations on the amounts of contributions of physical assets comparing to budget has no direct impact to the City’s current financial year financial results. No values are budgeted to or have been booked to account to September.

Balance Sheet (Refer to Attachment 2)

Capital Works Program

The current status of the Capital Works Program as of 30 September 2012 is summarised below, by Program Category: -

Capital Works Detail By Program

Program Category Description	Annual Revised Budget $ million	Year to date Actual $ million	Commitments $ million
Community	4.523	0.096	0.420
Corporate	8.966	1.047	0.497
Drainage	0.807	0.014	0.001
Investment	5.977	0.026	0.095
Recreation and Sport	17.645	0.738	1.149
Transport	30.954	1.883	1.605
Waste Management	7.745	0.066	0.125
Total	76.617	3.870	3.892

The table above notes a total Annual Revised Budget for the Capital Works Program as $76.617 million, which includes carry forwards from 2011/2012 as well as new projects and amendments approved by Council in the new financial year. As at the end of September $3.870 million has been spent against capital works, in line with expectations for the third month of the financial year. In addition to the actual expenditure, $3.892 million is recognised as committed. (Note: Commitments are life to date and might also relate to future financial periods).

To further expand on the Capital Works Program information above, key projects are selected to be reported on, on a regular basis, which are listed in the following table:

Capital Works Details For Projects Over $2.000 Million

Project Description	Annual Revised Budget $ million	Year to Date Actual $ million	Commitments $ million	Comments
Develop Industrial Estate - Neerabup	2.618	0.001	0.080	Environmental investigation underway.
Vehicle Replacement - Domestic Waste	5.425	0.000	0.000	The replacement of Bulk/WRC skid steers is in progress.
Flynn Drive Neerabup	6.565	0.037	0.179	Design nearing completion.
Wangara Industrial Area - Lot 15	2.090	0.015	0.015	Environmental consultancy continuing.
Replace Light Vehicles	3.133	0.126	0.245	Replacement program underway. Full expenditure expected.
Yanchep District Playing Fields	2.549	0.000	0.000	Master plan implementation subject to finalisation of Deed of Agreement between the City and the Yanchep Beach Joint Venture.
Lenore Road Wanneroo	6.683	0.022	0.160	Currently being advertised for tender.
Upgrade Kingsway RSC - Stage 6	3.005	0.000	0.000	Design & documentation being finalised.
Ocean Reef Road Wangara	2.291	0.200	0.100	Under defects liability period.

Investment Portfolio Summary (Refer to Attachment 3)

In accordance with the amendments to Local Government (Financial Management) Regulations 1996 gazetted on the 20 April 2012, the City will only invest in the following highly secured investments effective from 1 July 2012:

1. Deposits with authorised deposit taking institutions and the Western Australian Treasury Corporation for a term not exceeding 12 months;

2. Bonds that are guaranteed by the Commonwealth Government or a State or Territory for a term not exceeding three years; and

3. Australian currency.

As at 30 September 2012, the City holds an investment portfolio (cash and cash equivalents) of $233.584 million. Interest Earnings were budgeted at 4.00% yield. For the financial year to date ending September, Council’s investment portfolio return has exceeded the bank bill index benchmark by 1.25% pa (5.13% pa vs. 3.88% pa). Further explanation of the current economic climate, market conditions and City’s portfolio analysis is detailed in Attachment 3.

Rate Setting Statement (Refer to Attachment 4)

The Rate Setting Statement outlined in Attachment 4 represents a composite view of the finances of the City, identifying the movement in the surplus/(deficit), primarily based on the operations and capital works revenue and expenditure, and resulting rating income required.

Overall Comment

The Operating Result for the City to September month end presents an overall positive variance of +10% (+$7.111 million) to year to date budget. Operating income presented a slight favourable variance to year to date budget of +2%, which is mainly contributed by higher than budget income from Interest Earnings and Fees & Charges. Expenditures from operations also present a favourable variance to year to date budget, of +15% (+$5.217 million), with the major influence being positive variances generated from Employee Costs and Materials & Contracts of $1.768 million and $2.327 respectively. Activities in the capital program have remained slow to the end of the first quarter, however progress comments for major projects (above) are encouraging.

Our Auditors, Grant Thornton Audit Pty Ltd (Grant Thornton) have recently completed the City's 2011/2012 audit. A separate report will be tabled to Council for approval at its' 13 November meeting. Upon the approval of the Council to adopt the audited financial statements for the year ended 30 June 2012, the final figures for the 2011/2012 year end and appropriate adjustments, if any, will be reflected in the brought forward Surplus/(Deficit) of the Rate Setting Statement and Balance Sheet.

Statutory Compliance

This monthly financial report complies with Section 6.4 of the Local Government Act 1995 and Regulations 33A and 34 of the Local Government (Financial Management) Regulations 1996.

Strategic Implications

The proposal accords with the following Outcome Objective of the City’s Strategic Plan 2006 – 2021:

“4 Governance

4.6 Provide and maintain a high standard of governance and accountability”

Policy Implications

Nil

Financial Implications

As outlined above and detailed in Attachments 1, 2, 3 and 4.

Voting Requirements

Simple Majority

Recommendation

That Council RECEIVES the Financial Activity Statements and commentaries on variances to Year to Date Revised Budget for the period ended 30 September 2012, consisting of:

· Annual Original and Revised Budgets,

· September 2012 Year to Date Revised Budget,

· September 2012 Year to Date Income and Expenditures,

· September 2012 Year to Date Material Variance Notes, and

· September 2012 Year to Date Net Current Assets.

Attachments:

1 View.	Attachment 1: Income Statement September 2012	12/129377	Minuted
2 View.	Attachment 2: Balance Sheet September 2012	12/129380	Minuted
3 View.	Attachment 3: Investment Portfolio September 2012	12/129382	Minuted
4 View.	Attachment 4: Rate Setting Statement September 2012	12/129383	Minuted