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Late Items

 

Council  Agenda

 

 

 

8 April 2015

 

 

 

 

 

ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

 

 

 


CITY OF BUSSELTON

Late Items FOR THE Council  MEETING TO BE HELD ON 8 April 2015

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

13..... Community and Commercial Services Report. 3

13.1        GLC ALLIED HEALTH PROFESSIONAL SUITES. 3

13.2        GLC CAFE COMMERCIAL LEASE. 8

 


Council                                                                                      3                                                                           8 April 2015

13.             Community and Commercial Services Report

13.1           GLC ALLIED HEALTH PROFESSIONAL SUITES

SUBJECT INDEX:

GLC Allied Health Professional Suites

STRATEGIC OBJECTIVE:

A community that provides opportunities for our youth to learn, grow, work and become healthy adults.

BUSINESS UNIT:

Community Services

ACTIVITY UNIT:

Community Services

REPORTING OFFICER:

Manager, Community Services - Maxine Palmer

AUTHORISING OFFICER:

Director, Community and Commercial Services - Naomi Searle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Nil

  

PRÉCIS

 

Expressions of Interest (EoI) were sought in relation to commercial lease opportunities at the Geographe Leisure Centre (GLC) (part of Reserve 29933) for the use of Allied Health Professional Suites.

In accordance with Section 3.58 of the Local Government Act 1995, advertising has been undertaken informing the public of the City’s consideration to enter into a lease agreement with Chelsea O'Grady to operate Dermal Remedy as a skin care treatment business over a portion of the reserve; suite number three (3).

 

The purpose of this report is to inform Council of the outcome of the advertising and make recommendations as to the terms and conditions of the lease agreement.

 

 

BACKGROUND

 

The GLC has recently undergone a significant expansion and upgrade program, incorporating a new gymnasium, crèche, pool deck showers and change cubicles, universal access facilities, customer service area, offices, meeting room, cycle room, and four (4) Allied Health/ Professional Suites. 

 

The GLC is keen to attract allied health practitioners to provide mental and physical health services that complement existing services offered at the GLC.  Each suite is fully independent and purpose built for Allied Health businesses with exposure to GLC member traffic.  Each suite has a hand basin, telephone and data point, air-conditioning, windows providing natural light and external door access allowing them to function separately from the GLC’s operations.  Suites vary in configuration and size ranging from 12 m2 to 39 m2.  In addition to providing support services for GLC customers, the suites provide an additional revenue source that will assist in reducing the GLC’s net operating deficit.

 

From October 2014 to January 2015 the City advertised Expressions of Interest (EoI) for private sector interest in leasing the professional suites for allied health related purposes.  Feedback from prospective users revealed that a variety of leasing arrangements are of interest, with many preferring shorter periods than a five (5) year lease, such as daily or occasional hire, and as a result no formal submissions were received.  New Fees and Charges for Community and Commercial daily hire were subsequently adopted by Council on 25 February 2015(C1502/040).  Lease arrangements for sole occupancy of suites however continued to be progressed.

 

On 11 March 2015, Councillors were informed of the outcomes of a successful negotiation with Dermal Remedy, a skin care specialist, who proposes to lease Suite three (3). In accordance with Section 3.58 of the Local Government Act 1995, advertising has been undertaken informing the public of the City’s consideration to enter into a lease agreement over a portion of the reserve; suite number three (3).

 

This report provides the results of the public notice and seeks Council endorsement of the terms of a proposed commercial lease arrangement with Chelsea O'Grady  to operate Dermal Remedy.

 

STATUTORY ENVIRONMENT

 

The leasing of allied health suite three (3) is regarded under Section 3.58 of the Act as a disposal of property. In accordance with Section 3.58 (3), the City can dispose of property if, before agreeing to dispose of the property:

 

(a)  it gives 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 City before a date to be specified in the notice, being a date not less than 2 weeks after the notice is first given;

and;

 

(b)  it considers any submissions made to it before the date specified in the notice and, if its decision is made by the Council or a committee, the decision and the reasons for it are recorded in the minutes of the meeting at which the decision was made.

 

Under Section 3.58 (4), the details of the proposed disposition that are required by subsection (3)(a)(ii) include:

 

(a) the names of all other parties concerned;

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

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

 

The details of the proposed disposition were advertised in accordance with the Local Government Act 1995 Local Public Notice:

 

1.    Published in a newspaper circulating generally throughout the district (Busselton and Dunsborough Times  20 March and 27 March 2015) with submissions closing on the 3 April 2015;

2.    Exhibited to the public on a notice board at the local government’s offices and Geographe Leisure Centre; and

3.    Exhibited to the public on a notice board at the local library.

 

No submissions were received.

 

RELEVANT PLANS AND POLICIES

 

The leasing of the allied health suites is in line with the GLC Master Plan and Council endorsed (C1404/108) GLC Business Plan 2014/15-2018/19.

 

FINANCIAL IMPLICATIONS

 

As per section 3.58 (4) of the Local Government Act, an independent valuation of the property was prepared and received on 23 December 2014, which reported a rental value of between $12,300 and $14,300 exclusive of  GST and outgoings.

 

The proponent will provide their own fit out of Suite three (3) at a cost of circa $5,000.  Based on this Officers have negotiated a rent free period of two (2) months, and full rent of $1,300 per month (inclusive of GST and outgoings) commencing after the rent free period.  After this time annual rental payments would total $15,600 (inclusive of GST and outgoings), to be indexed annually to CPI.  The rent free period will allow sufficient time for the tenant to complete their fit out and commence operations.  It is proposed that the rental period commence on completion of the fit out.  Further, a lease term of three (3) years with a further two (2) year option is recommended. A market review period is not recommended as the rent exceeds the valuation received.

 

Long-term Financial Plan Implications

 

The annual rental payment recommendation achieves the rent forecast in the Council endorsed (C1404/108) GLC Business Plan.  

 

STRATEGIC COMMUNITY OBJECTIVES

 

Leasing of Suite three (3) at the GLC is consistent with the following City of Busselton Community Strategic Plan objectives:

 

2.1             A City where the community has access to quality cultural, recreation, and leisure facilities and services.

2.2             A City of shared, vibrant and well planned places that provide for diverse activity and          strengthen our social connections.

2.3             Infrastructure assets that are well maintained and responsibly managed to provide for future generations.

 

RISK ASSESSMENT

 

The recommendations contained within this report are considered low risk and as such a formal risk assessment is not provided.

 

CONSULTATION

 

Local advertising of the City’s intention to lease the property to the Dermal Remedy has been undertaken from 20 March to 3 April 2015, in accordance with Section 3.58 of the Local Government Act 1995. No submissions were received.

 

GLC customers have been informed of the GLC’s plans for Allied Health related business and to date the feedback has been positive.  One (1) informal objection was received during the EoI advertising period from a local physiotherapy business in Busselton. This matter was addressed at the time.

 

 

OFFICER COMMENT

 

The City advertised an EoI for the use of allied health suites at the GLC in late 2014.  No proposals were received through this process, although contact was made from the owner of Dermal Remedy at the time and several discussions subsequently took place. A formal proposal was received in early March which met the selection criteria outlined in the EoI guidelines as follows;

1.    Operational capacity of Proponent

2.    Demonstrated financial capacity of Proponent

3.    Quality of service offering and the extent to which it meets current and future needs of GLC customers and the vision of the GLC

4.    Diversity of service offering and the extent to which it differs from other proposals

5.    Proposed lease term and proposed ground rent

6.    Proposed commencement of service (ie. timeliness in delivery)

 

Dermal Remedy is an existing Busselton based business which operates out of the home of the owner/operator who proposes to relocate the business to Suite three (3) at the GLC.  The proposal states Dermal Remedy will provide GLC members and guests with affordable, professional and convenient anti-aging skin care treatments, hair removal and teeth whitening services for both female and males.  The proponent has been involved in the beauty industry for 16 years and has owned and managed clinics, resort spas and salons.

 

The EoI submission provided a comprehensive business plan including a SWOT analysis, marketing plan, two (2) year financial cash flow forecasts and breakeven analysis.

 

The proponent is seeking a lease term of three (3) years with an option to renew for a further two (2) years.  A minimum five (5) year lease is required under the Commercial Tenancy Act.

 

Subject to the decision of Council the fit out will take two (2) to three (3) weeks enabling Dermal Remedy to commence operations during May 2015.

 

A commercial lease arrangement for Suite three (3) supports the Council’s objective of increasing revenues and reducing operating costs at the GLC and helps to achieve the key performance indicator to continue to reduce the net operating deficit of the GLC facility. The proponent has proposed rental payments of $1,300 per month ($15,600 per annum), which achieves the revenues forecast in the GLC Business Plan. A period of two (2) months of zero rent would support the business to become established at the GLC.

 

The terms of the lease have been agreed with the proponent. The lease can be signed immediately following the decision of Council.

 

CONCLUSION

 

Officers sought Expressions of Interest (EoI) to lease the new allied health suites during October and November 2014.  Contact was made by the Proponent at that time and a formal proposal was submitted in early March.  The proponent and the business Dermal Remedy is deemed to be a suitable Allied Health business to establish at GLC.

 

Public notice was advertised for a period of two (2) weeks seeking comment on the proposed lease arrangements outlined in the Officer’s recommendation. No submissions were received.

 

The proponent has offered lease payments consistent with the Council endorsed (C1404/108) GLC Business Plan.  The proposal aligns well with community objectives outlined in the Strategic Community Plan and GLC Business Plan to provide quality, affordable and accessible services and facilities and it supports the key performance indicator to reduce the net operating deficit of the GLC.

 

The proponent is seeking a rent free of period of two (2) months of operation to allow the new business to become established.

 

OPTIONS

 

Council may choose not to endorse the Officer Recommendation and consider to:

 

Option 1 - Cease negotiations with Dermal Remedy and re-advertise the EoI to lease Suite three (3) at the Geographe Leisure Centre;

 

Option 2 - Allocate a greater or lesser amount of the proposed rental payments or rent free period.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Subject to Council supporting the Officer Recommendation, the following actions and timeframes are anticipated:

-      City of Busselton and Dermal Remedy sign a lease agreement (April 2015),

-      Fit out of the space is commissioned (April– May 2015); and,

-      Dermal Remedy commences operations during May, 2015, subject to all statutory approvals being received.

 

 

OFFICER RECOMMENDATION

 

That the Council authorises the CEO to enter into a lease, subject to the Minister for Lands approval, with Chelsea O'Grady for the purposes of a skin care treatment business within the Geographe Leisure Centre on a portion of Lot 300 in Reserve 29933. The terms and conditions of the lease to be in accordance with standard commercial lease terms and in particular:

 

a)            The term of the Lease will be three (3) years with a further two (2) year option

                b)            The rent to commence at $15,600 per annum inclusive of GST and outgoings to be                            paid  monthly in advance and increased annually by Consumer Price Index (CPI)

                c)            The provision of a rent free period of two months from commencement of the lease.

 

 

 


Council                                                                                      9                                                                           8 April 2015

13.2           GLC CAFE COMMERCIAL LEASE

SUBJECT INDEX:

GLC Cafe Commercial Lease

STRATEGIC OBJECTIVE:

Infrastructure assets are well maintained and responsibly managed to provide for future generations.

BUSINESS UNIT:

Community Services

ACTIVITY UNIT:

Community Services

REPORTING OFFICER:

Manager, Community Services - Maxine Palmer

AUTHORISING OFFICER:

Director, Community and Commercial Services - Naomi Searle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Nil

  

 

PRÉCIS

 

Expressions of Interest (EoI) were sought in relation to a commercial lease opportunity at the Geographe Leisure Centre (GLC) (part of Reserve 29933) for the purposes of a café/kiosk operation. 

In accordance with Section 3.58 of the Local Government Act 1995, advertising has been undertaken seeking public comment on a proposed lease agreement with Patricia Schreuder and Allan Schreduer to operate AppleShak Café over a portion of the Reserve.

 

The purpose of this report is to inform Council of the outcome of the advertising and make recommendations as to the terms and conditions of the lease agreement.

 

 

BACKGROUND

 

The GLC has recently undergone a significant expansion and upgrade program, incorporating a new gymnasium, crèche, pool deck showers and change cubicles, universal access facilities, customer service area, offices, meeting room and cycle room. Included in the building upgrade was the creation of a café/kiosk area central to the pool, stadium and main entry.  The café/kiosk area was formally the pool office, store and customer service area from which the GLC ran a small kiosk selling a limited range of packaged snacks, coffee, drinks and ice cream.  In order to provide a better quality service, while freeing up staff time to focus on core service delivery and reducing operating costs and improving revenue streams, the City advertised Expressions of Interest (EoI) seeking private sector investment to fit out and operate a café/kiosk in this area of the GLC.

The EoI opportunity incorporated a lease area of approximately 22m2 with an additional area of approximately 39m2 available under license for use as a common seating area  for GLC members and café clientele. 

 

The EoI was advertised for one (1) month from 17 October to 17 November 2014.  Two (2) proposals were received and evaluated, however in January 2015 one (1) proponent withdrew from the process.  Since this time negotiations have been undertaken with the remaining proponent.  In March 2015, Councillors were informed of the outcomes of the negotiation ahead of local advertising of the City’s intention to enter into a lease agreement over the site, as required under Section 3.58 of the Local Government Act 1995.

 

This report provides the results of the public notice period and seeks Council endorsement of the terms of a proposed commercial lease arrangement with Patricia Schreuder and Allan Schreduer to operate a café/kiosk known as the Appleshak Café in the area designed and constructed for this purpose at the GLC.

 

 

STATUTORY ENVIRONMENT

 

Leasing of the cafe is regarded under Section 3.58 of the Local Government Act 1995 as a disposal of property. In accordance with Section 3.58 (3), the City can dispose of property if, before agreeing to dispose of the property:

(a)  it gives 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 City before a date to be specified in the notice, being a date not less than 2 weeks after the notice is first given;

and;

 

(b)  it considers any submissions made to it before the date specified in the notice and, if its decision is made by the Council or a committee, the decision and the reasons for it are recorded in the minutes of the meeting at which the decision was made.

 

Under Section 3.58 (4), the details of the proposed disposition that are required by subsection (3)(a)(ii) include:

 

(a) the names of all other parties concerned;

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

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

 

The details of the proposed disposition were advertised in accordance with the Local Government Act 1995 Local Public Notice:

 

1.    Published in a newspaper circulating generally throughout the district (Busselton and Dunsborough Times  20 March and 27 March 2015) with submissions closing on 3 April 2015;

2.    Exhibited to the public on a notice board at the local government’s offices and Geographe Leisure Centre; and

3.    Exhibited to the public on a notice board at the local library.

 

No submissions were received.

 

RELEVANT PLANS AND POLICIES

 

The further development of the Cafe/Kiosk area is in line with the GLC Master Plan and Council endorsed (C1404/108) GLC Business Plan 2014/15-2018/19.

FINANCIAL IMPLICATIONS

 

As per section 3.58 (4) of the Local Government Act 1995, an independent valuation of the property was prepared and received on 23 December 2014, which reported a rental value of $9,000 plus GST per annum exclusive of outgoings.

 

As part of the EoI process, proponents were required to propose an annual rental payment.  As the proposed café/kiosk area is essentially a building shell, the EoI documentation indicated that the proponent would be required to conduct the fit out and, subject to Council endorsement, a rent free period equal to the value of the fit out would be considered as the fit out would remain the City’s asset.  Quotations for the fit out were undertaken by the proponent, totalling $45,000 which was much higher than Officers anticipated, potentially affecting the rent free period, of around eighteen (18) months. 

 

Upon analysis of the fit out requirements, it was identified that the City would be able to undertake the works in a more efficient and cost effective manner.  Quotations received indicate a fit out budget of circa $30,000, which could be funded from the GLC’s operational budget, however will be subject to a further Council Report.  The works consist of:

 

1.    Electrical works

2.    One (1) x fixed bench top

3.    Tiling of wall surfaces

4.    Plumbing works including sinks and a grease trap

5.    Pool deck servery

6.    Other works necessary to obtain Environmental Health approval.

 

Based on the above, Officers have negotiated a rent free period of two (2) months and full rent of $2,907.66 per month (inclusive of GST and outgoings), commencing after the rent free period. After this time annual rental payments would total $34,891.92 (inclusive of GST and outgoings), to be indexed annually to CPI.  The rent free period will allow sufficient time for the tenant to complete their fit out once the City has concluded the works it has agreed to undertake, with a view to commencing trading early May.  It is proposed that the rental period commence on completion of the fit out.  Further, a lease term of five (5) years with two (2) further five (5) year options is recommended.  A market review period is not recommended as the recommended rent exceeds the valuation received.

 

Long-term Financial Plan Implications

 

The annual rental payment recommendation achieves the rent forecast in the Council endorsed (C1404/108) GLC Business Plan.

 

STRATEGIC COMMUNITY OBJECTIVES

 

Leasing of the café service at the GLC is consistent with the following City of Busselton Community Strategic Plan objectives:

2.1             A City where the community has access to quality cultural, recreation, and leisure facilities and services.

2.2             A City of shared, vibrant and well planned places that provide for diverse activity and          strengthen our social connections.

2.3             Infrastructure assets that are well maintained and responsibly managed to provide for future generations.

 

RISK ASSESSMENT

 

The recommendations contained within this report are considered low risk and as such a formal risk assessment is not provided.

 

CONSULTATION

 

Local advertising of the City’s intention to lease the property to the Appleshak Café has been undertaken from 20 March to 3 April 2015, in accordance with Section 3.58 of the Local Government Act 1995. No submissions were received.

 

 

GLC customers have been informed of the GLC’s plans to incorporate a café/kiosk into the facility, and to date the feedback has been positive.

 

OFFICER COMMENT

 

The Appleshak Cafe scored highly against the selection criteria listed in the EoI submission requirements, as shown in the table below:

 

 

The branding of the Appleshak Café symbolises “fresh, healthy, nutritious food.  The bright green apple logo complements the GLC’s colour scheme and supports the GLC objective to “help the community to understand that there are simple ways of maintaining a healthy and active lifestyle and to provide the opportunities and support they need to achieve this.”

 

The proponent, although not currently working in the food and beverage retail sector has proven experience operating bakery, kiosk and catering businesses and has demonstrated the ability to turn a business purchased, whilst operating at a loss, into generating profit within twelve months, with annual profit increases thereafter.

 

A detailed profit and loss forecast for the first two (2) years of operation has been provided, and is inclusive of rental payments achieving the rent forecast in the Council endorsed (C1404/108) GLC Business Plan.  

 

The proponent has a strong ethos and vision for the café which would provide fresh, healthy, homemade produce including low cost snack packs for children and whole food smoothies.

 

The proponent is seeking a lease term of five (5) years with an option to renew for two (2) further five (5) year options.

 

Subject to the decision of Council regarding the award of the lease, the Appleshak Café is expected to be open for business in May 2015, following the fit out.

 

A commercial lease arrangement for the café supports the Council’s objective of increasing revenues and reducing operating costs at the GLC and helps to achieve the key performance indicator to continue to reduce the net operating cost of the GLC facility. The proponent has proposed rental payments of $2,907.66 per month ($34,891.92 per annum), which achieves the revenues forecast in the GLC Business Plan. Two (2) months of zero rent would support the new business to become established.

 

CONCLUSION

 

Officers sought Expressions of Interest (EoI) to lease a cafe/kiosk service during October and November 2014.  Although two (2) proposals were received, one (1) proponent withdrew from the process.  The remaining proposal scored highly against the selection criteria outlined in the EoI requirements.

 

As per Section 3.58 of the Local Government Act 1995, public notice has been given for a period of two (2) weeks inviting submissions on the proposed lease arrangements outlined in the Officer’s recommendation. No submissions were received.

 

The proponent has offered lease payments consistent with the Council endorsed GLC Business Plan.  The proposal aligns well with community objectives outlined in the Community Strategic Plan and GLC Business Plan to provide quality, affordable and accessible services and facilities and it supports the key performance indicator to reduce the net operating cost of the GLC.

 

The proponent is seeking a rent free of period of two (2) months of operation to allow the new business to become established. 

 

OPTIONS

 

Council may choose not to endorse the Officer Recommendation and consider to:

 

Option 1 - Cease negotiations with Appleshak Café and re-advertise the EoI to lease a café/kiosk at the Geographe Leisure Centre;

 

Option 2 – Amend the proposed rental payments or rent free period.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Subject to Council supporting the Officer Recommendation, the following actions and timeframes are anticipated:

-      City of Busselton and Appleshak Café sign a lease agreement (April 2015),

-      Fit out of the space (April– May 2015); and,

 

Commence café operations in May, 2015, subject to all statutory approvals being received.

 

OFFICER RECOMMENDATION

 

That the Council authorises the CEO to enter into a lease, subject to the Minister for Lands approval, with Patricia Schreuder and Allan Schreuder for the purposes of a cafe business within the Geographe Leisure Centre on a portion of Lot 300 in Reserve 29933. The terms and conditions of the lease to be in accordance with standard commercial lease terms and in particular:

 

a)            The term of the Lease will be five (5) years with a further two (2)  five (5) year options

b)            The rent to commence at $34,891.92 per annum inclusive of GST and outgoings to be paid  monthly in advance and increased annually by Consumer Price Index (CPI)

                c)            The provision of a rent free period from the date of commencement of the lease of                          two (2)months with the payment of full rent to commence on 1st July 2015