Please note:  These minutes are yet to be confirmed as a true record of proceedings

CITY OF BUSSELTON

MINUTES FOR THE Council MEETING HELD ON 24 June 2020

TABLE OF CONTENTS

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

1....... Declaration of Opening aCKNOWLEDGEMENT OF COUNTRY / ACKNOWLEDGEMENT OF Visitors / DISCLAIMER / NOTICE OF RECORDING OF PROCEEDINGS. 3

2....... Attendance. 3

3....... Prayer. 4

4....... Application for Leave of Absence. 4

5....... Disclosure Of Interests. 4

6....... Announcements Without Discussion.. 4

7....... Question Time For Public. 4

8....... Confirmation and Receipt Of Minutes. 5

Previous Council Meetings. 5

8.1          Minutes of the Council Meeting held 10 June 2020. 5

Committee Meetings. 6

8.2          Minutes of the Finance Committee Meeting held 10 June 2020. 6

9....... RECEIVING OF Petitions, Presentations AND DEPUTATIONS. 6

9.1          GUNYULGUP VALLEY ACTION GROUP - OBJECTION TO AMENDMENT NO. 45 TO LOCAL PLANNING SCHEME 21. 7

10..... QUESTIONS BY MEMBERS OF WHICH DUE NOTICE HAS BEEN GIVEN (WITHOUT DISCUSSION). 9

11..... Items brought forward.. 10

ADOPTION BY EXCEPTION RESOLUTION.. 10

12.1        Finance Committee - 10/06/2020 - LIST OF PAYMENTS MADE - APRIL 2020. 11

12.2        Finance Committee - 10/06/2020 - FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 30 APRIL 2020. 28

17.1        COUNCILLORS INFORMATION BULLETIN.. 58

ITEMS TO BE DEALT WITH BY SEPARATE RESOLUTION (WITHOUT DEBATE). 60

12.3        Finance Committee - 10/06/2020 - APPLICATION FOR RATE EXEMPTION - THE FREE REFORMED CHURCH OF BUSSELTON.. 60

13.1        APPLICATION FOR DEVELOPMENT APPROVAL (DA18/0542) - PROPOSED SINGLE HOUSE AND FIVE CHALETS - LOT 40 (61) CAUDALIE WAY, QUINDALUP. 77

16.1        HOTEL DEVELOPMENT AND LEASING ARRANGEMENTS - HOTEL SITE 2, BUSSELTON FORESHORE. 244

18.1        MOTION TO REDUCE PROJECTED COST OF THE BEACH.. 257

18.2        MOTION FOR REPURPOSING OF REGIONAL AIRPORT DEVELOPMENT FUNDING.. 263

15.1        PROGRESSION OF THE BUSSELTON ENTERTAINMENT ARTS AND CREATIVE HUB. 267

14..... Engineering and Work Services Report. 520

19..... urgent business. 521

20..... Confidential Reports. 521

21..... Closure. 521

 


Council                                                                                      5                                                                         24 June 2020

MINUTES

 

MINUTES OF A Meeting of the Busselton City Council HELD IN the Council Chambers, Administration Building, Southern Drive, Busselton, ON 24 June 2020 AT 5.30pm.

 

1.               Declaration of Opening aCKNOWLEDGEMENT OF COUNTRY / ACKNOWLEDGEMENT OF Visitors / DISCLAIMER / NOTICE OF RECORDING OF PROCEEDINGS

The Presiding Member opened the meeting at 5.52pm.

 

2.               Attendance

Presiding Member:

Members:

 

Cr Grant Henley     Mayor

Cr Kelly Hick             Deputy Mayor

Cr Sue Riccelli

Cr Ross Paine

Cr Kate Cox

Cr Paul Carter

Cr Jo Barrett-Lennard

Cr Lyndon Miles

Cr Phill Cronin (via electronic attendance)

 

Officers:

 

Mr Mike Archer, Chief Executive Officer

Mr Oliver Darby, Director, Engineering and Works Services

Mr Paul Needham, Director, Planning and Development Services

Mrs Naomi Searle, Director, Community and Commercial Services

Mr Tony Nottle, Director, Finance and Corporate Services

Mrs Emma Heys, Governance Coordinator

Ms Melissa Egan, Governance Officer

 

Apologies:

 

Nil

 

Approved Leave of Absence:

 

Nil

 

Media:

 

“Busselton-Dunsborough Times”

“Busselton-Dunsborough Mail”

 

Public:

 

33

 

3.               Prayer

The prayer was delivered by Pastor Nigel Wittwer of Hope Christian Church.

 

4.               Application for Leave of Absence

Nil

 

5.               Disclosure Of Interests

The Mayor noted that a declaration of financial interest had been received from Cr Kelly Hick in relation to Item 13.1 ‘Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup’.

 

The Mayor noted that declarations of impartiality interests had been received from Cr Ross Paine in relation to:

·         Item 18.1 ‘Motion to Reduce Projected Cost of the BEACH’;

·         Item 18.2 ‘Motion for Repurposing of Regional Airport Development Funding’; and

·         Item 15.1 ‘Progression of the Busselton Entertainment Arts and Creative Hub’.

 

The Mayor advised that in accordance with the Local Government (Rules of Conduct) Regulations 2007 these declarations would be read out immediately before the items were discussed.

 

6.               Announcements Without Discussion

Announcements by the Presiding Member

 

Nil

 

7.               Question Time For Public

Response to Previous Questions Taken on Notice

 

Nil

 


 

Question Time for Public

 

7.1             Mr Kevin Strapp

 

Question

Why are we … everybody getting worked up about repositioning this $9.5 million? I would suggest that you’ve given the Minister a very big free kick where they can say they won’t give it to you at all or we’ll redistribute it throughout the South West.

 

Response

It certainly wasn’t our intention to have it redistributed throughout the South West. The letter to the Minister was following a letter which requested the immediate commencement of the terminal project to expend the $9.5 million as a shovel-ready, designed project that was ready to go. The response from the Minister was very quickly forthcoming saying no, we will wait and see if the services resume and then, at the end of the three year contract that you have, we will do a further evaluation. We said that, in the interests of stimulus and recovery from the downturn in the economy during COVID, we would support if that funding were to be re-purposed so it could be used immediately for a project within the City of Busselton, and that our priority project was the performing arts centre. However, it is of course up to the Minister and the State government, every year at Budget, whether they look at reappropriation of that funding. If it’s going to sit there and languish for three years when we could use it on projects more needed within the community, then I think that’s a better use. If we get international services or services that demand the construction immediately of a new terminal, then I think the State government should honour its commitment to that at that time.

 

8.               Confirmation and Receipt Of Minutes

Previous Council Meetings

8.1             Minutes of the Council Meeting held 10 June 2020

COUNCIL DECISION

C2006/054              Moved Deputy Mayor K Hick, seconded Councillor K Cox

That the Minutes of the Council Meeting held 10 June 2020 be confirmed as a true and correct record.

CARRIED 9/0

 


 

Committee Meetings

8.2             Minutes of the Finance Committee Meeting held 10 June 2020

COUNCIL DECISION

C2006/055              Moved Councillor P Carter, seconded Councillor S Riccelli

That the Minutes of the Finance Committee Meeting held 10 June 2020 be noted.

CARRIED 9/0

 

9.               RECEIVING OF Petitions, Presentations AND DEPUTATIONS

At this juncture, the Mayor advised the meeting that Agenda Item 9.1 relating to the petition would be heard after the Presentations by Parties with an Interest, to enable the petitioners to speak to their petition before it is considered.

Presentations

 

Mr Chris Avis and Mr Barry Lang presented in relation to Item 9.1 (Petition) Gunyulgup Valley Action Group - Objection to Amendment No. 45 to Local Planning Scheme 21. Mr Avis and Mr Lang are opposed to the Amendment No. 45 to Local Planning Scheme 21 and in favour of the Officer’s Recommendation in relation to Item 9.1 that Council receives the petition.

 


 

Petitions

9.1             GUNYULGUP VALLEY ACTION GROUP - OBJECTION TO AMENDMENT NO. 45 TO LOCAL PLANNING SCHEME 21

COUNCIL DECISION

C2006/056              Moved Deputy Mayor K Hick, seconded Councillor P Carter

 

That the Council:

 

1.    receive the petition from the Gunyulgup Valley Action Group regarding Amendment 45 to Local Planning Scheme No. 21, objecting to the removal of Additional Use 52 from the ‘Rural Residential’ zoned Lot 30 Millbrook Road, Yallingup, and the introduction of Special Provision 71 to a portion of Lot 30 Millbrook Road (proposed Lot 8 Millbrook Road); and

 

2.    notes that the generation of a location (through the online petition platform) as opposed to an address being provided for each signatory has made it difficult to verify that the petition is made (in the majority) by electors of the district; but that the extenuating circumstances pertaining to COVID-19 have been considered and applied in receiving the petition. 

CARRIED 9/0

 

A petition was received from the petitioner on 15 June 2020 regarding an objection to Local Planning Scheme 21 Amendment 45, being the removal of Additional Use 52 from the 'Rural Residential' zoned Lot 30 Millbrook Road, Yallingup and introduction of Special Provision 71 to a portion of Lot 30 Millbrook Road (proposed Lot 8 Millbrook Road) to include a number of additional 'A' uses.

 

The requirements for a petition to be heard by Council is set out by Standing Order 6.9 of the City of Busselton Standing Orders Local Law 2018, specifically that it:

 

(a)  be addressed to the Mayor;

(b)  be made by electors of the district;

(c)   state the request on each page of the petition;

(d)  contain the name, address and signature of each elector making the request;

(e)  contain a summary of the reasons for the request;

(f)   state the name of the person to whom, and an address at which, notice to the petitioners can be given; and

(g)  be respectful and temperate in its language.

 

The presiding member has the discretion to accept the petition for consideration if it meets a majority of the above requirements.

 

The petition is in an electronic form generated in change.org, as per this link:  https://www.change.org/lps21-amendment45-petition.  The petition is addressed to the Mayor, is identified as being from the Gunyulgup Valley Action Group and, by virtue of the way it operates, meets the intent of the requirement to state the request on each page of the petition.  This is because each signatory is able to view the request before signing the petition.  This request is in effect a summary of the reasons for the request.

 

The requirement to provide a name and address of each elector has not been met, with only a suburb or in some instances a state or country in being identified.  While there does appear to be the ability to edit the location to add a full address, very few of the signatories have done this. 


 

The petition contains 823 signatories, only 80 of which are identified by the location provided as being located in the City of Busselton. It may be the case that other signatories are electors who reside or who were located elsewhere at the time of signing the petition, however without the provision of an address officers are unable to readily verify this from the petition.   

 

With respect to containing a signature of each elector making the request the Electronic Transactions Act 2011 (WA) would be applicable.  In brief, in circumstances where:

 

(a)  a method is used to identify the person and their intent;

(b)  the method was reliable; and

(c)   the City consents to the electronic receipt,

 

section 10(1) provides that the requirement for a signature under the Standing Orders has been met.  

 

The petition is overall respectful and temperate in its language although it is noted that a small number of the signatories have provided incomplete, clearly erroneous and / or offensive terminology as names.

 

While officers are concerned about the lack of provided addresses and the resultant ability to readily verify it as being from (a majority) of electors, officers are also mindful of the impact that COVID-19 restrictions may have had on the operation of the petition and the need to run it online.  Officers also understand that people signing the petition may not have understood the need to / how to enter their full address.  In consultation with the Mayor as presiding member, the petition is therefore being presented to Council.

 

Pursuant to Standing Order 6.9(3), the Council has the following options:

 

(a)  receive the petition;

(b)  reject the petition;

(c)   receive the petition and refer it to the CEO to prepare a report to Council / Committee;

(d)  receive the petition and refer it to the CEO for action.

 

It is recommended by officers that the petition is received by Council.

 

A report in relation to the petition or referring it to the CEO for action is not recommended, for the following key reasons:

1.    The matters subject of the petition will necessarily be subject of a report in any case, as there is no delegation (and in fact no power to delegate) for decisions relating to town planning scheme amendments (note that at this stage it is expected that a report on Amendment 45 will be presented to the Council’s next ordinary meeting, scheduled for 29 July 2020); and

 

2.    The issues raised in and the outcome sought by the petition have also been raised in submissions lodged in relation to Amendment 45, and will therefore necessarily be outlined and discussed in that report, and therefore considered by the Council.

 


 

Presentations (continued)

 

6.15pm:             At this time, Cr Hick left the meeting.

 

Marc Halsall, Halsall & Associates, presented on behalf of a resident community group in relation to Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup. Mr Halsall was opposed to the recommendation.

 

Mrs Sarah Williams presented a letter written to Council from Mr Paul Finch in relation to Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup. Mr Finch was opposed to the recommendation.

 

Mr Dave Polt presented in relation to Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup. Mr Polt was opposed to the recommendation.

 

Mr Mason Townsend presented in relation to Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup. Mr Townsend was opposed to the recommendation.

 

Mr Tim Koroveshi and Mr Gary McMahon, Ecosystems Solutions, presented in relation to Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup. Mr Koroveshi was in favour of the recommendation.

 

7.05pm:             At this time, Cr Hick re-entered the meeting.

 

Deputations

 

Nil

 

 

10.             QUESTIONS BY MEMBERS OF WHICH DUE NOTICE HAS BEEN GIVEN (WITHOUT DISCUSSION)

Nil

 


 

11.             Items brought forward

ADOPTION BY EXCEPTION RESOLUTION

At this juncture the Mayor advised the meeting that, with the exception of the items identified to be withdrawn for discussion, the remaining reports, including the Committee and Officer Recommendations, will be adopted en bloc, i.e. all together.

 

COUNCIL DECISION

C2006/057              Moved Councillor P Carter, seconded Deputy Mayor K Hick

 

That the Committee and Officer Recommendations in relation to the following agenda items be carried en bloc:

               

12.1        Finance Committee - 10/06/2020 - LIST OF PAYMENTS MADE - APRIL 2020

 

12.2        Finance Committee - 10/06/2020 - FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 30 APRIL 2020

 

17.1        COUNCILLORS INFORMATION BULLETIN

CARRIED 9/0

En Bloc

 


Council                                                                                      12                                                                      24 June 2020

12.             Reports of Committee

12.1           Finance Committee - 10/06/2020 - LIST OF PAYMENTS MADE - APRIL 2020

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Financial Operations

BUSINESS UNIT

Financial Services

REPORTING OFFICER

Manager Financial Services - Paul Sheridan

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Noting: the item does not require a decision of Council and is simply for information purposes and noting

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   List of Payments for April 2020  

 

This item was considered by the Finance Committee at its meeting on 10 June 2020, the recommendations from which have been included in this report.

 

COUNCIL DECISION AND COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

C2006/058          Moved Councillor P Carter, seconded Deputy Mayor K Hick

 

That the Council notes payment of voucher numbers M117991 – M118049, EF070825 – EF071671, T007509 – T007511, DD004087 – DD004119 together totalling $7,644,763.88

CARRIED 9/0

En Bloc

 

EXECUTIVE SUMMARY

This report provides details of payments made from the City’s bank accounts for the month of April 2020, for noting by the Council and recording in the Council Minutes.

 

BACKGROUND

The Local Government (Financial Management) Regulations 1996 (the Regulations) requires that when the Council has delegated authority to the Chief Executive Officer to make payments from the City’s bank accounts, that a list of payments made is prepared each month for presentation to, and noting by, the Council.

OFFICER COMMENT

In accordance with regular custom, the list of payments made for the month of April 2020 is presented for information. 

Statutory Environment

Section 6.10 of the Local Government Act 1995 and more specifically Regulation 13 of the Regulations refer to the requirement for a listing of payments made each month to be presented to the Council.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

There are no financial implications associated with the officer recommendation.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No risks of a medium or greater level have been identified.

Options

Not applicable.

CONCLUSION

The list of payments made for the month of April 2020 is presented for information.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.


Council

21

24 June 2020

12.1

Attachment a

List of Payments for April 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Council                                                                                      38                                                                      24 June 2020

12.2           Finance Committee - 10/06/2020 - FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 30 APRIL 2020

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Financial Services

BUSINESS UNIT

Financial Services

REPORTING OFFICER

Manager Financial Services - Paul Sheridan

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   Investment Report April 2020

Attachment b    Statement of Financial Activity April 2020  

 

This item was considered by the Finance Committee at its meeting on 10 June 2020, the recommendations from which have been included in this report.

 

COUNCIL DECISION AND COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

C2006/059              Moved Councillor P Carter, seconded Deputy Mayor K Hick

 

That the Council receives the statutory financial activity statement reports for the period ending 30 April 2020, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

CARRIED 9/0

En Bloc

 

EXECUTIVE SUMMARY

Pursuant to Section 6.4 of the Local Government Act 1995 (the Act) and Regulation 34(4) of the Local Government (Financial Management) Regulations 1996 (the Regulations), a local government is to prepare, on a monthly basis, a statement of financial activity that reports on the City’s financial performance in relation to its adopted / amended budget.

 

This report has been compiled to fulfil the statutory reporting requirements of the Act and associated Regulations, whilst also providing the Council with an overview of the City’s financial performance on a year to date basis for the period ending 30 April 2020.

 

BACKGROUND

The Regulations detail the form and manner in which financial activity statements are to be presented to the Council on a monthly basis, and are to include the following:

·    Annual budget estimates

·    Budget estimates to the end of the month in which the statement relates

·    Actual amounts of revenue and expenditure to the end of the month in which the statement relates

·    Material variances between budget estimates and actual revenue/expenditure (including an explanation of any material variances)

·    The net current assets at the end of the month to which the statement relates (including an explanation of the composition of the net current position)

Additionally, and pursuant to Regulation 34(5) of the Regulations, a local government is required to adopt a material variance reporting threshold in each financial year. At its meeting on 31 July 2019, the Council adopted (C1907/131) the following material variance reporting threshold for the 2019/20 financial year:

 

That pursuant to Regulation 34(5) of the Local Government (Financial Management) Regulations, the Council adopts a material variance reporting threshold with respect to financial activity statement reporting for the 2019/20 financial year as follows:

 

·    Variances equal to or greater than 10% of the year to date budget amount as detailed in the Income Statement by Nature and Type/Statement of Financial Activity report, however variances due to timing differences and/or seasonal adjustments are to be reported on a quarterly basis; and

·    Reporting of variances only applies for amounts greater than $25,000.

OFFICER COMMENT

In order to fulfil statutory reporting requirements and to provide the Council with a synopsis of the City’s overall financial performance on a year to date basis, the following financial reports are attached hereto:

 

Statement of Financial Activity

This report provides details of the City’s operating revenues and expenditures on a year to date basis, by nature and type (i.e. description). The report has been further extrapolated to include details of non-cash adjustments and capital revenues and expenditures, to identify the City’s net current position; which reconciles with that reflected in the associated Net Current Position report.

 

Net Current Position

This report provides details of the composition of the net current asset position on a full year basis, and reconciles with the net current position as per the Statement of Financial Activity.

 

Capital Acquisition Report

This report provides full year budget performance (by line item) in respect of the following capital expenditure activities: 

 

·   Land and Buildings

·   Plant and Equipment

·   Furniture and Equipment

·   Infrastructure

 

Reserve Movements Report

This report provides summary details of transfers to and from reserve funds, and associated interest earnings on reserve funds, on a full year basis. Additional reports and/or charts are also provided as required to further supplement the information comprised within the statutory financial reports.


 

Comments on Financial Activity to 30 April 2020

The Statement of Financial Activity (FAS), for the year to date as at 30 April 2020 shows an overall Net Current Position of $8.4M as opposed to the amended budget of ($14.2M), a positive difference of $22.6M. 

 

The following summarises the major cash variances that appear on the face of the FAS, which in accordance with Council’s adopted material variance reporting threshold, collectively make up the above difference:

 

Description

2019/20
Actual YTD

2019/20
Amended
Budget YTD

2019/20
Amended
Budget

2019/20
YTD Bud Variance

2019/20
YTD Bud Variance

 

$

$

$

%

$

Revenue from Ordinary Activities

0.98%

702,075

1.    Operating Grants, Subsidies and Contributions

4,116,107

3,078,887

4,977,647

33.69%

1,037,220

2.    Other Revenue

381,632

431,703

551,510

(11.60%)

(50,071)

 

 

 

 

 

Expenses from Ordinary Activities

 

 

6.70%

4,495,591

3.    Materials & Contracts

(13,301,654)

(15,913,936)

(19,058,249)

16.42%

2,612,282

4.    Other Expenditure

(2,256,506)

(2,876,755)

(4,995,811)

21.56%

620,249

5.    Allocations

1,626,014

1,811,318

2,161,452

10.23%

(185,304)

 

 

 

 

 

 

6.    Non-Operating Grants, Subsidies and Contributions

8,132,479

8,697,821

24,388,690

(6.50%)

(565,342)

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

 

38.60%

17,834,469

7.    Land & Buildings

(3,870,942)

(7,267,454)

(8,861,113)

46.74%

3,396,512

Plant & Equipment

(3,241,885)

(4,820,850)

(4,885,350)

32.75%

1,578,965

Furniture & Equipment

(376,629)

(939,380)

(1,113,069)

59.91%

562,751

Infrastructure

(13,691,355)

(28,744,185)

(38,328,246)

52.37%

15,052,830

8.    Proceeds from Sale of Assets

3,063,385

703,550

3,409,080

335.42%

2,359,835

9.    Transfer to Restricted Assets

(642,003)

(50,090)

(60,100)

(1181.70%)

(591,913)

10.  Transfer from Restricted Assets

1,675,268

0

6,319,121

100.00%

1,675,268

11.  Transfer from Reserves

8,149,866

12,597,783

35,648,783

(35.31%)

(4,447,917)

 


 

Revenue from Ordinary Activities

Year to date (YTD) actual income from ordinary activities is $702K more than expected when compared to the YTD amended budget, with the following items meeting the material variance reporting thresholds:

 

1.    Operating Grants, Subsidies and Contributions are $1M (net) better than amended budget. This variance is mainly due to the following:

·    Grants Commission - Special Grants Bridges (10152), ($158K) - $124K is still to come in relation to Bussell Hwy Bridge 0241.  The remaining variance relates to budgeting misallocations where the grants were actually supposed to be main roads direct funding;

·    Insurance Reimbursements (10200), $138K – mainly due to the LGIS scheme member credit refund of $127K;

·    Legal Fees Reimbursements (10500), ($65K) – budget item included for a fine that was received in the 18/19 financial year.  A budget amendment was processed to move a portion of the fine from retained earnings to a legal reserve, however no amendment to remove this budgeted revenue item in 19/20 will be done;

·    Human Resources Reimbursements (10521), $50K - $33K due to conference and training reimbursements not budgeted for sufficiently and $19K received in workers comp reimbursements with all receipts budgeted in June;

·    Contributions to Airport Operations (11151), $51K – received December but budgeted in June;

·    Strategic Planning Operating Grants & Subsidies (10820), ($31K) – This is remaining grant funding for the CAS project which will not be finalized until later in the year.  The remaining activities for the project will be carried over into the next budget;

·    Environmental Management Administration (10830), $232K – $170K grant received for the Revitalizing Geographe Waterways Phase 2 project earlier than budgeted, plus unbudgeted amounts of $40K for Lower Vasse River Collaborative Project from Regional Estuaries Initiatives, and $20K for Strategic Weed Action for Biodiversity Protection from Department of Primary Industries;

·    Protective burning and firebreaks reserve (10931), $166K – This variance relates to receiving 50% grant awarded to the City under the mitigation activity fund (Emergency Services Levy), which was not budgeted.  Details of the cost codes for a budget amendment have not been finalised;

·    Bushfire Risk Management Planning Grants DFES (10942), $28K – This variance relates to the payment of grant in full for the bushfire risk planning coordinator position within the City of Busselton. This represents a timing difference between budget allocations (over 12 months), and actual funds received;

·    Preventative Services CLAG Contribution (10925), ($29K) – Offset by budgeted expenditure that has not occurred, to the same amount;

·    Fire Prevention DFES Contribution & Prior Period Adjustments (10940), $21K – timing difference due to prior period adjustments for late receipted contributions;

·    Wonnerup South Rd Bridge Slk 2.3 (A3440), $32K – emergency funding received from Main Roads for repairs undertaken;

·    Pre-Primary Building & Surrounds (B1503), $30K – Grant was budgeted to be received in June 2020, but was received in November 2019;

·    Busselton Jetty Contributions (11160), $35K – bi-annual contribution more than budgeted;

·    Regional Waste Management Administration (11301), ($32K) – Contributing councils have not been invoiced as much as budgeted;

·    Operations Services Works Reimbursements (11501), $25K – Workers compensation reimbursement for wages paid;

·    Reimbursements Old Butter Factory (B1401 & B9610), $371K – Timing difference due to difficulties in predicting when LGIS would process the claims;

·    Storm Damage Insurance Renewal (C2527), $37K – insurance claim for damage to King Street steps and ramp received.

 

2.    Other Revenue is ($50K) worse than budget.  The main contributing variances are outlined in the table below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

10100

Finance & Corporate Services Support - LSL contribution not received from other LG (Offset by officer not taking LSL this FY)

(26,000)

10510

Governance Support Services (LSL contribution received from other LG.  Not related to above)

14,745

10591

Geographe Leisure Centre (LSL contribution not received from other LG)

(13,599)

10970

Parking Control

(44,644)

G0030

Busselton Transfer Station

53,498

G0031

Dunsborough Waste Facility

(29,873)

 

Expenses from Ordinary Activities

Expenditure from ordinary activities is $4.5M or 6.7% less than expected when compared to the amended YTD budget.  The following items meet the material variance reporting thresholds:

 

3.    Materials and Contracts better than amended budget YTD by $2.6M

 

The main contributing items are listed below, most of which being heavily influenced by the slow down in activity caused by the COVID-19 shutdowns and restrictions:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

163,118

10000

Members of Council

(24,512)

10500

Legal and Compliance Services

62,661

10616

Winderlup Villas Aged Housing

26,790

Community and Commercial Services

450,062

10380

Busselton Library

70,319

10590

Naturaliste Community Centre

28,411

10591

Geographe Leisure Centre

34,258

10600

Busselton Jetty Tourist Park

117,724

10625

Art Geo Administration

30,635

10630

Property and Business Development

29,607

10900

Cultural Planning

55,631

Planning and Development Services

705,907

10820

Strategic Planning

185,511

10830

Environmental Management Administration

181,959

10850

Implement Management Plans Other

81,822

10931

Protective Burning & Firebreaks-Reserves

50,246

11170

Meelup Regional Park

99,680

Engineering and Works Services

1,252,600

Various

Busselton Jetty Maintenance

461,891

12620

Rural-Tree Pruning

(23,306)

12621

Urban-Tree Pruning

(64,958)

Various

Bridge Maintenance

84,856

Various

Building Maintenance

55,476

Various

Other Infrastructure Maintenance

564,579

Various

Waste services

239,684

Various

Road Maintenance

(221,641)

Various

Reserve Maintenance

156,021

 

4.    Other Expenditure $620K under the amended YTD budget:

 

The main contributing items are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

244,179

10000

Members of Council

135,822

10151

Rates Administration

51,017

10700

Public Relations

36,581

Community and Commercial Services

224,377

10530

Community Services Administration

169,945

Engineering and Works Services

128,165

11160

Busselton Jetty

70,830

B1223

Micro Brewery - Public Ablution

60,000

 

5.    Allocations

In addition to administration based allocations which clear each month, this category also includes plant and overhead related allocations. Due to the nature of these line items, the activity reflects as a net offset against operating expenditure, in recognition of those expenses that are of a capital nature (and need to be recognised accordingly). It should be noted that performance in the category has no direct impact on the closing position.

 

Non-Operating Grants, Subsidies and Contributions

6.    Non-Operating Grants, Subsidies and Contributions are below budget by $565K with the main items impacting on this being the timing of the receipt of funding. This has been exacerbated by the delays in completing capital projects due to the COVID-19 shutdowns and restrictions.  This is largely offset with less than anticipated capital expenditure at the same time, where works have not been completed in connection with the funding.  The extent to which the works remain incomplete will represent a positive impact on net position, and the remaining funding will be carried forward in reserves to be spent in future periods in order to complete the projects.


 

Cost Code

Cost Code Description

Variance
YTD

Finance and Corporate Services

(383,315)

10239

Contributions (Program 11) - Community Facilities

(641,031)

10239

Contributions (Program 12) – Works

110,897

10250

Information & Communication Technology Services – Capital Grants (Federal)

144,956

Community and Commercial Services

65,858

C6025

Installation of Bird Netting – Capital Grant (Federal)

(92,620)

C6099

Airport Development – Capital Grant (Federal)

151,478

Planning and Development Services

(798,110)

B1015

Hithergreen District Bushfire Brigade – Donated Assets

(465,200)

B1024

Wilyabrup Bushfire Brigade – Donated Assets

(178,300)

B1029

Busselton Branch SES – Donated Assets

(97,200)

B9109

Hithergreen Building Renovations – Capital Grant (State)

(57,410)

Engineering and Works Services

550,225

B9407

Busselton Senior Citizens – Contributions

111,300

C1512

Port Geographe Boat Ramp Renewal Works – Capital Grant (State)

60,500

C3020

Donated Assets Parks, Gardens & Reserves

329,133

C3113

Busselton Tennis Club – Infrastructure – Contribution

80,000

C3122

Rails to Trails - Continuation of Implementation Plan – Capital Grant (Lotteries Commission)

(300,000)

C3168

Busselton Foreshore Jetty Precinct – Capital Grant

44,554

C3186

Lou Weston Oval – Courts – Contributions

(235,000)

C3210

McBride Park - POS Upgrade – Contributions

(32,538)

C3211

Tulloh St (Geographe Bay Road) - POS Upgrade – Contributions

(90,332)

C3213

Cabarita Road - POS Upgrade – Contributions

(100,000)

C3214

Kingsford Road - POS Upgrade – Contributions

(150,653)

C3215

Monash Way - POS Upgrade – Contributions

(167,174)

F0019

College Avenue – Capital Grant (State)

144,000

S0035

Strelly Street / Barlee Street Roundabout – MR Capital Grant

31,028

S0051

Causeway Road / Rosemary Drive Roundabout – MR Capital Grant

(50,000)

S0064

Peel Terrace (Stanley Pl/Cammilleri St Intersection Upgrade) – MR Capital Grant

(166,670)

S0069

Peel Terrace (Brown Street Intersection Upgrades) – MR Capital Grant

(83,330)

S0070

Peel & Queen Street Roundabout Service Relocation – MR Capital Grant

(216,670)

S0071

Ludlow-Hithergreen Road Safety Improvements – Fed Capital grant

461,200

S0072

Kaloorup Road - Reconstruct and Seal Shoulders – MR Capital Grant

100,000

S0324

Georgette Street - Reconstruction & Kerbs – MR Capital Grant

67,000

T0019

Wonnerup South Road - Reconstruct and Widening (narrow seal) – RTR Capital Grant

104,085

T0086

Yoongarillup Road - Reconstruct & Widen (Western Section) – RTR Capital Grant

246,350

V0002

Eastern Link - Busselton Traffic Study – Capital Grant (Federal)

400,000

Capital Expenditure

7.    As at 30 April 2020, there is an underspend variance of 49.3% or $20.6M in total capital expenditure, with YTD actual at $21.2M against the YTD amended budget of $41.8M. The attachments to this report include detailed listings of all capital expenditure (project) items, however the main areas of variance are summarised as follows:

 

Cost Code

Cost Code Description

Variance
YTD

Land

(71,308)

10370

Busselton Cemetery

(71,308)

Buildings

3,467,820

B9516

Busselton Library Upgrade

244,860

B9109

Hithergreen Building Renovations

57,410

B9300/1/2

Aged Housing Capital Improvements (Winderlup, Harris Rd)

139,904

B9407

Busselton Senior Citizens

822,910

B9556

NCC Upgrade

41,665

B9591

Performing Arts Convention Centre

313,145

B9596

GLC Building Improvements

349,769

B9605

Energy Efficiency Initiatives (Various Buildings)

(28,882)

B9606

King Street Toilets

89,842

B9610

Old Butter Factory

(63,754)

B9716 & B9717

Airport Terminals

1,366,114

B9808

Busselton Jetty Tourist Park Upgrade

136,902

Plant & Equipment

1,578,965

10000

Members of Council

40,000

11156

Airport Development Operations

342,129

11402

Plant Purchases (P10)

854,970

11403

Plant Purchases (P11)

150,146

11407

P&E - P&G Smart Technologies

150,000

Furniture & Office Equipment

574,751

10250

Information & Communication Technology Services

360,626

11156

Airport Development Operations

195,974

Infrastructure By Class

15,040,830

 

Roads

2,348,429

 

Bridges

372,000

 

Car Parks

1,323,863

 

Footpaths & Cycleways

377,696

 

Parks, Gardens & Reserves

8,747,688

 

Drainage

114,005

 

Regional Airport & Industrial Park Infrastructure

1,757,150

 

In the main, many of these projects have yet to be completed and represent a timing difference.  Due to the COVID-19 crisis, many projects have also been deferred and will be relisted for completion in next year’s budget.

 

Proceeds from Sale of Assets

8.    There is a variance for the proceeds from sale of assets of $2.6M, due to difficulty in predicting timing for the settlement of the sale of the old library building land, creating a timing difference against budget.

Transfer to Restricted Assets

9.    There is a variance in transfers to restricted assets of $592K more than amended budget. The reasons for this are as follows:

·    Interest earned on government grants of $37K transferred to restricted cash, for which there was no budget allocated as it was expected that the grant would have been utilized by this stage;

·    Additional bonds of $350K were received in relation to the next stage of the Dunsborough Lakes development;

·    Transfer of $156K representing contribution by developers, including $125K from the sale of the old library land as agreed with the developers;

·    Net transfers to deposits and bonds of $49K as opposed to a budget of $0. These funds do not have a budget allocation as they are not able to be reliably measured.

               

Transfer from Restricted Assets

10.  There is a variance in transfers from restricted assets of $1.7M more than amended budget.   The main reason for this is as follows:

·    Transfer from Roadwork Bonds of $849K as opposed to a budget of $0;

·    Refunds of $27K in deposits for venue hire;

·    Refunds of $12K of Jetty berthing deposits;

·    $34K of other miscellaneous refunds of bonds & deposits;

·    $500K reimbursement to muni of remaining loan funds for the tennis club project;

·    $253K of transfers related to partially completed roadworks projects.

These funds do not have a budget allocation as they dependant of external third parties and are not able to be reliably measured.

 

Transfer from Reserves

11.  There is a variance for transfer from reserves of $4.4M less than amended budget. The reasons for this are as follows:

·    100 – Airport Infrastructure Renewal Reserve ($169K) – Only partial work for installation of bird netting has been done and the car park resealing has not been completed;

·    136 – Airport Marketing & Incentive Reserve ($1.4M) – Being deferred until next financial year;

·    143 – Airport Noise Mitigation Reserve ($870K) – project deferred until 20/21 budget

·    106 – Building Asset Renewal Reserve $220K – early recoup related to partially completed works;

·    407 – Busselton Library Building Reserve $20K – partial recoup for the extension works;

·    408 – Busselton Jetty Tourist Park Reserve ($172K) – upgrade works only partially complete;

·    409 – Geographe Leisure Centre Building Reserve ($270K) – Project B9596 for general building improvements;

·    331 – Joint Venture Aged Housing Reserve $40K – works partially completed earlier than expected;

·    411 – Civic & Administration Building Reserve $38K – works partially completed earlier than expected;


 

·    110 – Jetty Maintenance Reserve ($495K) – only partially recouped, as works only partially undertaken on cost code C3497 (part of the Parks, Gardens & Reserves variance shown above), for the following reasons:

i.              The previous expenditure figure was based on the 50 year plan.

ii.             The 5 year structural review undertaken in 2019/2020 discovered that the Jetty was in better condition than forecast in the 50 year plan.  Capital works planned for 2020 have been deferred to 2030.

iii.            Requests for Tenders issued for maintenance works per the 5 year plan are to be awarded at the Council meeting on 29 January 2020.

iv.           As a result, budget figures have been revised for next the 5 financial years to reflect the 5 year plan;  

·    115 – Plant Replacement Reserve ($638K) – timing difference associated with recoupment for purchase of new plant;

·    137 – Major Traffic Improvements Reserve $367K – Project V0002 for the Eastern Link Project is on-going.  Approximately $1.7M has been spent, of which $400K grant funding has been received and $1M transferred to Muni;

·    132 – CBD Enhancement Reserve ($436K) – mainly due to incomplete townscape upgrade works;

·    127 – New Infrastructure Development Reserve ($123K) – This reserve is funding 10 projects at the moment, some of which are still incomplete;

·    133 – Valuation & Corporate Expenses Reserve ($12K) – the transfer to cover the $97K bill from the Electoral Commission happened in March;

·    123 - Port Geographe Waterways Management Reserve (SAR) ($327K) – Annual deed agreement not yet requested to be paid;

·    Due to cash flow requirements partially completed works were recouped from the following reserves:

i.              223 – Road Asset Renewal Reserve $1.4M;

ii.             224 – Footpaths & Cycleways Reserve $317K;

iii.            225 – Parks & Garden Reserve $126K;

iv.           302 – Community Facilities City District $415K;

v.            303 – Community Facilities Busselton $44K;

vi.           309 – Community Facilities Vasse $59K;

vii.          122 - Port Geographe Development Reserve $364K;

viii.         126 - Provence Landscape Maintenance Reserve (SAR) $64K;

ix.           128 - Vasse Newtown Landscape Maintenance Reserve (SAR) $101K;

x.            321 - Busselton Area Drainage and Waterways Improvement Reserve $35K;

xi.           102 - Coastal and Climate Adaptation Reserve $256K;

xii.          145 - Energy Sustainability Reserve $177K;

xiii.         146 - Cemetery Reserve $185K;

·    121 – Waste Management Facility and Plant Reserve ($3.82M) – The works for the Transfer station plus the site rehabilitation jobs that have not progressed, are the biggest cause of this variance.  It is forecast that these jobs will be deferred until next financial year.

 

Investment Report

Pursuant to the Council’s Investment Policy, a report is to be provided to the Council on a monthly basis, detailing the investment portfolio in terms of performance and counterparty percentage exposure of total portfolio. The report is also to provide details of investment income earned against budget, whilst confirming compliance of the portfolio with legislative and policy limits.

 

As at 30 April 2020, the value of the City’s invested funds totalled $76.99M, down from $78.99M as at 31 March. The decrease is due to a partial closure of a term deposit.

 

During the month of April, seven term deposits totalling the amount of $22.0M matured. One deposit was partially closed totalling $2.0M to provide funds for standard operations. Remaining deposits were renewed for a further 117 days at 0.98% on average.

 

The balance of the 11am account (an intermediary account which offers immediate access to the funds compared to the term deposits and a higher rate of return compared to the cheque account) remained steady.

 

The Airport Development accounts remain steady.

 

The official cash rate in April remains steady at 0.25%. This will have a strong impact on the City’s interest earnings for the foreseeable future. Further drops are unlikely at this stage.

 

Chief Executive Officer – Corporate Credit Card

There were no transactions made on the Chief Executive Officer’s corporate credit card during April 2020.

Statutory Environment

Section 6.4 of the Act and Regulation 34 of the Regulations detail the form and manner in which a local government is to prepare financial activity statements.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

Any financial implications are detailed within the context of this report.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No such risks have been identified.

Options

The Statements of Financial Activity are presented in accordance with Section 6.4 of the Act and Regulation 34 of the Regulations and are to be received. Council may wish to make additional resolutions as a result of having received these reports.

CONCLUSION

As at 30 April 2020, the City’s financial performance, although displaying a positive net current position, is considered at risk of not meeting operational budget expectations by the end of the financial year due to the downturn in operational activity brought on by the COVID-19 global pandemic.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.


Council

39

24 June 2020

12.2

Attachment a

Investment Report April 2020

 


Council

56

24 June 2020

12.2

Attachment b

Statement of Financial Activity April 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



Council                                                                                      62                                                                      24 June 2020

17.             Chief Executive Officers Report

17.1           COUNCILLORS INFORMATION BULLETIN

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Councillors' Information Bulletin

BUSINESS UNIT

Executive Services

REPORTING OFFICER

Reporting Officers - Various

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Noting: the item does not require a decision of Council and is simply for information purposes and noting

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Nil

 

COUNCIL DECISION AND OFFICER RECOMMENDATION

C2006/060              Moved Councillor P Carter, seconded Deputy Mayor K Hick

 

That the items from the Councillors’ Information Bulletin be noted:

17.1.1       Current Active Tenders 

CARRIED 9/0

En Bloc

 

EXECUTIVE SUMMARY

This report provides an overview of a range of information that is considered appropriate to be formally presented to the Council for its receipt and noting. The information is provided in order to ensure that each Councillor, and the Council, is being kept fully informed, while also acknowledging that these are matters that will also be of interest to the community.

 

Any matter that is raised in this report as a result of incoming correspondence is to be dealt with as normal business correspondence, but is presented in this bulletin for the information of the Council and the community.

 

INFORMATION BULLETIN

17.1.1       Current Active Tenders 

 

Note: Information in italics has previously been provided to Council, and is provided again for completeness.

 

RFT02/20 BUSSELTON LIBRARY UPGRADE

 

·    Requirement – upgrade of the Busselton Library (the tender sought prices for 2 stages of the project).

·    A Request for Tender was advertised on 29 February 2020 with a closing date of 24 March 2020. 

·    Three submissions were received, all of which exceeded the City’s budget for this project.

·    The power to decline to accept any tender has been delegated to the CEO pursuant to Delegation DA 1-07.

·    To ensure the most advantageous outcome for the City pre-qualified suppliers on the City’s newly established Construction Services Panel were invited to submit quotations for this project (RFQ 22/20).

·    Only three of the five pre-qualified suppliers on Sub Panel B submitted quotations pursuant to RFQ 22/20.

·    In relation to RFT 02/20, a recommendation will be made to the CEO to decline to accept any tender pursuant to Regulation 18(5) of the Local Government (Functions and General) Regulations 1996 and Delegation DA 1-07.

·    At its meeting on 10 June 2020, Council accepted the quotation (RFQ 22/20) from Devlyn Australia Pty Ltd as the most advantageous quotation and delegated power and authority to the CEO to negotiate and agree with the Successful Contractor minor variations to the contract subject to such variations and the final terms not exceeding the overall project budget.

 

RFT04/20 LIVING STREAMS DESIGNS FOR THE LOWER VASSE RIVER

 

·    Requirement – the preparation of detailed environmental designs for the restoration and re-design of an 800m section of the Lower Vasse River.

·    A Request for Tender was advertised on 28 March 2020 with a closing date of 16 April 2020. 

·    The value of the contract is not expected to exceed the CEO’s current delegated authority under Delegation DA 1-07.

·    Eight submissions were received and have been evaluated.

·    A contract was awarded by the CEO under delegation to Alluvium Consulting Australia Pty Ltd in May 2020.

 

RFT05/20 UPGRADE OF MECHANICAL SERVICES TO THE GEOGRAPHE LEISURE CENTRE

 

·    Requirement – to supply and install a modification to the existing mechanical system at the Geographe Leisure Centre.

·    A Request for Tender was advertised on 9 May 2020 with a closing date of 26 May 2020. 

·    The value of the contract is not expected to exceed the CEO’s current delegated authority under Delegation DA 1-07 and it is expected that the evaluation will be completed and a contract will be entered into during June 2020.

·    Two submissions were received and are currently under evaluation.

 

RFT06/20 BUSSELTON FORESHORE EXERCISE EQUIPMENT – DESIGN, FABRICATION AND INSTALLATION

 

·    Requirement – the design, fabrication and installation of six (6) exercise equipment stations at the Busselton Foreshore. 

·    A Request for Tender was advertised on 9 May 2020 with a closing date of 26 May 2020. 

·    The value of the contract is not expected to exceed the CEO’s current delegated authority under Delegation DA 1-07 and it is expected that the evaluation will be completed and a contract will be entered into during June 2020.

·    One submission was received and is currently under evaluation.


 

ITEMS TO BE DEALT WITH BY SEPARATE RESOLUTION (WITHOUT DEBATE)

12.3           Finance Committee - 10/06/2020 - APPLICATION FOR RATE EXEMPTION - THE FREE REFORMED CHURCH OF BUSSELTON

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Exemptions & Appeals (Rates)

BUSINESS UNIT

Rates

REPORTING OFFICER

Rates Coordinator - David Nicholson

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations

VOTING REQUIREMENT

Absolute Majority

ATTACHMENTS

Attachment a   Letter Requesting Rates Exemption - Free Reformed Church Busselton

Attachment b    Rate Exemption Application Form

Attachment c    Rate Exemption Application - Statutory Declaration

Attachment d   Constitution - Free Reformed Church

Attachment e    Free Reformed Church Busselton Incorporated Association Extract

Attachment f    2018-2019 Audit Letter

Attachment g   108 Hawker - Site Plan  

 

This item was considered by the Finance Committee at its meeting on 10 June 2020, the recommendations from which have been included in this report.

 

COUNCIL DECISION AND COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

C2006/061              Moved Councillor J Barrett-Lennard, seconded Councillor P Carter

 

That the Council:

1.         Approve the rate exemption application from The Free Reformed Church of Busselton under section 6.26 (2)(d) of the Local Government Act 1995 on 108 Hawker Approach, Yalyalup effective 1 July 2019; and

2.         Agree that this rate exemption is to continue where The Free Reformed Church of Busselton confirms in writing by the 30 April annually that they continue to own and use the property for the purposes stated in the application.

CARRIED 9/0

BY ABSOLUTE MAJORITY

 

EXECUTIVE SUMMARY

An application has been received from The Free Reformed Church of Busselton for rate exemption for the property at 108 Hawker Approach, Yalyalup, which is used as the residence for their minister.

On the basis of the application, this report recommends that the application for exemption be granted effective 1 July 2019 in accordance with Section 6.26(2)(d) of the Local Government Act 1995.

BACKGROUND

The Free Reformed Church of Busselton is a religious organisation that previously owned a property at 9 Salmon Close, West Busselton. This property was granted a rate exemption in August 2013 as it was being used as the residence for the minister. In August 2019, this property was sold as they had purchased 108 Hawker Approach, Yalyalup, earlier in May 2019 for a new minister’s residence.

 

In September 2019, the Church contacted the City and was provided with the necessary rate exemption application documentation. The City officially received the exemption application in February 2020.

 

Despite the delay in making the application, the Church is seeking rate exemption effective from 1 July 2019.

OFFICER COMMENT

The Act states that all land is rateable except in certain circumstances. However, Section 6.26(2)(d) of the Act states that:

 

land used or held exclusively by a religious body as a place of public worship or in relation to that worship, a place of residence of a minister of religion, a convent, nunnery or monastery, or occupied exclusively by a religious brotherhood or sisterhood” is not rateable

 

As the property 108 Hawker Place, Yalyalup, is being used as a residence and office for the Minister of the Church, it is considered to be rate exempt under section 6.26(2)(d) of the Act.

 

No physical inspection of the property has been carried out as a Statutory Declaration on its use has been provided, which is sufficient.

Statutory Environment

Section 6.26(2)(d) of the Act specifically states that land used or held exclusively by a religious body as a place of public worship or in relation to that worship, a place of residence of a minister of religion, a convent, nunnery or monastery, or occupied exclusively by a religious brotherhood or sisterhood is exempt from rates.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

If rate exemption is approved effective 1 July 2019, there would be a reduction of $2,173 to the 2019/2020 rating and specified area rate income. There would be similar reductions for future financial periods if the property is continued to be used for the purpose of the Church.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No such risks of a medium or greater level have been identified.

 

However, if Council choses to not approve the application for rate exemption then staffing and/or legal costs may be incurred if the applicant refers the matter to the State Administrative Tribunal for review of the decision.

Options

As an alternative to the proposed recommendation the Council could decline the rate exemption application on the basis that it considers the property to be rateable under the Act. As stated above, this is not recommended based on the risks associated with declining the application.

CONCLUSION

It is considered, based on the application provided by The Free Reformed Church of Busselton that 108 Hawker Approach, Yalyalup, is eligible for rate exemption due to it being used as a place of residence for the minister of the church.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Given that an initial rate exemption enquiry was made in September 2019, it is considered that rate exemption on 108 Hawker Approach, Yalyalup should be effective from the 1 July 2019. Following Council’s resolution, this will be undertaken by 31 May 2020.


Council

63

24 June 2020

12.3

Attachment a

Letter Requesting Rates Exemption - Free Reformed Church Busselton

 


Council

67

24 June 2020

12.3

Attachment b

Rate Exemption Application Form

 


 

 


 


 


 


Council

68

24 June 2020

12.3

Attachment c

Rate Exemption Application - Statutory Declaration

 


Council

73

24 June 2020

12.3

Attachment d

Constitution - Free Reformed Church

 


 


 


 


 


Council

74

24 June 2020

12.3

Attachment e

Free Reformed Church Busselton Incorporated Association Extract

 


Council

75

24 June 2020

12.3

Attachment f

2018-2019 Audit Letter

 


Council

76

24 June 2020

12.3

Attachment g

108 Hawker - Site Plan

 

 

 


 


Council                                                                                      92                                                                      24 June 2020

13.             Planning and Development Services Report

13.1           APPLICATION FOR DEVELOPMENT APPROVAL (DA18/0542) - PROPOSED SINGLE HOUSE AND FIVE CHALETS - LOT 40 (61) CAUDALIE WAY, QUINDALUP

STRATEGIC GOAL

3. ENVIRONMENT Valued, conserved and enjoyed

STRATEGIC OBJECTIVE

3.1 Development is managed sustainably and our environment valued.

SUBJECT INDEX

Development/Planning Applications

BUSINESS UNIT

Statutory Planning

REPORTING OFFICER

Senior Development Planner – Policy - Stephanie Navarro

AUTHORISING OFFICER

Director, Planning and Development Services - Paul Needham

NATURE OF DECISION

Quasi-Judicial: to determine an application/matter that directly affects a person’s right and interests e.g. development applications, applications for other permits/licences, leases and other decisions that may be appealable to the State Admin Tribunal.

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   Location Plan

Attachment b    Aerial and site photos

Attachment c    Development Plans

Attachment d   Development Guide Plan

Attachment e    South Biddle Structure Plan

Attachment f    Commonage Consolidated Structure Plan

Attachment g   Assessment of Vegetation within proposed Asset Protection Zones

Attachment h   Department of Biodiversity, Conservation and Attractions submission

Attachment i     Bushfire Management Plan

Attachment j     Peer Review

Attachment k    Officer assessment against bushfire planning framework

Attachment l    Department of Fire and Emergency Services submissions

Attachment m  Summary of submitters and map of submitters  

 

DISCLOSURE OF INTEREST

Date

24 June 2020

Meeting

Council Meeting

Name/Position

Kelly Hick, Councillor

Item No./Subject

Item 13.1 Application For Development Approval (DA 18/0542) - Proposed Single House And Five Chalets - Lot 40 (61) Caudalie Way, Quindalup.

Type of Interest

Financial Interest

Nature of Interest

The Development Application relates to a proposed accommodation business of a similar nature and in relatively close proximity to the one that I own and operate.

 

7.08pm:         At this time, Cr Hick left the meeting.   

 

As foreshadowed prior to the meeting, Cr Henley made a statement in favour of the Officer Recommendation, noting Council has been briefed about the long history of the application and noting the existing planning use of the area. 

COUNCIL DECISION AND OFFICER RECOMMENDATION

C2006/062              Moved Councillor P Carter, seconded Councillor K Cox

 

That the Council determines:

A.         That application DA18/0542 submitted for the development of a Single House and five Chalets at Lot 40 (61) Caudalie Way, Quindalup, is considered by the Council to be generally consistent with the City of Busselton Local Planning Scheme No. 21 and the objectives of the zone within which it is located.

 

B.         That Development Approval is granted for the proposal referred to in (A) above subject to the following conditions:

 

General Conditions

 

1.         The development hereby approved shall be substantially commenced within two years of the date of this decision notice, if not substantially commenced within this period, the approval will lapse and be of no further effect.

 

2.         The development hereby approved shall be undertaken in accordance with the Approved Development Plans (enclosed), including any notes placed thereon in red by the City and except as may be modified by the following conditions.

 

Prior to Commencement of Development Conditions:

 

3.         The development hereby approved shall not commence until the following plans or details have been submitted to the City and have been approved in writing:

 

3.1       Notification in the form of a section 70A notification, pursuant to the Transfer of Lands Act 1893 (as amended) is to be placed on the Certificates of Title advising the following:

 

This land is within a bushfire prone area as designated by an Order made by the Fire and Emergency Services Commissioner. The approval of the Single House and Chalets is conditional upon the details contained within the Bushfire Management Plan (BMP) prepared by Ecosystem Solutions (Revision I dated 22 May 2020), and the accompanying Bushfire Emergency Evacuation Plan, including any modifications to this BMP and/or future BMPs that are approved by the City in writing.

 

The Single House and Chalets shall be constructed, and their associated Asset Protection Zones maintained, such that they provide resistance to a radiant heat flux of 40 kW/m2 (BAL-40).

 

No person shall occupy any Chalet for more than a total of three months in any 12 month period.

 

A copy of the Certificate of Title with the section 70A notification registered against it, or Landgate lodgement receipt, is to be provided to the City.

 

3.2       A schedule of the final materials, finishes and colours of the Chalets, Single House and water tanks. The schedule shall include details of the type of materials proposed to be used, including their colour and texture.

The External Surfaces of the approved development shall comprise Prescribed Materials as defined in clause 5.4.4 of the City of Busselton Local Planning Scheme No.21.

 

3.3       A Waste Management Plan. The plan shall include specifications of the methods, facilities and management measures to be put in place for the storage, collection and disposal of waste and rubbish generated by the development.

 

3.4       Details setting out how a minimum number of seven car parking bays, one per Chalet and two for the Single House shall be provided on site. The parking areas, driveways and points of ingress and egress [including crossovers] shall be designed, constructed and drained and shall comply with the Acceptable Solutions of Guidelines for Planning in Bushfire Prone Areas (where applicable).

 

3.5       Details of on-site effluent works.

 

3.6       Details of stormwater and surface water drainage works.

 

3.7       Details of the means and method of providing a potable water supply of 135,000 litres or equivalent alternative water supply, as otherwise approved in writing by the City, for the Single House.

 

3.8       Details of the means and method of providing a potable water supply of 80,000 litres or equivalent alternative water supply, as otherwise approved in writing by the City, for each Chalet.

 

3.9       A Landscape Plan which shall include:

 

a.         Screening vegetation between Chalets 1, 2 and 3 and the Caudalie Way road reserve; and

b.        Screening vegetation between Chalets 4 and 5 and the Single House and the southern lot boundary.

 

Landscaping shall incorporate species from the City of Busselton Engineering and Works Services Standards and Specifications Section 9 (e) Landscape Plant Species and shall not compromise the development’s compliance with the Bushfire Management Plan prepared by Ecosystems Solutions (Revision I dated 22 May 2020).

 

4.         The development of any Chalet hereby approved shall not commence until the following contributions have been paid to the City:

 

4.1       A contribution towards road network upgrading in the Rural Remainder precinct of $548.61 per Chalet.

 

4.2       A contribution of towards community facilities in the Rural Remainder precinct of $813.00 per Chalet.

 

Prior to Occupation/Use of the Development Conditions:

 

5.         The development hereby approved shall not be occupied, or used, until all plans, details or works required by Conditions 3 and 4 have been implemented and the following conditions have been complied with:

 

5.1       A revised Bushfire Attack Level (BAL) Certificate has been submitted to and approved by the City.

 

5.2       Information is to be provided to demonstrate that the measures which are required to be met before occupation as contained in the Bushfire Management Plan prepared by Ecosystem Solutions (Revision I dated 22 May 2020) have been implemented, including but not limited to the following:

 

a.         The Emergency Access Way between Broyage Retreat and Kinross Loop being upgraded, at the proponent’s expense, in accordance with the Bushfire Management Plan prepared by Ecosystem Solutions (Revision I dated 22 May 2020) including the details contained within Appendix 4 – Emergency Access Way Upgrade Requirements.

 

Ongoing Conditions:

 

6.         The works undertaken to satisfy Conditions 3, 4 and 5 shall be subsequently maintained for the life of the development and the following conditions shall be complied with:

 

6.1       The approved Bushfire Management Plan prepared by Ecosystem Solutions (Revision I dated 22 May 2020) shall be implemented and maintained.

 

6.2       Landscaping shall be maintained in accordance with the approved Landscape Plan to the satisfaction of the City. Unless otherwise first agreed in writing, any trees or plants which, within a period of five years from first planting, are removed, die or are assessed by the City as being seriously damaged, shall be replaced within the next available planting season with others of the same species, size and number as originally approved.

 

6.3       The Chalets hereby approved are to be made available for temporary accommodation purposes only and shall not be occupied by any one person or family or group of persons (two persons or more) for a period exceeding 3 months (consecutively or intermittently) within any 12 month period.

 

6.4      An occupant of the Single House must be responsible for the management of the Chalets including the implementation of the Bushfire Emergency Evacuation Plan in the case of a bushfire emergency.

CARRIED 8/0

 

7.13pm:         At this time, Cr Hick returned to the meeting.

 

EXECUTIVE SUMMARY

The City has received a development application for a Single House and five Chalets at Lot 40 (61) Caudalie Way, Quindalup.

 

Due to the nature of the issues requiring consideration and the level of community interest, the application is being presented to the Council for determination, rather than being determined by City officers acting under delegated authority.

 


 

Having considered the application, including submissions received in response to the advertising of the proposal, City officers consider that the application is consistent with the City of Busselton Local Planning Scheme No. 21 and relevant planning framework, and therefore it is recommended that the application be approved, subject to appropriate conditions.

 

BACKGROUND

The Council is asked to consider a development application seeking approval for a Single House and five Chalets at Lot 40 (61) Caudalie Way, Quindalup (‘Site’). The application was originally submitted in July 2018. The City was unable to support the application at the time due to its non-compliance with the Acceptable Solutions of the Guidelines for Planning in Bushfire Prone Areas (‘Guidelines’). The application was, however, placed on hold awaiting the expected release of the Western Australian Planning Commission Position Statement: Tourism Land Uses in Bushfire Prone Areas (‘Position Statement’).

 

The Position Statement, which was released in October 2019, enables local governments to consider tourism land uses, including Short-term Accommodation such as Chalets, where they do not comply with the Acceptable Solutions of the Guidelines, subject to certain criteria being met. The applicant has subsequently submitted a Bushfire Management Plan (BMP), including a Bushfire Emergency Evacuation Plan (BEEP) and risk assessment, in support of the proposal that addresses these areas of non-compliance and includes assessment against the Position Statement. 

 

Key information regarding the application is set out below:

 

1.         Landowner/s: Amy Karin Molloy & Shannon Thomas Leslie O'Donohue.

 

2.         Applicant: Tim Koroveshi.

 

3.         Site area: 5.0115 Ha.

 

4.         General description of site: The Site is long and narrow and is orientated in an east-west direction with much of the Site being heavily vegetated. The Site is bound by a reserve (Lot 8002) to the north and east, Caudalie Way to the north-west and south west, and a number of rural residential properties to the south. A location plan, site aerial and site photos are provided at Attachments A and B respectively.

 

5.         Current development/use: The Site is vegetated but currently otherwise vacant with the exception of an existing outbuilding and dam.

 

6.         Brief description of proposed development: Three of the Chalets are proposed to be located in the north-western portion of the Site adjacent Caudalie Way. The remaining two Chalets and Single House are proposed to be located along the southern lot boundary. The Chalets and Single House are proposed to have their own water tank located along side. A copy of the proposed Development Plans is provided at Attachment C.

 

7.         Applicable Zoning and Special Control Area designations: The site is zoned ‘Rural Residential’ and is within a Landscape Value Special Control Area under the Scheme. In addition, Additional Use 62 (A62) under Schedule 2 – Additional Uses of the Scheme is applicable to the Site and is set out below -


 

No.

PARTICULARS OF LAND

LAND USE PERMITTED/SPECIFIED

CONDITIONS

 

A62

Lot 40 Caudalie Way,

Quindalup

 

Chalet

1.    The additional use specified shall be deemed to be a “D” use for the purpose of Part 4 of the Scheme.

2.    Subdivision and development of the land shall be in accordance with a Structure Plan adopted by the local government and endorsed by the Western Australian Planning Commission pursuant to Part 4 of the Deemed Provisions.

3.    Not more than seven (7) ‘single keyed’ two bedroom Chalets, three (3) guest rooms and one (1) manager’s residence comprising a maximum of two bedrooms shall be permitted on the land.

 

 

Further information regarding the introduction of these Additional Use rights into the Scheme is provided within the Statutory Environment section of this report below. 

 

8.         Land-use permissibility: A Single House in the ‘Rural Residential’ zone is a permitted (“P”) land use. In accordance with A62, the Chalets are a discretionary land use. In accordance with clause 3.3 – Zoning Table of the Scheme, discretionary land uses are not permitted unless the local government has exercised its discretion by granting development approval.

 

The following attachments are provided:

·        Attachment A – Location Plan;

·        Attachment B – Site aerial and site photos;

·        Attachment C – Development Plans;

·        Attachment D – Development Guide Plan;

·        Attachment E - Biddle Road Structure Plan;

·        Attachment F - Commonage Consolidated Structure Plan;

·        Attachment G - Assessment of Vegetation within proposed Asset Protection Zones;

·        Attachment H – Department of Biodiversity, Conservation and Attractions submissions;

·        Attachment I – Bushfire Management Plan , including Bushfire Emergency Evacuation Plan and risk assessment;

·        Attachment J – Peer review of risk assessment;

·        Attachment K – Officer assessment against bushfire planning framework;

·        Attachment L - Department of Fire and Emergency Services submissions; and

·        Attachment M – Summary of Submissions and Map of Submitters.

 

OFFICER COMMENT

Following an assessment of the application, including consideration of the submissions received during consultation, the key issues outlined below are considered to be relevant to the determination of this application and are explored in the report further below:

·        Amenity;

·        Environment; and

·        Bushfire

It is considered that all other aspects of the proposal that are not discussed further below satisfy the relevant planning framework, (there are some other issues identified in submissions that are not considered significant issues, which are briefly outlined and discussed in the Schedule of Submissions.

 

Amenity

A key concern that was raised in submissions received during advertising of the application was the suitability of the development in this location including concerns that the nature of the development, being for short stay accommodation, could potentially detract from the rural residential character of the area. In addition, concerns were raised regarding the impact of the development on the amenity of the area, including visual and noise impacts. 

 

The proposed development, including the density of the Chalets and proximity of the development to surrounding lots, is consistent with the planning framework for the Site. The Site has been designated for tourism development since the initiation of the Biddle Road Structure Plan in 1998. This is also reflected in the Commonage Consolidated Structure Plan which was subsequently endorsed in 2004. It is noted that if the Site had been developed at the time of subdivision to the same lot sizes as the rural residential lots to the south of the Site, around ten lots could have been accommodated. Dwellings on these lots could, then, have conceivably been approved to be used as holiday homes.

 

In 2007, Amendment 79 to introduce additional land use rights (A62) to the Site was gazetted. A62 allows for the consideration of up to “seven ‘single keyed’ two bedroom Chalets, three guest rooms and one manager’s residence comprising a maximum of two bedrooms” on the Site. Amendment 79 was supported by a Development Guide Plan (DGP) that indicated the seven Chalets were to be located along the southern lot boundary and the guesthouse/manager’s residences to be located in the north-western corner of the Site.

 

The scale of the proposed development now proposed five rather than seven Chalets. The current development proposes three Chalets on the north-western portion of the site where the guesthouse/manager’s residence was originally indicated on the DGP. The remaining two Chalets and Single House are proposed to be located along the southern lot boundary. Note that it is arguable that a separate ‘manager’s residence’ could have been proposed, in addition to the Single House. As such, up to three additional ‘dwellings’ could have been proposed in total. The relocation of the Single House further into the Site is considered desirable as it will improve efficiency in the case of an evacuation in a bushfire emergency and will better enable the manager to implement the BEEP including checking the Chalets as they leave the property.

 

Further discussion regarding Amendment 79, and associated DGP, is provided within the Statutory Environment section of this report below. A copy of the DGP, Biddle Road Structure Plan and Commonage Consolidated Structure Plan are provided at Attachments D, E and F respectively.

In summary, it is considered that the relevant planning framework very clearly identifies the Site as one where short stay accommodation of the nature and scale proposed can occur. In substantial part for that reason, refusing or requiring modification of the proposal because of amenity concerns is not something which could be supported. Notwithstanding that, there are some particular aspects of the proposal that reduce the potential amenity impact and these are outlined below (but, it should be noted that even if some aspects of the development were not as described below, it would not necessarily mean that the potential amenity impact would be such that refusal or modification could be supported).

 

In regards to the visual impact of the proposed development from Caudalie Way, the Chalets are proposed to be two storey in form, with a mezzanine upper level, and a skillion roof design. The Chalets are to be oriented so that the lower wall (at 4.8 metres) would face Caudalie Way. The apex of the skillion, orientated away from Caudalie Way, has a maximum height of 5.6 metres. Because the site slopes down from Caudalie Way, there is a level difference between the road and proposed floor levels of Chalets 1 – 3 of approximately 4 metres. This level difference reduces the visibility of the buildings when viewed from Caudalie Way. With the addition of landscaping, the development would be further softened from the street. Furthermore, the original DGP for the Site indicates the guesthouse/manager’s residence in this location. It is considered that a guesthouse/manager’s residence would have had a greater visual impact as viewed from Caudalie Way than the proposed Chalets, as it would likely have been a larger structure.

 

In relation to the visual impact of the development on the adjoining Rural Residential zoned properties to the south, it is noted that the proposed floor levels of the Chalets and Single House are approximately 5 to 7 metres lower than the ground level of the houses on the adjoining properties. The southern lot boundary is considered to be a side boundary and therefore a 15 metre setback is prescribed under the Scheme. Chalets 4 and 5 comply with the required setbacks of the Scheme with a proposed setback of 23 metres. The Single House proposes a 12.5 metre setback, however, this setback is considered to be acceptable as it is a relatively minor discretion in the context and facilitates the retention of vegetation to the north of the Single House. The applicant has submitted cross-sections which indicates these level differences (provided as part of the Development Plans at Attachment C). Taking into consideration the setbacks, level differences, future landscaping as well as the relatively small size of the Chalets, it is considered that the development is appropriate in the context of the site and will not have an unacceptable adverse impact on the amenity of the area.

 

In response to concerns raised in submissions regarding potential noise from patrons of the Chalets, it is noted that noise generated by people talking is not controlled under the Environmental Protection (Noise) Regulations 1997 (‘Noise Regulations’). However, if amplified music is played by patrons of the Chalets or residents of the Single House, it will be required to comply with the Noise Regulations. It is considered that the presence of a manager on site will assist with the supervision and control of guest behaviour.

 

Environment

The proposed development has been designed to reduce the remnant vegetation that would need to be removed to accommodate the development and associated Asset Protection Zones (APZ). The applicant engaged a consultant to undertake an assessment of the vegetation that is intended to be cleared. That report was referred to the Department of Biodiversity, Conservation and Attractions (DBCA) which has advised that it is satisfied with the proposal. City officers agree that the design and location of the development enables the retention of vegetation while achieving compliance with the bushfire requirements.

 

A copy of the Assessment of Vegetation within proposed Asset Protection Zones and comments from DBCA are provided at Attachment G and H respectively.

 

 

Bushfire

The proposed development has been assessed against the requirements of SPP3.7, the Position Statement and the Guidelines. At the time that the application was originally submitted in 2018, the application did not meet the Acceptable Solutions of the Guidelines, and therefore the application was put on hold awaiting the Position Statement.

 

The Position Statement, which was released in October 2019, provides an alternative pathway to enable the consideration of tourism land uses, including Short-term Accommodation such as Chalets, where they do not comply with an Acceptable Solution of the Guidelines. Note that the Position Statement is a higher order document than the Guidelines.

 

The applicant subsequently submitted a revised BMP, including a BEEP and risk assessment, in accordance with the Position Statement. This final version of the BMP, including the BEEP and risk assessment, were referred to Department of Fire and Emergency Services (DFES) for comment in accordance with the requirements of the Guidelines. As part of the referral response, DFES have advised that they do not support the proposal as it is not in accordance with the Acceptable Solutions of the Guidelines. The City has previously received general advice from DFES that they will not support any proposal that does not meet the Guidelines, even if it is supported by the Position Statement. It is understood from discussions with DFES and DPLH that this is an organisational position of DFES, However, as DFES are not the ‘decision makers’, their advice only requires due regard.

 

City officers are satisfied that the proposal meets the requirements of the Position Statement as demonstrated within the BMP and supporting risk assessment. City officers, therefore, consider that the proposal can be supported by the City in accordance with the Position Statement. All bushfire documentation submitted in support of the proposal has been prepared by Level 3 bushfire planning practitioners. In addition, the risk assessment prepared in support of the development application has been independently peer reviewed by another Level 3 bushfire planning practitioner. City officers consider that the preparation and review of this documentation by suitably qualified professionals demonstrating compliance with the requirements of the Position Statement is sufficient for the application to be supported despite the lack of support from DFES.

 

Further discussion regarding the bushfire planning framework is provided at Attachment K and a copy of the BMP, including BEEP risk assessment are provided at Attachment I. A copy of the submission responses from DFES are provided at Attachment L.

 

Statutory Environment

The key statutory environment is set out in the City of Busselton Local Planning Scheme 21 (Scheme), the Planning and Development (Local Planning Schemes) Regulations 2015 (Regulations), Schedule 2 of which is the ‘deemed provisions’, which also functionally form part of the Scheme.  Key aspects of the Scheme and Regulations relevant to consideration of the application are set out below.

 

Matters to be Considered

Clause 67 of the deemed provisions within the Regulations sets out ‘matters to be considered’ by a local government in considering an application for development approval. The following matters are considered to be relevant to consideration of this application:

(c)       any approved State planning policy;

(d)       any environmental protection policy approved under the Environmental Protection Act 1986 section 31(d);

(g)       any local planning policy for the Scheme area;

(m)     the compatibility of the development with its setting including the relationship of the development to development on adjoining land or on other land in the locality including, but not limited to, the likely effect of the height, bulk, scale, orientation and appearance of the development;

(n)       the amenity of the locality including the following —

             (i)    environmental impacts of the development;

             (ii)   the character of the locality;

             (iii) social impacts of the development;

(o)       the likely effect of the development on the natural environment or water resources and any means that are proposed to protect or to mitigate impacts on the natural environment or the water resource;            

(p)       whether adequate provision has been made for the landscaping of the land to which the application relates and whether any trees or other vegetation on the land should be preserved;

(q)       the suitability of the land for the development taking into account the possible risk of flooding, tidal inundation, subsidence, landslip, bush fire, soil erosion, land degradation or any other risk;

(s)       the adequacy of —

(i)  the proposed means of access to and egress from the site; and

(ii) arrangements for the loading, unloading, manoeuvring and parking of vehicles;

(t)        the amount of traffic likely to be generated by the development, particularly in relation to the capacity of the road system in the locality and the probable effect on traffic flow and safety;

(x)       the impact of the development on the community as a whole notwithstanding the impact of the development on particular individuals;

(y)       any submissions received on the application;…

 

Zoning

The site is zoned ‘Rural Residential’ under the Scheme. The relevant Objectives of the ‘Rural Residential’ zone are as follows:

 

b.         To provide opportunities for a range of limited rural and related ancillary pursuits on rural-residential lots where those activities will be consistent with the amenity of the locality and the conservation and landscape attributes of the land.

 

c.         To set aside areas for the retention of vegetation and landform or other features which distinguish the land.

 

Clause 4.38 - Special Provisions relating to the Rural Residential zone

As the Site is zoned Rural Residential the provisions of clause 4.38 of the Scheme apply. The development is generally consistent with the requirements of clause 4.38 with the exception of some of the setbacks to the southern lot boundary, road reserve and creek line which is discussed further below. 

 


 

The required setbacks under the Scheme for any development in the Rural Residential zone are 20 metres to any road and/or a front or rear boundary, 15 metres to a side boundary and 30 metres from the centre line of any creek. In this instance the proposed setbacks of the proposed development are as follows:

 

·        Chalet 1 – 13 metres to Caudalie Way and 19 metres from the eastern boundary;

·        Chalet 2 – 31.5 metres to Caudalie Way and 19 metres from the eastern boundary;

·        Chalet 3 – 23.5 metres to Caudalie Way and 19 metres from the creek line;

·        Chalet 4 – 23 metres to southern lot boundary and 14 metres from creek line;

·        Chalet 5 – 23 metres to southern lot boundary and 39 metres from the northern lot boundary;

·        Single House – 12.5 metres to southern lot boundary and 25 metres from the northern lot boundary.

 

Further discussion regarding the location of the development, including the visual impact of the development form the Caudalie Way road reserve and southern lot boundaries, is provided in the Officer Comment section of this report above.

 

In relation to the setbacks of development to the creek line, City officers considered that the proposed setbacks to the creek line are acceptable and are consistent with the original DGP. The vegetation on the Site, including riparian vegetation along the creek line, is already relatively degraded and lacks the composition and integrity of different vegetation layers due to stock grazing on the Site prior to the development of the area. The Chalets have been located to ensure that minimal amount of vegetation is required to be cleared and such that no riparian vegetation will need to be removed to accommodate the development or associated APZs.

 

It is noted that if any clearing of riparian vegetation is required the applicant will be required to obtain a clearing permit from Department of Water, Environment and Regulations, which is a separate process to the development application. In regards to the required separation distance of effluent disposal systems to the creek line, details of effluent disposal systems, including the type and location, are required to be provided to the City prior to the commencement of development. At this time any potential impacts in relation to contaminants from the septics into the watercourse will be assessed with supplementary treatment required if deemed necessary.

 

Clause 5.4 – Landscape Value Area

The site is located within the Landscape Value Special Control Area under the Scheme and therefore is subject to the following provisions of the Scheme:

 

5.4.1 The local government shall not grant development approval for the clearing or development of any land identified within a Landscape Value area on the Scheme map, unless it has considered –

 

(a)       whether the development will be compatible with the maintenance and enhancement, as far as is practicable, of the existing rural and scenic character of the locality;

(b)      whether the development will materially affect any wildlife refuge, significant wetland, coastal environment or any identified site containing Aboriginal archaeological relics; and

 

(c)       disturbance to the natural environment, including -

 

(i)        visual effects of clearing for development;

 

(ii)       maintenance of rural character; and

 

(iii)      habitat disturbance.

 

5.4.2  The local government shall not grant development approval for the carrying out of development on land within the Landscape Value area or on land on or near any ridgelines where, in the opinion of the local government, that development is likely to substantially detract from the visual amenity of the area, having regard to, among other things, the cumulative visual effect of the development related to other development that may be anticipated in the locality and in the area generally.

 

    5.4.3    Before granting development approval for the erection of a building on land within the Landscape Value area, the local government shall make an assessment as to whether it should impose conditions relating to –

 

(a)      the siting of the proposed building;

 

(b)      the use of prescribed materials on the external surfaces of the building; and

 

(c)       the number, type and location of existing trees and shrubs which are to be retained and the extent of landscaping to be carried out on the site.

 

  5.4.4   In clause 5.4.3 –

 

"external surfaces" means the external walls and cladding (if any), external doors, external door and window frames, columns, roofs, fences and any surface of a building or work visible from the exterior of a building or work; and

 

"prescribed materials" means materials with dark tones or dark colouring and of low reflective quality or materials which are painted or similarly treated with dark toned or dark coloured paint or pigment of low reflective quality.

 

Details of ‘external surfaces’ will be required to be provided prior to the commencement of development if an approval is granted. These ‘external surfaces’ will be required to comply with the ‘prescribed materials’ as outlined in clause 5.4 of the Scheme.

 

Clause 3.7 Additional Uses of the Scheme and A62

Clause 3.7 Additional Uses of the Scheme states as follows:

 

Notwithstanding anything contained in the Zoning Table, the land specified in Schedule 2 may be used for the specific use or uses that are listed in addition to any uses permissible in the zone in which land is situated subject to the conditions set out in Schedule 2 with respect to that land.

 

In 2004, the City initiated a Scheme Amendment (Amendment 79) to then Town Planning Scheme No. 20 and an associated Development Guide Plan (DGP). Amendment 79 proposed to introduce additional land use rights to the Site including nine Chalets, a three-bedroom guesthouse and manager’s residence. Amendment 79 was revised to a maximum of seven Chalets which were shown on the associated DGP along the southern lot boundary of the site with the guesthouse and manager’s residence to be located in the north-western portion of the lot. To support Amendment 79 a number of documents including traffic impact assessment and environmental assessment where submitted by the Applicant. Amendment 79 was gazetted on 16 March 2007.

 

An excerpt of A62 is provided in the report above and a copy of the approved DGP is provided at Attachment D.

Relevant Plans and Policies

The policies affecting this proposal include:

·        State Planning Policy 3.7 : Planning in Bushfire Prone Areas and associated Guidelines (SPP3.7)

·        Leeuwin Naturaliste Sub-regional Strategy (LNSRS) and associated State Planning Policy 6.1: Leeuwin-Naturaliste Ridge (SPP6.1)

·        City of Busselton Local Planning Policy: Rural Tourist Accommodation

 

SPP3.7

SPP3.7 guides how development should address bushfire risk management in Western Australia. It applies to all land that has been designated as ‘bushfire prone’ by the Fire and Emergency Services Commissioner as highlighted on the Map of Bush Fire Prone Areas. The accompanying Guidelines provide supporting information to assist in the interpretation of the objectives and policy measures outlined in SPP3.7, providing advice on how bushfire risk is to be addressed when planning, designing or assessing a planning proposal within a designated bushfire prone area.

 

Under the SPP3.7 and the Guidelines the Chalets are considered to be ‘Vulnerable Land Use’ and as such a BMP and BEEP were required to be submitted as part of the development application. In addition, SPP3.7 requires that development applications for ‘Vulnerable Land Use’ in ‘bushfire prone’ areas be referred to the DFES for comment.

 

Discussion regarding the proposals compliance with these requirements are provided in the Officer Comment section of this report.

 

LNSRS and SPP6.1

The LNSRS is an overarching planning document that guides the future planning and development of all the land within the local government areas of the Shire of Augusta-Margaret River and the City of Busselton. The Leeuwin-Naturaliste Sub-regional Strategy was released on May 2019 with the following vision for the Leeuwin-Naturaliste sub-region:

 

The Leeuwin-Naturaliste sub-region to continue to develop and be managed in a manner consistent with the character, amenity and value of the natural and built environments, and the efficient use and equitable distribution of resources.

 

The Site is designated as ‘Rural Landscape Significance’ under Figure 3 – Landscape Classes Map and Rural Residential under Figure 5 – Land Use Strategy Plan of SPP6.1. The relevant and applicable policy of this landscape class (PS) and policy of this land use strategy (LUS) are as follows:

 

PS 3.6 In areas of Rural Landscape Significance, as identified in Figure 3, development or change of use should protect the rural character of the land.

 

LUS 1.25 Subdivision and development design that facilitates better use of land already committed for Rural Residential development will be encouraged. Assessment of proposals will address the following criteria—

·        provision for clustered settlement;

·        provision of community-based activities and services;

·        provision for walking, cycling and possible future public transport;

·        opportunities for local enterprise development such as limited small-scale tourism development, including accommodation, attractions and cottage industries; and

·        suitability for small-scale intensive agriculture.

It is considered that the proposed development is consistent with and meets the above mentioned policies of SPP6.1.

 

City of Busselton Local Planning Policy - Rural Tourist Accommodation

Local Planning Policy - Rural Tourist Accommodation (LPP) provides assessment criteria for different types of tourist accommodation in rural areas, including Rural, Viticulture and Tourism, Rural Landscape, Conservation and Rural Residential zones, throughout the City. As ‘Chalets’ are a prohibited (“X”) land use in the Rural Residential zones generally the provisions applicable to Chalets within this LPP are not applied within the Rural Residential zone however have been given consideration, where applicable, in the assessment of this development application.

 

It is noted that the density and minimum lot size provisions of this LPP have not been considered and are not applicable on the basis of that the site has additional land use rights for seven Chalets under A62.  The setback requirements are also not considered applicable on the basis that the DGP indicates the Chalets with a similar setback to that which is proposed as part of this application.

 

Under the LPP, a potable water supply of 80,000 litres per annum per Chalet to be provided which has been enforced via a condition of development approval.

 

South Biddle Road Structure Plan

The South Biddle Road Structure Plan was first initiated by the Council on 5 August 1998 (C988/0276 refers). The original structure plan and supporting documentation indicated the Site as a “unique tourist site” and included a café/restaurant, lodge and 16 Chalets on the Site. As part of the report to the Council to initiate the Structure Plan, City officers indicated that while 16 Chalets was considered excessive, little information on the development had been provided and that matters regarding the scale of the development should be addressed in a future scheme amendment to re-zone the property prior to development for these uses.

 

Modifications to the South Biddle Road Structure Plan were endorsed in 2002. As part of these modifications to the South Biddle Road Structure Plan a notation regarding the Site being suitable for café, restaurant, lodge and Chalets would be subject to a separate future re-zoning was included. In addition, a notation was placed on the Site which states as follows:

 

Tourist Development of proposed Lot 40 will be of a nature that generates no greater vehicular traffic than that commonly associated with rural residential or low intensity tourist development (i.e. A maximum of 50 vehicle movements per day)

 

Commonage Consolidated Structure Plan (CCSP)

The CCSP covers the entire Commonage Rural Residential area and was endorsed in 2004 subsequent to the South Biddle Road Structure Plan. The Site is indicated in the CCSP as a “proposed Tourist Development” with a “tree planting area/revegetation buffer/habitat corridor/non-development area” running along the southern and eastern portion of the site. The CCSP also has a number of development requirements which include setbacks to lot boundaries, setbacks to streams, building materials, building heights and retention of vegetation that apply to all development subject to the CCSP.

 

The provisions of the CCSP are generally consistent with the requirements of the Scheme as discussed further above. 

Financial Implications

There are no financial implications associated with the Officer Recommendation.

Stakeholder Consultation

Clause 64 of the deemed provisions sets out circumstances in which an application for development approval must be advertised, and also sets out the means by which applications may be advertised. As the development proposes a permitted (Single House) and a discretionary (Chalets) land uses the development was not required to be advertised, however, the City chose to advertise the application due to the nature of the development.

 

The application was referred via letter to four neighbouring landowners from 9 August 2018 to 30 August 2018. A total of 29 submissions, all objecting to the proposed development, were received from surrounding landowners.

 

The key concerns raised from the submissions are summarised below:

·        Suitability of development and potential detrimental impact on the rural residential character of the area; and

·        Potential impact of the development on the amenity of the area, including visual, noise and anti-social behaviour; and

·        Amount of vegetation required to be removed to accommodate the development; and

·        Additional traffic generated by the development; and

·        Increase to bushfire risk and places additional people at risk in a bushfire event.

The purpose of public consultation is to provide an opportunity for issues associated with a proposed development to be identified by those who potentially may be affected.  A development application should not be approved or refused based on the number of submissions it receives, for or against, rather all applications must be determined on the merits of the particular proposal, including consideration of any relevant planning issues raised through consultation.  

 

A schedule of submissions and a map indicating the location of submitters is provided at Attachment M. The schedule identifies who submissions were received from and summarises the submissions and the map identifies the location of the submitters in relation to the Site.

Risk Assessment

An assessment of the potential implications of implementing the Officer Recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. The key risks associated with the development are considered to be reputational and potential professional indemnity (financial) risk to the City, principally related to the bushfire planning considerations.  Officers are satisfied that a robust assessment of the proposed development has been undertaken and that should an approval be issued, and a bushfire later affect the lot, impacting either built form or life, the decision would be deemed reasonable limiting any reputational and professional indemnity risk to an acceptable level.

 

Options

As an alternative to the proposed recommendation the Council could:

1.    Refuse the proposal, setting out reasons relating to traffic, noise, visual amenity, rural-residential amenity, environmental concerns and bushfire risk; or

2.    Refuse the proposal, setting out reasons relating to the bushfire risk; or

3.    Apply additional or different conditions.

 

Officers do not support Option 1 as it is considered unlikely a sound argument could be mounted, should there be a review by the State Administrative Tribunal, for refusing the application on the majority of these grounds. 

 

While Option 2 has not been recommended, it is noted that officers seriously considered whether this would be an appropriate recommendation to Council given the complexity of the bushfire considerations for this site and the conflict created in the State bushfire planning framework, being that the co-endorsement of DFES for a BMP & BEEP would generally be required, but DFES have indicated that they will not endorse any development application which uses the Position Statement to justify non-compliance with SPP3.7 or the Guidelines.  On balance however, and given that State Planning Policy should not be applied inflexibly, it was considered more appropriate in this instance to support the proposal and recommend approval. It is perhaps worth reiterating that the proposal has been through a very extensive process to assess bushfire risk issues, including review by City officers with a significant background and experience in the area, as well as the input of two Level 3  ‘BPAD’ assessors (the highest level of accreditation available).

 

CONCLUSION

Subject to the inclusion of relevant conditions, the proposal is considered appropriate to support and it is accordingly recommended for approval.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

The applicant and those who made a submission will be advised of the Council decision within two weeks of the Council meeting.

 


Council

93

24 June 2020

13.1

Attachment a

Location Plan

 


Council

96

24 June 2020

13.1

Attachment b

Aerial and site photos

 


 


 


Council

100

24 June 2020

13.1

Attachment c

Development Plans

 


 


 


 



 


 


 


 


 



 


 


Council

110

24 June 2020

13.1

Attachment d

Development Guide Plan

 


Council

111

24 June 2020

13.1

Attachment e

South Biddle Structure Plan

 


Council

112

24 June 2020

13.1

Attachment f

Commonage Consolidated Structure Plan

 


Council

119

24 June 2020

13.1

Attachment g

Assessment of Vegetation within proposed Asset Protection Zones

 


 


 


 


 


 


 




Council

127

24 June 2020

13.1

Attachment h

Department of Biodiversity, Conservation and Attractions submission

 


 


 


 


 


 


Council

140

24 June 2020

13.1

Attachment i

Bushfire Management Plan

 


 


 


 


 


 


 


 


 


 


 


 


 



 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 



 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


Council

218

24 June 2020

13.1

Attachment j

Peer Review

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Council

221

24 June 2020

13.1

Attachment k

Officer assessment against bushfire planning framework

 


 


 



Council

233

24 June 2020

13.1

Attachment l

Department of Fire and Emergency Services submissions

 


 


 


 


 


 


 


 


 


 


 


Council

243

24 June 2020

13.1

Attachment m

Summary of submitters and map of submitters

 


 


 


 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Council

254

24 June 2020

 

16.             Finance and Corporate Services Report

16.1           HOTEL DEVELOPMENT AND LEASING ARRANGEMENTS - HOTEL SITE 2, BUSSELTON FORESHORE

STRATEGIC GOAL

4. ECONOMY Diverse, resilient, prosperous

STRATEGIC OBJECTIVE

4.1 An innovative and diversified economy that provides a variety of business and employment opportunities as well as consumer choice.

SUBJECT INDEX

Busselton foreshore redevelopment

BUSINESS UNIT

Corporate Services

REPORTING OFFICER

Legal Services Coordinator - Cobus Botha

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Quasi-Judicial: to determine an application/matter that directly affects a person’s right and interests e.g. development applications, applications for other permits/licences, leases and other decisions that may be appealable to the State Admin Tribunal.

VOTING REQUIREMENT

Absolute Majority

ATTACHMENTS

Attachment a   Plan Hotel Site 2

Attachment b    Busselton Foreshore Structure Plan  

 

COUNCIL DECISION AND OFFICER RECOMMENDATION

C2006/063              Moved Councillor P Carter, seconded Councillor L Miles

 

That the Council:

 

1.    Notes that, in accordance with Section 3.59 of the Local Government Act 1995 (WA):

a.    The City of Busselton prepared a business plan in relation to a proposed sub-lease of a portion of Lot 503 Foreshore Parade, located within Reserve 38558 (Hotel Site 2) on the terms and conditions outlined in this report;

b.    Statewide notice, stating that the City proposes to enter into the Sublease, was given;

c.     A copy of the business plan was made available for public comment and submissions about the Sublease were invited; and

d.    No submissions have been received.

 

2.    Resolves to enter into a lease with the State of WA in relation to Hotel Site 2 (Head Lease) on the following terms and conditions:

a.    Term: Up to 65 years

b.    Rent: $1,000 + GST per year

c.     Permitted purpose: Hotel/Short stay accommodation

d.    Such further terms and conditions as agreed upon pursuant to resolution 4.

 

3.    Resolves to sublease, subject to the Minister for Planning, Lands and Heritage’s consent, Hotel Site 2 to Pacifica Ausglobal Busselton Pty Ltd ACN 637 353 710 (Sublessee) on the following terms and conditions (Sublease):

a.   Term: 35 Years with an option to extend for a further term of 30 years (at the Sublessee’s option)

b.  Rent: Year 1 - $100 + GST

Year 2 - $25,000 + GST

Year 3 - $50,000 + GST

Year 4 - $75,000 + GST

Year 5 - $105,000 + GST

Year 6 and onwards - Previous year’s rent annually reviewed and adjusted in accordance with CPI, with market rent reviews to be undertaken every 5 years

c.   Permitted purpose: Hotel/Short stay accommodation

d.  Such further terms and conditions as agreed upon pursuant to resolution 4.

 

4.    In respect to resolutions 2 and 3 delegate power and authority to the Chief Executive Officer to:

a.    Negotiate and agree with the State of WA the further terms and conditions of the Head Lease as outlined in this report;

b.    Negotiate and agree with the Sublessee the further terms and conditions of the Sublease as outlined in this report;

c.     Enter into the Head Lease and Sublease on behalf of the City; and

d.    Make from time to time such minor variations to the Head Lease and Sublease as may be necessary or appropriate for successfully delivering the proposed hotel project in accordance with this report.

CARRIED 9/0

BY ABSOLUTE MAJORITY

 

EXECUTIVE SUMMARY

The purpose of this report is to seek formal Council approval to enter into the necessary agreements to facilitate development of a proposed 110-room 4 star Hilton Garden Inn branded hotel on Hotel Site 2 on the Busselton foreshore; and ratify the terms and conditions of a proposed head lease between the City and the State of WA and a sublease between the City and Pacifica Ausglobal Busselton Pty Ltd (Pacifica).

 

BACKGROUND

The Busselton foreshore is ideally located to take advantage of Busselton’s temperate climate and opportunities offered by the iconic Busselton Jetty and the exceptional scenery that overlooks Geographe Bay. Since 2009, Council has initiated public interest in and support for revitalising the Busselton foreshore. 

 

Following an extensive public consultation process, the Busselton Foreshore Master Plan (BFMP) was adopted by Council on 28 March 2012 (C1203/073).

 

The BFMP covers an area of approximately 38 hectares of combined commercial, cultural and public space on the Busselton foreshore, and aims at providing, among other things, a unique water’s edge visitor/tourist experience. The BFMP initially identified five potential sites for hotel/short stay accommodation, but following a commercial analysis (conducted by the City) and due to environmental requirements in relation to providing a “possum corridor” in this area, the number of hotel/short stay accommodation sites were reduced to three.

 

In 2013, following further extensive public consultation and engagement with key government agencies and existing commercial lessees in this area, Council and the Western Australian Planning Commission adopted the then Busselton Foreshore Development Guide Plan. There have been several minor revisions made to that plan subsequently, including re-adopting it as the Busselton Foreshore Structure Plan (Structure Plan) in 2016 (including the change in nomenclature which reflected the Planning and Development (Local Planning Schemes) Regulations 2015 introduced in 2015).


 

The Structure Plan references town planning controls such as land use, building heights and floor areas and incorporates the 3 short stay accommodation sites referenced in the BFMP, one of these being “Hotel Site number 2” as shown stippled black on the plan at Attachment A (Hotel Site 2). 

 

Hotel Site 2

Hotel Site 2 currently forms part of Lot 503, located within Reserve 38558 on the Busselton foreshore.  Reserve 38558 is Crown land vested in the City for recreation and tourism. In line with the current policy of the Department of Planning Lands and Heritage, commercial leasing within Reserve 38558 requires excision of the area to be leased to create a separate lot. In accordance with these requirements, the City engaged a licensed surveyor to prepare a draft deposited plan for the purposes of excising Hotel Site 2 and creating a separate lot (proposed Lot 600, Foreshore Parade). This process will be finalised through Landgate once the formalities mentioned in this report have been addressed.

 

Similar to the tenure arrangements for the adjacent family restaurant/microbrewery development, Hotel Site 2 is intended to be the subject of a head lease granted by the State of WA to the City of Busselton, enabling the City to offer a sublease to the developer for the purposes of its proposed hotel project. Further detail about the proposed head lease is discussed in the Officer Comment section of this report.

 

Agreement to Sublease

Pacifica is implementing a strategy of developing upscale hotels in regional locations across Australia. The locations for development are selected on the basis of their existing economic activity base, potential for growth, distinct tourism potential, idiosyncratic locations and the existing accommodation stock. Pacifica have recently commenced construction of Hilton operated hotels in Karratha and Kalgoorlie (in partnership with the respective local governments).

 

Following an expression of interest process to recruit potential hotel developers and/or operators of short stay accommodation for the Busselton foreshore, Council resolved on 22 November 2017 (C1711/287) to:

 

·    Nominate Pacifica as preferred proponent for the development of Hotel Site 2; and

·    Authorise the CEO to negotiate and enter into a non-binding heads of agreement with Pacifica. 

 

In December 2017, the City and Pacifica entered into a non-binding heads of agreement which, among other things:

                           

·    Allowed Pacifica to conduct a detailed due diligence investigation into developing a luxury hotel at Hotel Site 2; and

·    Committed the City and Pacifica to negotiate exclusively and in good faith a mutually acceptable commercial and legal structure for securing tenure and development terms for this project.

 

Pursuant to the heads of agreement Pacifica submitted in November 2018, a concept design was developed for a proposed 110-room 4 star Hilton Garden Inn branded hotel to be developed on Hotel Site 2 (Hotel Project). The Hotel Project was generally acceptable to the City and consequently the City and Pacifica negotiated and agreed to progress the Hotel Project on the following terms and conditions:

 

·    Granting of a long term sublease of Hotel Site 2 to provide Pacifica, providing security of tenure for delivering the Hotel Project;

·    Pacifica agreeing to develop the Hotel Project in accordance with a design and within a timeframe approved by Council; and

·    The proposed sublease and development of the Hotel Project being conditional upon:

 

The City procuring a head lease of Hotel Site 2 from the State of Western Australia;

The City procuring the Minister for Lands’ consent to the proposed sublease;

The City complying with the requirements under Sections 3.58 and 3.59 of the Local Government Act 1995;

Council formally approving the head lease, sublease and Hotel Project; and

Pacifica obtaining development approval for the Hotel Project and a “senior debt facility” to finance the Hotel Project.

 

·    The developers nominated Pacifica Ausglobal Busselton Pty Ltd as the contracting party.

 

The City and Pacifica formalised the abovementioned arrangements by way of a development deed entered into on 6 December 2019 (Agreement to Sublease). The Agreement to Sublease, head lease, proposed sublease and the public consultation process under Section 3.59 are discussed in more detail in the Officer Comment and Statutory Environment sections of this report.

 

City officers and Pacifica representatives have briefed Councillors at various stages about the nature and extent of the Hotel Project and the terms and conditions of the proposed sublease of Hotel Site 2, with Councillors consistently indicating their support for the development concept and the broader course of action. This report records the City’s compliance with the requirements under Section 3.59 of the Local Government Act 1995 (to the extent that it applies to the project) and recommends that Council formally approve the key terms and conditions of the proposed head lease and sublease.

 

OFFICER COMMENT

Since inception of the Busselton Foreshore Masterplan, development of one or more hotels within the Busselton foreshore precinct has been planned for.

 

The Hotel Project concept is for a 4 storey hotel complex comprising:

 

·    110 Luxury hotel rooms (4-star rating)

·    30 bay on-site carpark

·    Amenity and services located at ground level

·    Meeting and board room facilities

·    North facing rooftop function room with a viewing deck

·    Food and beverage facility aligned with the brand offering (and cognisant of the food and beverage offerings within walking distance of the premises)

·    Hotel operating agreement with the Hilton Group for branding and managing the hotel as a Hilton “Garden Inn”

 

The Hotel Project will require Pacifica to invest a significant amount of money in construction and fit out of the hotel building, estimated to be in excess of $20 million.

 

There are currently no 4-star hotels within the Busselton foreshore precinct or the Busselton inner city centre. The Hotel Project is expected to cater for existing broad demand for group, business and leisure accommodation in this location, as well as for additional room nights that can be expected following introduction of interstate and international flights from the upgraded Busselton-Margaret River Airport and completion of the City’s performing arts centre (BEACH project).

 

The provision of the proposed quality accommodation in such a central and desirable location will be a significant asset for tourism in the region. It further validates the potential created by several tens of millions of dollars of public investment in the Busselton foreshore over the last decade.


 

In addition, the proposed development is expected to create a significant number of jobs over both the short and long term, which should have a positive impact on local business and benefit the local community.

 

The Hotel Project is also expected to reduce, over the term of the sub-lease, the City’s liability to contribute municipal funds towards the ongoing maintenance and enhancement of the Busselton foreshore precinct and in the process relieve, to a certain extent, the onus on the City’s ratepayers.

 

Land tenure in respect to Hotel Site 2 will be structured as follows:

 

·    A head-lease from the State of Western Australia to the City for a period of 65 years, with the power to sublease; and

·    A sub-lease from the City to Pacifica (Pacifica Ausglobal Busselton Pty Ltd) for a period of up to 65 years for the purpose of developing and operating the Hotel Project. 

 

Head Lease

Subject to Council approval, City Officers are at the point of finalising the head lease for Hotel Site 2 with the Department of Planning Lands & Heritage (acting on behalf of the State of WA). The key terms and conditions of the head lease are:

 

·    Lease area

¾  The total extent if Hotel Site 2 is 3,685m2 comprising of an area of 2,265m2 for the hotel building footprint and 1,420m2 for the hotel carpark.

¾  The lease area is to be excised from Reserve 38558 and a separate title created (proposed Lot 600).

·    Term

¾  Up to 65 years.

·    Permitted use

¾  Hotel/short stay accommodation and associated car parking.

·    Rent

¾  $1,000 per year + GST.

¾  Rent review every 5 years (but will remain a nominal value).

·    Reserve account

¾  Rent income from sublease is to be deposited in the City’s Jetty Maintenance Reserve and applied to the maintenance and repair of the Busselton Jetty and, with the head lessor’s permission, capital improvements of the Busselton Jetty and the maintenance, capital improvement and care of the Busselton foreshore area.

·    Ministerial approval

¾  Dealings with any interest in the head lease or Hotel Site 2 must be approved by the relevant Minister.

·    Indicative commencement date

¾  1 January 2021.

 

Agreement to Sublease and Sublease

The Agreement to Sublease established the legal framework for the City and Pacifica to negotiate and, subject to Council and Ministerial approval, enter into a sublease of Hotel Site 2.

 

In terms of the Agreement to Sublease, Pacifica had to obtain development approval for the Hotel Project and a “senior debt facility” to finance the Hotel Project. Development approval for the Hotel Project was granted by the Southern Joint Development Assessment Panel pursuant to their meeting on 14 April 2020. Pacifica has also indicated that its financial arrangements for the Hotel Project are in place.

 


 

The Agreement to Sublease requires the City to:

 

·    Secure a head lease of Hotel Site 2 (see discussion under Head Lease above).

·    Obtain Ministerial consent for the sublease (the Department of Planning, Lands and Heritage indicated “in-principle” approval of the sublease. The Minister’s consent will be obtained once the sublease is ready for execution).

·    Comply with the requirements under Sections 3.58 and 3.59 of the Local Government Act 1995 (see the Statutory Environment section of this report).

·    Undertake and complete the following works:

 

Provide water, electricity, gas and sewerage connections to Hotel Site 2.

Construct the hotel and adjacent public carpark.

Landscaping of all road verges and footpaths adjacent to Hotel Site 2 and the adjacent public carpark.

 

These works, with an estimated cost of $350,000, must be completed within 3 months after the sublease commencement date.

 

Council’s approval of the sublease is required. The key terms and conditions of the sublease are:

 

·    Lease area

¾  Hotel Site 2.

·    Construction conditions

¾  Pacifica to construct the proposed hotel complex at their cost and risk, in accordance with concept design approved by the City.

¾  There is no obligation on the City to contribute towards the construction costs of the hotel complex, other the City works mentioned above.

·    Term

¾  35 Years with an option to extend for a further term of 30 years (at the sub-lessee’s option).

·    Permitted use

¾  Hotel/short stay accommodation and associated car parking.

·    Rent

¾  $105,000 per year + GST based on:

Market rent value of “ground lease” of the portion of land to be used for the hotel building - $100,000/year + GST; and

$5,000/year + GST for the hotel carpark, calculated with reference to the requirements under the City’s policy in relation to “cash-in-lieu” carpark contribution.

¾  The full rent amount will be phased in as follows:

Year 1 - $100 + GST

Year 2 - $25,000 + GST

Year 3 - $50,000 + GST

Year 4 - $75,000 + GST

Year 5 - $105,000 + GST

Year 6 and onwards - Previous year’s rent annually reviewed and adjusted in accordance with CPI, with market rent reviews to be undertaken every 5 years.

·    Security

¾  The sub-lessee to provide:

Rent bond equal to one year’s rent ($105,000); and

Performance bond of $500,000 for the duration of the construction phase.

¾  Due to the significant upfront investment by the sub-lessee personal (directors’) guarantees are not required.

·    Rates and outgoings

¾  Payable by sub-lessee.

·    Insurance

¾  Effected and maintained by sub-lessee.

·    Building maintenance

¾  Undertaken by sub-lessee at sub-lessee’s cost.

·    Contamination and pollution

¾  Sub-lessee responsible for any contamination and pollution caused by its business operations and use of Hotel Site 2.

·    Right of first refusal

¾  The sub-lessee has a right of first refusal to either lease or purchase the Hotel Site 2 should:

¾  The State of WA and the City wishes to lease Hotel Site 2 after expiry of the sublease; or

¾  The City acquire freehold title to Hotel Site 2 during the sublease term and wishes to sell.

·    Restrictions

¾  The City undertakes not to allow for a period of 4 years from the sublease commencement date another hotel development within the Busselton foreshore precinct.

¾  The City commits (for a 10 year period) to notify Pacifica in the event of receiving a proposal from a third party for development of hotel site 1.

 

Abovementioned legal structure (the Agreement to Sublease and proposed head lease and sublease) is the result of years of planning by and negotiations between the City and Pacifica. It is considered a transparent, secure and effective structure for procuring successful delivery of the Hotel Project, striking a balance between the expectations and interests of all stakeholders (State of WA, the City and Pacifica).

Statutory Environment

Land Administration Act 1997

Hotel Site 2 is located within Crown Reserve 38558. The Hotel Project will require compliance with the Land Administration Act 1997 (WA) (LA Act), including a head lease (between the City and the State of WA) and approval of the sublease terms and conditions by the Minister for Lands. The City has on an ongoing basis consulted with the Department of Planning, Lands and Heritage about the project and obtained (at officer level) “in-principle approval” of the proposed head lease and sublease. The formalities under the LA Act will be finalised once the City and Pacifica is ready to enter into the sublease.

 

Local Government Act - disposal of property

Hotel Site 2 is, for purposes of the Local Government Act 1995 (WA) (LG Act), “local government property”.

 

Under Section 3.58 of the Act, a local government can only dispose of property (which includes granting a lease or sublease):

 

·    To the highest bidder at public auction;

·    By way of a public tender process; or

·    By giving local public notice of the proposed disposition and following the public consultation process as prescribed in sub-section 3.58(3) of the Act.

 

However, pursuant to Regulation 30(2a) of the Local Government (Functions and General) Regulations 1996 (WA) (Regulations), a disposition of land is exempt from the requirements under Section 3.58 if the local government complies with Section 3.59 of the Act.

 


 

Granting Pacifica a sublease of Hotel Site 2 could potentially constitute a “major land transaction” as contemplated under Section 3.59 of the Act.  Under section 3.59, read with Regulation 8A(1) of the Regulations, a major land transaction is defined as a land transaction of which the total value of the consideration under the transaction (and anything done by the local government for achieving the purpose of that transaction), is more than the lesser of:

 

·    $10 million; or

·    10% of the operating expenditure incurred by the local government from its municipal fund in the last completed financial year. 

 

The City’s operating expenditure for the 2018/19 financial year was $76.8m, with 10% thereof equating to $7.68m. With regard to the proposed sublease of Hotel Site 2 the estimated value for purposes of Section 3.59 is $7.175m (approximately $6.825m for the rent payable under the sublease at $105,0000/year over 65 years plus approximately $350,000 in respect to the City’s car park construction and landscaping works). However, these projections exclude any increases due to rent reviews.

 

Although the value of the proposed sublease may (potentially) not exceed above-mentioned threshold of $7.68m, given the significant nature of the Hotel project the City considered it prudent to comply with Section 3.59 of the Act. Accordingly:

 

·    The City prepared a business plan which included an overall assessment of the proposed sublease and Hotel Project (“major land transaction”);

·    Gave Statewide and local notice, stating that the City proposes to enter into the proposed “major land transaction”; and

·    Made a copy of the business plan available for public comment and invited submissions about the proposed “major land transaction”.

 

The business plan assessed the proposed “major land transaction” against a number of considerations, including the:

 

·    expected effect on the provision of facilities and services by the City;

·    expected effect on other persons providing facilities and services in the district;

·    expected financial effect on the City;

·    expected effect on matters referred to in the City’s current plan; and

·    ability of the City to manage the undertaking or the performance of a major land transaction.

 

The submission period closed in January 2020 and no submissions were received. In accordance with Section 3.59(5), Council is now required to decide (by absolute majority) whether to proceed with the “major land transaction” as proposed (or in a manner that is not significantly different from what was proposed).

Relevant Plans and Policies

The Officer Recommendation aligns to the following adopted City plans or policies:

 

Busselton Foreshore Statement of Intent

On 8 June 2011 (C1106/180), the former Busselton Shire Council adopted a ‘Statement of Intent’ for the development of the Busselton Foreshore, recognising a balanced approach is required to ensure sustainable outcomes from public and private investment. 

 


 

The statement concluded:

“the foreshore will be developed in a manner that respects Busselton’s identity and heritage whilst providing economic, social, environmental and cultural benefits to the Shire (sic) and the South West region”.

 

This statement was updated and reaffirmed by Council on 25 February 2015 (C1502/037).

 

Busselton Foreshore Master Plan (BFMP)

The most recent amendment to the BFMP was adopted by Council (C1602/031) on 24 February 2016 and identified three sites for hotels/short-stay accommodation.

 

Busselton Foreshore Structure Plan

The Structure Plan includes Hotel Site 2 in the ‘Short Stay Accommodation’ Precinct and sets the following precinct objective:

 

“This precinct will provide for high quality development sites for tourist accommodation and supporting land uses, aiming to provide active frontage to the east-west spine road, landscaped setting and retain wide view corridors between buildings.  The predominant land use in this precinct will be short stay accommodation such as hotels and serviced apartments.  Restaurants, shops and bars will be provided at ground level to address surrounding streets and the public realm”.

 

The Structure Plan also sets out the following more detailed town planning controls relating to land use, building heights and floor areas in respect to Hotel Site 2:

 

Precinct objective:

Short stay accommodation.

Use Classes:

Hotel, Tourist Accommodation, Shop, Tavern; all with ‘D’ permissibility, meaning that the use is permitted when the local government has exercised its discretion by granting development approval.

Storeys:

Four plus loft.

Maximum height:

16m Top of external wall

18m Top of external wall (concealed roof)

20m Top of pitched roof

Maximum building ground floor area:

2,265m2

 

The Southern Joint Development Assessment Panel (SJDAP) considered the Structure Plan and broader planning framework, and granted development approval for Hotel Site 2 on 14 April 2020.

 

Leasing of City Premises

The purpose of the City’s Leasing policy is to provide a framework and methodology to facilitate responsible utilisation of City owned and controlled land and buildings in a consistent manner that achieves maximum community benefit. The policy states that when assessing a report to lease public land for commercial use, Council should give regard to the following factors including, but not limited to:

 

·    Attracting investment and enhancement of an amenity (e.g. Busselton and Dunsborough foreshores);

·    Creation of employment;

·    Promotion of tourism;

·    Economic return; and

·    Impacts on social, economic and environmental outcomes.

 

The policy also states that the term and rent (and other payments) will be negotiated on a case by case basis for commercial leases.

Financial Implications

The initial annual rent payable by the City to the State of WA pursuant to the proposed head lease is a nominal amount of $1,000 + GST per year. Although the proposed head lease provides for a rent review every 5 years, it also stipulates that the rent will “remain an agreed nominal rental”.

 

The rent payable by Pacifica to the City under the proposed sublease is $105,000 + GST per year. To allow Pacifica leniency during the construction phase of the Hotel Project and to establish its business, the rent will be staged (as outlined under Officer Comment above). Rent income will be directed towards maintenance costs associated with the Busselton Jetty (and, to the extent that the Minister for Lands agrees to it, towards foreshore maintenance, preservation and improvement. Rent income from the sublease should reduce the City’s reliance on other municipal income for maintaining the Busselton Jetty and Busselton foreshore.

 

The City’s obligations with regard to constructing the hotel and adjacent public carpark and undertaking landscaping works adjacent to Hotel Site 2 is estimated to be $350,000. Provision for this expenditure has been made in the City’s 2019/20 and 2020/21 budgets.

 

Long-term Financial Plan Implications

The proposed annual expenditure on the head lease and revenue from the sub-lease have been factored into the Long Term Financial plan.

Stakeholder Consultation

Since redevelopment of the Busselton foreshore was conceptualised in 2009, the City has undertaken ongoing, extensive public consultation. This included consulting with the public on the Busselton Foreshore Master Plan and various iterations of the Busselton Foreshore Development Guide Plan, and inviting public submissions about the proposed sublease and Hotel Project. The public generally indicated strong support for redevelopment of the Busselton foreshore, including the Hotel Project.

 

The City has also worked closely with and had strong support from the Department Planning, Lands and Heritage since inception of Pacifica’s proposal to develop the Hotel Project.

Risk Assessment

Should Council adopt the Officer Recommendation, it is considered that are no residual risks rated as medium or high, as these risks, to the extent that it is reasonably and practically achievable, have been mitigated through the terms and conditions of the proposed sublease.

 

These mitigating measures include:

 

Risk

Mitigating Measures

Site Conditions

Under the sublease Pacifica assumes all risk in relation to site conditions.

Construction obligations

Under the sublease Pacifica is required to construct the hotel building in accordance with a design pre-approved by the City and within specific timeframes. A number of “construction” clauses in the sublease will regulate matters such as building variations, submitting and complying with a works program, health and safety requirements, working hours and defects liability.


 

Pacifica not completing the building

A performance bond of $500,000 is payable to the City upon commencement of the sublease, which will fund demolition site remediation costs should the Hotel Project for whatever reason fail prior to completion of the building.

Rent bond

Pacifica must provide an unconditional bank guarantee equal to one year’s rent to cover any breaches of lease conditions.

Insurance

Pacifica will be required to insure all improvements for replacement value and effect and maintain public liability insurance of $20 million in respect of any one claim.

Building maintenance

Clauses have been added to the sub-lease requiring internal and external conditions of the building to be well maintained, acknowledging that the hotel building will be strategically located within the Busselton Foreshore Precinct and in the vicinity of the iconic Busselton Jetty.

 

In general, the risk associated with the Hotel Project and proposed head and sublease is considered to be acceptable.

Options

As an alternative to the Officer Recommendation, the Council may elect to not proceed with the proposed head lease and sub-lease or resolve to amend the terms and conditions negotiated by Officers. If any Councillor is minded to any of the above options officers can assist with the drafting of a suitable alternative motion.

 

CONCLUSION

The Hotel Project and the proposed legal structure for the project should unlock a highly valuable and well-located land asset on the Busselton foreshore (that is Hotel Site 2) and balance complex land administration processes and local economic conditions.  It is also expected that this project will secure, over the long term, sound economic development outcomes for the City and the region.

This Business Plan indicates that:

·         The Hotel Project is not expected to have any adverse impacts on the provision of facilities and services by the City;

·         The benefit of the Hotel Project to the community and the broader region outweighs any expected adverse effect on other persons providing facilities and services in the district;

·         The City is expected to benefit financially from the Project; and

·         The City has sufficient capacity and capability to manage the undertaking and ongoing performance of the Project.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Should Council support the Officer Recommendation, officers should be able to finalise and arrange for execution of the head lease and sublease during August 2020. The head lease and sublease will commence on 1 January 2021, with July/August 2022 as indicative completion date of the hotel building.

 


Council

255

24 June 2020

16.1

Attachment a

Plan Hotel Site 2

 


Council

256

24 June 2020

16.1

Attachment b

Busselton Foreshore Structure Plan

 


 


Council                                                                                      260                                                                    24 June 2020

18.             Motions of which Previous Notice has been Given

18.1           MOTION TO REDUCE PROJECTED COST OF THE BEACH 

DISCLOSURE OF INTEREST

Date

24 June 2020

Meeting

Council

Name/Position

Ross Paine, Councillor

Item No./Subject

18.1 Motion to Reduce Projected Cost of the Beach

Type of Interest

Impartiality Interest

Nature of Interest

I am a member of the Busselton Repertory Club.

 

Councillor Sue Riccelli, having given notice, moved the below motion.

 

There was opposition to the motion and debate ensued.

 

COUNCIL DECISION

C2006/064              Moved Councillor S Riccelli, seconded Councillor J Barrett-Lennard

 

That the Council requests the Chief Executive Officer and Council working group to reduce the cost of the BEACH to the original forecast budget should the $9.5m repurposed Airport terminal funding from the State Government not be allocated to the BEACH project.  

LOST 1/8

For the Motion: Cr Riccelli

Against the Motion: Cr Henley, Cr Miles, Cr Paine, Cr Hick

Cr Cox, Cr Barrett-Lennard, Cr Carter, Cr Cronin

 

REASONS

The City’s original business case for the BEACH was $20.7 million. With this original forecast in mind alongside Federal Government funding, the City was still required to borrow approximately $7.5 million creating a possible 0.5% rate increase to ratepayers.

 

The BEACH project has now increased to approximately $30.3 million with a lack of community consultation and awareness. If the requested repurposing of the $9.5 million Regional Airport Development terminal funding from the State Government is not redirected towards the BEACH as proposed, this will require the City to borrow approximately $17 million which will come at a significant cost to ratepayers.

 

The majority of large performing arts centres run at a significant loss. An example being the BREC in Bunbury, which runs at a loss of approximately $1.5 million per annum and has a far greater catchment area than Busselton. Whilst the estimated attendance figures and costings provided indicated this may not be the case, I am concerned these figures are overinflated, particularly given the uncertainty of our current and future economic climate. To offset this with a $17 million loan creates a 20-year debt and significant risk to our budget and ratepayers.

 

 


 

OFFICER COMMENT

The development of a Performing Arts and Convention Centre (PAC) has been a long aspired community project that has been included in the City’s Strategic Community Plan and Long Term Financial Plan (LTFP) since 2013.  The project is one of three pillar projects the City has been progressing since 2010, alongside the Busselton and Dunsborough Foreshores and Busselton Margaret River Airport redevelopments, with the Busselton Entertainment Arts and Creative Hub (BEACH) developed as a key connector between the Foreshore and the Busselton Central Business District (CBD), revitalising the town centre through the increase of people, and importantly dollar spend in local businesses.

 

In 2019 an Expression of Interest (EoI) for architectural design services was developed based on a $21.35m budget.  By securing $10.35m from the Federal Government the City would be required to borrow $7.5m, with the balance of funds coming from the sale of the old library building ($2.6m) and in kind contributions / reserve fund transfers.

 

At Council’s request, City officers have been developing a business case to present to the State Government for additional funding, with this business case based on an optimised concept design, described further below.  This has incurred costs and considerable staff resources. With a sound business case now ready to present, officers are firmly of the opinion that the project should only proceed on the basis of the optimised design, and with a budget of $28.5m-$30.35m.  Otherwise Council risks being criticised of building a substandard facility with known shortfalls from the outset. 

 

Officers understand the intent of this motion would still enable the construction of the BEACH as per the optimised design if funding is achieved through the successful application of the business case, or if the State Government does elect to repurpose airport funds to the BEACH project. Officers also note however Item 18.2, where Councillor Riccelli is additionally seeking that the Council request the Minister for Regional Development and the Minister for Transport to support the repurposing of the airport funds to the Australian Underwater Discovery Centre, as opposed to the BEACH. 

 

With respect to the BEACH design, the original EoI in 2019 incorporated a number of objectives developed through consultation with key stakeholders. Since the engagement of Kerry Hill Architects, significant work has been undertaken by Council’s working group (consisting of elected members and staff) to refine the concept.  This has included an extensive amount of community consultation with key users (BEACH Community Reference Group), stakeholders and other PACs across Australia.  The result has been the development of an optimum design that:

 

-      maximises benefits by investing into the Centre now rather than facing known shortfalls in the future

-      addresses the ‘lesson learned’ from other benchmarked PACs to maximise functionality, ensure operational flexibility, and maximise patronage

-      improves capacity and quality of conferencing facilities within the region, meeting a current gap in the market and also complementing private and public investment on the Foreshore and within the CBD

-      incorporates the inclusion of the ArtGeo Gallery to a class AA standard, broadening the standard of exhibitions that can be hosted in the region.  This was originally identified as potential future project in the 2017 LTFP with a $2m budget

-      incorporates a ‘Creative Industries Hub’ that will provide infrastructure for the creative industries sector, capitalising on Busselton’s identification as a creative industries hotspot and taking advantage of an opportunity to diversify the local economy

-      enhances the BEACH as a community asset and broadens the user experience by including a number of different offerings, providing a range of reasons for people to visit multiple times.

 

The optimised concept design will meet the needs of the community well into the future, while remaining modest and with a significantly lower budget than other recently constructed regional PACs such as the Albany PAC and Karratha PAC, valued at $70m and $55m respectively.  The designs were advertised in the May edition of the City’s Bay to Bay publication to circa 17,000 ratepayers with minimal feedback received.

 

With a confirmed budget City officers recently undertook a review of the LTFP incorporating a $28.4m budget for the BEACH (budget excluding $500k allocated in the 2019/20 budget, $1.1m creative industries hub and $350k in-kind). Based on a worst case scenario, should State Government funding not be forthcoming, it was decided, through discussions with Councillors, that a loan of up to $17m would be modelled over a 20 year term (rather than 10 years). 

 

It was felt that this would provide for an intergenerational equity funding mechanism for a facility that would be around for over 50 years. 

 

With interest rates falling considerably from 4% to an historic low of 2.2% over the past 24 months, the loan was modelled based on a fixed rate over 20 years. The City however also has a number of loans that will expire over the life of the Draft LTFP which would reduce the impact on rates required to fund loans.  Attachment A illustrates the estimated impact on rates as a percentage to meet the loan principle, interest and fees. The estimated impact on rates range between 0.51% - 1.69% with a loan of $7.5m over 10 years and 0.83% - 2.23% with a loan of $17m over 20 years.

 

With these inputs, officers have shown that the City is able to facilitate the loan in the event that State Government funding is not received and loan funds are approved by the Western Australian Treasury Corporation.

 

It is widely known and accepted that Performing Arts Centres (PACs) operate at a cost.  This deficit is offset by the social benefits and the economic output PACs have on the local community.  Similarly, facilities such as the Geographe Leisure Centre, Naturaliste Community Centre, ArtGeo Gallery, libraries and foreshores are provided at a financial cost for the recreational and social benefit they return to the community. 

 

The City has not invested significantly into the arts and cultural sector for decades.  The arts and cultural sector has also been hit hard by the COVID-19 pandemic and restrictions.   Investment into the BEACH will not only assist in getting the industry back on its feet, it will also provide a much needed injection into the local construction industry, creating ongoing employment opportunities, and increasing spend within the Busselton CBD.  A distinguishable point of difference from nearby PACs is the inclusion of a class AA standard art gallery capable of hosting national touring exhibitions, and conference facilities capable of hosting business events of up to 400 people (seated banquet style) which will also see an economic return to the community.

 

Through the COVID-19 pandemic it has become particularly evident how vulnerable the City’s economy is without a significant industry base, and that there is an urgent need to identify and capitalise on industry diversification opportunities.  With an opportunity to enhance funding secured by the Federal Government and low interest rates, now is an opportune time to build a facility for the future instead of building a facility that will have known shortfalls and not meet the needs and expectations of the community.

 

Should Council support this notice of motion and not receive any additional State Government funding, there will need to be a significant reduction in the current design scope to bring it back to $21.35m, noting that the Federal Government funding agreement has conditions attached to it that the City must meet.  Due to the interdependencies of individual scope items, single design elements cannot be removed (with the exception of the creative industries hub valued at $1.1m). 


 

This would therefore require Council to revert to the original design scope resulting in the following:

-      reduction in overall floor area

-      reduction from 400 to 250 people (seated banquet style) conference facility and relocated to level 1

-      reduction of 650 to 600 seat auditorium with straight seating (not curved)

-      removal of the cable net over auditorium

-      removal of deck and balcony

-      art gallery remaining in the ArtGeo building

-      removal of the creative industries hub

-      no integration with the Weld Theatre

 

Officers are of the strong opinion that the City should plan and build for the future, in line with the approach it has adopted with all major projects over the past 10 years.  In fact, officers are of the opinion that it would be better not to proceed with the project if the full scope of works are not able to be delivered.  The request to repurpose the airport funding to this project will allow the City to do this without additional further impact on ratepayers (above a $7.5m loan), the very thing we understand Councillor Riccelli is also trying to achieve.


Council

262

24 June 2020

18.1

Attachment a

Estimated Rates Impact of Loan

 


 


Council                                                                                      271                                                                    24 June 2020

18.2           MOTION FOR REPURPOSING OF REGIONAL AIRPORT DEVELOPMENT FUNDING

DISCLOSURE OF INTEREST

Date

24 June 2020

Meeting

Council

Name/Position

Ross Paine, Councillor

Item No./Subject

18.2 Motion for Repurposing of Regional Airport Development Funding

Type of Interest

Impartiality Interest

Nature of Interest

I am a member of the Busselton Repertory Club.

 

Councillor Sue Riccelli, having given notice of the motion, and with the consent of the Presiding Member, moved the below amended motion.

 

There was opposition to the amended motion and debate ensued.

 

COUNCIL DECISION

C2006/065          Moved Councillor S Riccelli, seconded Councillor J Barrett-Lennard

That the Council contact the Minister for Regional Development and the Minister for Transport to support the repurposing of the $9.5 million Regional Airport Development terminal funding for economic stimulus projects within the City of Busselton, with primary priority allocation to the Australian Underwater Discovery Centre and secondary funding to the BEACH project.

LOST 1/8

For the Motion: Cr Riccelli

Against the Motion: Cr Henley, Cr Miles, Cr Paine, Cr Hick

Cr Cox, Cr Barrett-Lennard, Cr Carter, Cr Cronin

 

REASONS

Whilst both the BEACH and Australian Underwater Discovery Centre (AUDC) will create jobs and stimulate the economy, the AUDC deserves primary funding for the following reasons:

 

·        The Busselton Jetty / AUDC was recently awarded Top Tourist Attraction in West Australia (and third best attraction in Australia). The Busselton Jetty is the longest timber-piled tourist jetty in the southern hemisphere. Busselton Jetty attracts over 500,000 visitors annually, making it the second most visited tourist attraction in the State. It was determined that a new underwater observatory would overcome the significant limitations of the existing underwater observatory and meet increasing visitor demand.

 

·        The AUDC project aligns with the “State Government Strategy for Tourism in WA 2020” (and has already been supported by Minister Paul Papalia) including:

Grow tourism value by increasing desirability of the South West / West Australia as a travel destination, so people visit, stay longer and spend more;

Develop economic infrastructure that stimulates regional visitation and Australian global tourism competitiveness;

Create a product that will extend the tourism season;

Create a unique marine-based experience that will be known worldwide;

Develop a tourism experience that resonates with the State’s key target markets – China, Malaysia, Singapore and the UK;

Leverage opportunities from potential visitor streams from Busselton Airport redevelopment and other tourism markets;

Support new job creation in regional communities in Western Australia; and

Promote natural environment conservation and education through immersive/sensory interpretation and curriculum based programs.

 

Employment opportunities will be generated by both the AUDC and BEACH, however and economic assessment of employment for the City of Busselton is as follows:

 

BEACH:

·    City of Busselton - 17.2 FTE

·    South West – 17.5 FTE

·    Western Australia – 19.2 FTE

 

AUDC:

·    City of Busselton - 48 FTE

·    South West 46 FTE

·    Western Australia – 24 FTW

 

Contributions to GRP (operating phase – first full year, direct and indirect) as follows:

·    BEACH City of Busselton $0.7 million

·    AUDC City of Busselton $4.72 million

 

Competition impact (on other private businesses):

BEACH will compete directly with the Geographe Bayview Resort (350 seats), new Hilton Hotel (150 seats), Abbey Beach and Pullman Resorts. AUDC will be unique and renowned as a worldwide attraction. The AUDC is an economic enabling infrastructure bringing new wealth into the economy. The BEACH, from an economic perspective, is a redistribution of wealth (new money does not enter the economy). Interstate and international visitors may utilise the BEACH, but it is not what actually enticed them to the region.

 

OFFICER COMMENT

The City’s Strategic Community Plan establishes the community’s vision, aspirations and expectations for the District.  It also drives the development of other key plans and priorities including the City’s three pillar projects; Busselton Margaret River Airport, Busselton/Dunsborough Foreshore redevelopments, and the construction of a Performing Arts and Convention Centre (PAC). 

 

The Busselton Margaret River Airport and development of a new terminal building remains the City priority and, ideally the City would like to see the $9.5m Regional Airport Development funding used for this purpose.  However, noting that the State Government has made it clear that it will not release the funding until demand for the new airport terminal warrants it, and accepting the need for economic stimulus projects as a result of the COVID-19 pandemic, the City has proposed that the funds be repurposed to the construction of a PAC – being the Busselton Entertainment Arts and Creative Hub (BEACH). 

 

Historically pillar projects such as a PAC have been developed through tri-government funding partnerships. It is important that the City meets community expectations by completing priority projects, and as such State Government funding should continue to be sought for the BEACH, as requested by Council following the development of recent concept designs based on a $30.3m budget, which includes the Creative Industries Hub. 

 

Since 2010, the City and State and Federal Government have invested circa $70m into the Busselton Foreshore, including the refurbishment of the Jetty. The Foreshore is now recognised as a tourist destination in its own right, and provides an injection of visitor numbers to the Jetty.  A PAC, as per the optimum design and with the inclusion of conference facilities, will again increase visitor numbers to the Jetty through the attraction of both tourists and business events.   

 

The current BEACH designs provide the capacity to host large scale business events for up to 400 people (seated banquet style). This will help to fill a current gap in the events market within the District, with the current largest facility being approximately 300 seats and located some distance from any town centre. This results in local businesses not being able to maximise the benefits of visiting tourists, and also inhibits our ability to attract large scale conferences that are generally held in Perth.  While the Geographe Bayview Resort was issued a Development Approval in August 2017 for a 350 seat conference facility, it is unknown whether the development will proceed. 

 

Recently Development Approval was issued for a 4.5 star Hilton Garden Inn hotel development on the Busselton Foreshore. The designs and business model for this hotel development were based on a nearby PAC having the ability to host large scale business events.  The developers of the hotel have recently confirmed their understanding that conference facilities were to be included in any PAC:

 

‘Understanding that the conferencing facilities were to be included in the Beach complex was one of the factors that informed our investment decision to proceed with Hilton project down at the foreshore. Conferencing facilities that are close to hotels are great generators of room revenue. They enhance the existing business travel market and also have a positive impact on broader tourism market.

 

We would disappointed if the City decides to go down this path as we would view this is a significant deviation from what we had been lead to believe. I would urge you to reconsider this proposed deviation from your original vision.’

 

Officers cannot qualify economic data included in the notice of motion as it does not reflect information officers have to hand.  Council was recently briefed on the economic benefits of the BEACH.  With the BEACH business case currently in its final stages, latest economic data estimates the following benefits for the City of Busselton (local area):

 

Construction

Jobs (FTE):                           120 (41 direct, 79 indirect)

Gross Value Add:              $19.2m ($6.6m direct, $12.7m indirect)

 

Operational

Jobs (FTE):                           20.3 (18 direct, 2.3 indirect)

Gross Value Add:              $1.2m ($0.8m direct, $1.2m indirect).

 

In comparison it is estimated the AUDC will result in the following benefits, based on the Feasibility Assessment developed by Lucid Economics in 2019 and provided by Busselton Jetty Inc. (BJI) in May 2020:

 

Construction

Jobs (FTEs):                         47 (16 direct, 30 indirect)

Gross Value Add:              $8.26m ($3.1m direct, $5.15m indirect)

 

Operational

Jobs (FTE):                           52 (37 direct, 14 indirect)

Gross Value Add:              $5.1m ($2.6m direct, $2.5m indirect).

 

The above AUDC projections are based on a $30.6m design and construction budget, excluding interpretive elements.  Projections are also based on the development including the ‘Village’ (food, beverage and interpretive offerings), AUDC (underwater interpretive centre), the repurposing of the UWO and a second train operating. 

 

At a Busselton Jetty Reference Group meeting held 12 June 2020, Busselton Jetty Inc. (BJI) informed the City that regardless of State Government funding being secured, it was likely that the project will be delivered with a $26m budget and that, should State funding be forthcoming, BJI will likely reduce the budget by not drawing on a City self-supporting loan of $4m.  Further, the future of the Village remains uncertain with BJI indicating it may not be incorporated into the development as originally intended (reduced scale) and that it is unknown when the second train will be acquired.  Based on these factors there is still uncertainty surrounding the AUDC construction and operational economic projections.

 

The construction of the BEACH is seen as a strong economic stimulus initiative, with local construction trades and the arts and cultural sectors the immediate beneficiaries.  It should be noted that Council has already indicated its support for the City to approach the State Government to repurpose the $9.5m allocated for the Busselton Margaret River Airport terminal to the BEACH project.  This was on the basis that it would capitalise on the $10.35m in Federal Government funding, would reduce the additional loan funding required to undertake the project, would provide stimulus to the economy, and ultimately facilitates the completion of a long aspired community project; a project that, along with the development of the foreshores and the airport, will provide long term benefits to the district. 

 

Officers therefore do not support this notice of motion on the basis that additional State Government funding would assist in reducing loan borrowings and the impact on ratepayers for a project that the City has consistently, over the last 10 years, made a commitment to. 

 

 


15.             Community and Commercial Services Report

15.1           PROGRESSION OF THE BUSSELTON ENTERTAINMENT ARTS AND CREATIVE HUB

STRATEGIC GOAL

1. COMMUNITY: Welcoming, friendly, healthy

STRATEGIC OBJECTIVE

1.3 A community with access to a range of cultural and art, social and recreational facilities and experiences.

SUBJECT INDEX

BEACH

BUSINESS UNIT

Community and Commercial Services

REPORTING OFFICER

Director, Community and Commercial Services - Naomi Searle

AUTHORISING OFFICER

Chief Executive Officer - Mike Archer

NATURE OF DECISION

Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   BEACH Business Case June 2020

Attachment b    Business Case Supporting Document A - BEACH Plans

Attachment c    Business Case Supporting Document B - Business Operations Draft Plan June 2020

Attachment d   Business Case Supporting Document C - BEACH Design Review Presentation

Attachment e    Business Case Supporting Document D - Draft Masterplan Busselton Creative Centre

Attachment f    Business Case Supporting Document E - BEACH Cost Benefit Assessment Final

Attachment g   Business Case Supporting Document F - BEACH Cost Status Update Summary

Attachment h   Business Case Supporting Document G - BEACH Lifecycle Management Plan

Attachment i     Estimated Rates Impact of Loan

Attachment j     Comparison of Loan Borrowings Draft LTFP  

 

DISCLOSURE OF INTEREST

Date

24 June 2020

Meeting

Council

Name/Position

Ross Paine, Councillor

Item No./Subject

15.1 Progression of the Busselton Entertainment and Creative Hub

Type of Interest

Impartiality Interest

Nature of Interest

I am a member of the Busselton Repertory Club

 

The Officer Recommendation was moved, there was opposition, and debate ensued.

 

COUNCIL DECISION AND OFFICER RECOMMENDATION

C2006/066              Moved Councillor L Miles, seconded Councillor R Paine

That the Council:

1.         Confirms its commitment to the Busselton Entertainment Arts and Creative Hub (BEACH) project (the Project), as per the optimised designs developed by Kerry Hill Architects (June 2020) and at a budget of between $28.5M and $30.3M, dependent on a final decision with regards to the inclusion of a Creative Industries Hub;

2.         Will consider the inclusion of a Creative Industries Hub within the Project based on  additional external funding being secured and on the outcomes of the tendering process and final pricing;    

3.         Continues to seek additional external funding for the project, to reduce the quantum of loan borrowings required for the Project; and

4.         Endorses as a funding strategy entering into a loan borrowings / debt financing of up to $17M over a 20 year term (to be reduced by any additional external funding that is secured and / or the inclusion of the Creative Industries Hub component).

CARRIED 8/1

For the Motion: Cr Henley, Cr Miles, Cr Paine, Cr Hick

Cr Cox, Cr Barrett-Lennard, Cr Carter, Cr Cronin

Against the Motion: Cr Riccelli

 

EXECUTIVE SUMMARY

The establishment of a dedicated convention, entertainment and performing arts venue in Busselton is the third pillar of a regional growth strategy alongside the Busselton Foreshore Development and Busselton Margaret River Airport upgrade. The Busselton Entertainment Arts and Creative Hub (BEACH) concept has been progressively developed over the last eight years, with an architectural design developed that has been refined over the last five months. 

 

The intent of the officer recommendation is to provide direction and certainty in relation to the BEACH project (the Project), in the event that item 18.1 – Motion to Reduce Projected Cost of the BEACH on the current agenda is not supported by Council.  The officer recommendation aligns with the general discussions to date with Council and the work that the BEACH working group have done to progress the Project.  Support of the officer recommendation will provide a clear project scope which meets the requirements contained with the Federal Government Grant agreement, and delivers a quality facility that meets the needs of the community, now and into the future.

 

BACKGROUND

The development of a Performing Arts and Convention Centre (PACC) has been a long aspired community project and has been consistently identified as a key local priority project over several iterations of the City’s Strategic Community Plan.  It was also contained in the South West Blueprint (February 2015) as a regional priority project in support of the South West region creative industries sector and is identified in the City of Busselton Economic Development Strategy (2016-26) as a key project that will support tourism growth and the concept of ‘quality of place’.

 

In April 2019, the City secured $10.35M from the Federal Government for the Project.  As per Council direction and the Chief Executive Officer’s KPIs, a revised business case to support the seeking of additional funding has now been prepared and submitted to the State Government.    The business case is provided at Attachment A (with referenced supporting documents provided at Attachments B through to H), and provides a more detailed background of the Project. 

OFFICER COMMENT

The attached business case provides a full justification for the Project and encompasses the following:

 

·    Background;

·    Project need;

·    Project alignment with regional and State policies and frameworks;

·    Project deliverables;

·    Stakeholder engagement;

·    Critical assumptions;

·    Economic and financial analyses;

·    Funding strategy and budget;

·    Sustainability and ongoing viability;

·    Risk analysis;

·    Concept plans;

·    Operational business plan including financial projections;

·    Cost benefit analysis;

·    Cost status report; and

·    Lifecycle management plan.

 

The Officer Recommendation is presented in support of the Project and business case, and is in four parts, as set out below.

 

1.         Confirms its commitment to the Busselton Entertainment Arts and Creative Hub (BEACH) project (the Project), as per the optimised designs developed by Kerry Hill Architects (June 2020) and at a budget of between $28.5M and $30.3M, dependent on a final decision with regards to the inclusion of a Creative Industries Hub;

 

In 2019 an Expression of Interest (EoI) for architectural design services was developed based on a $21.35m budget. Kerry Hill Architects were engaged through a subsequent RFT process, and since then have worked with the Council’s BEACH working group (consisting of elected members and staff) to refine the concept and develop an optimised design.  The optimised designs achieve the following:

 

-      maximised benefits by investing into the Centre now rather than facing known shortfalls in the future;

-      addresses the ‘lesson learned’ from other benchmarked PACCs to maximise functionality, ensure operational flexibility, and maximise patronage;

-      improves capacity and quality of conferencing facilities within the region, meeting a current gap in the market and also complementing private and public investment on the Foreshore and within the CBD;

-      incorporates the inclusion of the ArtGeo Gallery to a class AA standard, broadening the standard of exhibitions that can be hosted in the region.  This was originally identified as potential future project in the City’s 2017 Long Term Financial Plan with a $2m budget;

-      incorporates a ‘Creative Industries Hub’ that will provide infrastructure for the creative industries sector, capitalising on Busselton’s identification as a creative industries hotspot and taking advantage of an opportunity to diversify the local economy;

-      provides increased opportunities to support the City to be the ‘Events Capital of WA,’;

-      enhances the BEACH as a community asset and broadens the user experience by including a number of different offerings, providing a range of reasons for people to visit multiple times.

Officers are firmly of the opinion that the Project should only proceed on the basis of the optimised design, and with a budget of $28.5m-$30.35m; otherwise Council risks building a substandard facility with known shortfalls from the outset. 

 

2.         Considers the inclusion of a Creative Industries Hub within the Project based on  additional external funding being secured and on the outcomes of the tendering process and final pricing;    

 

The inclusion of a Creative Industries Hub will provide opportunities for the City’s creative industries sector and a home for local artistic, cultural and educational groups. The inclusion of the Hub capitalizes on Busselton being identified as one of 20 creative industries ‘hot spots’ across Australia, and one of five within the State. 

It will provide a creative maker space, co-working area, recording studio and meeting room that will be used for short or long-term rental by organisations in the creative industries sector.  The inclusion of the Hub is supported by the South West Development Commission and Department of Culture and the Arts, as it designed to develop the emerging creative industries sector and diversify the City’s economic base. The State Government has shown a desire to fund innovation and new emerging industries, and are likely to find this aspect of the Project attractive.

 

Valued at approximately $1.1m, the optimized concept designs allow for this scope item to be removed. The City will structure its Request for Tender such that the Creative Industries Hub can be optionally included or not dependent on the tendered prices. 

 

3.         Continues to seek additional external funding for the project, to reduce the quantum of loan borrowings required for the Project;

 

The City is actively pursuing State Government funding for the Project. The Project is still approximately four months away from a tender being issued for construction, and the City will continue to pursue additional funding through both available State and Federal Government avenues right up until that time, and through construction (over the next 24 months), in order to reduce the loan borrowings required. 

 

4.         Endorses as a funding strategy entering into a loan borrowings / debt financing of up to $17M over a 20 year term (to be reduced by any additional external funding that is secured and / or the inclusion of the Creative Industries Hub component).

 

As part of long term financial planning and modelling officers have modelled a worst case scenario, with the City taking loan borrowings to fulfil the optimised design project budget, in the event that external funding is not secured. 

 

With interest rates falling considerably over the last 24 months, from 4% to an historic low of approximately 2%, officers have modelled a standard loan facility of up to $17M over a 20 year term, fixed at 2.2% per annum based on Western Australian Treasury Corporation (WATC) advice. The benefits of a longer term loan allow for an intergenerational equity funding mechanism, noting that the BEACH will be in operation for over 50 years.  For that reason it is felt that a loan of $17M over 20 years is as appropriate as the original forecast loan of $7.5M over 10 years. 

 

Attachment I illustrates the estimated impact on rates as a percentage to meet the loan principal, interest and fees, ranging between 0.83% - 2.23%.  It should be noted however that the City also has a number of loans that will expire over the same period which would reduce this impact on rates. This is further demonstrated in Attachment J which provides a comparison of all borrowings for all projects being taken out against all loan borrowings expiring during the term of the Draft LTFP.  

 

This modelling demonstrates that the City is able to afford the revised BEACH designs and budget while still delivering a significant capital works program that will see a number of sport and recreation projects undertaken over the next 10 years.  It should be noted that the City’s approach to LTFP modelling is conservative, with limited external funding such that should external funding be secured to deliver projects, a net positive impact will occur.

 

The City is also now able to access the liquidity lending facility through the WATC to assist with the construction and cash flow management required of such a significant infrastructure project. This new form of lending facility will allow the City greater flexibility than a standard loan facility due to:

 

1.         Lower interest rate on draw-downs during the construction phase, currently around 0.55% which is obviously extremely attractive;

2.         Only drawing down funds when it is required;

3.         Ability to adjust the total draw down if additional funding is secured ultimately reducing the total loan; and

4.         All draw-downs would be bundled into a standard loan facility at the completion of the construction phase.

 

At the completion of the project, the borrowings will be bundled in to a standard loan facility/ies at the interest rate on the day. There is a risk that interest rates could rise between the start of the construction phase and the completion, however it is also likely that they may even reduce.

 

While, as per recommendation 3, the City will continue to seek additional external funding, in order to progress the Project with a level of certainty it is recommended that Council endorse the drawing of a liquidity lending facility of up to $17M as a funding strategy. 

 

The estimated costs of drawing down the $17M in a liquidity lending facility over the life of the construction phase is in the range of $300,000 to $350,000 based on the indicative draw down schedule. If the City was to take out the $17M under a standard loan facility at the start of the construction phase, it would cost the City approximately $2.1M in principal, interest and fees during the same timeframe. While the liquidity lending facility offers a significant saving at the ‘front end’ Council will need to be mindful that the 20 year loan only commences at the completion of the construction period. This essentially provides a 22 year payback period when taking into account the liquidity lending arrangements during construction.

 

The Draft LTFP presented to Council in May 2020 incorporates operational financial forecasts based on a $21.35M project budget as, at the time of publishing, the financial forecasts for the $30.35M facility were incomplete.  However as part of the development of the business case for the optimised designs, operational financial forecasts were remodelled.  This has resulted in additional revenue generation through commercial lease, licence and hire arrangements, additional events and gallery exhibitions which more than offsets the additional operating expenses of a larger facility.  The financial forecasts are included in the attached business case.  These financial forecasts will be used in future versions of the LTFP.

 

While the BEACH will run at a deficit, as is customary with PACCs, this deficit is offset by the social benefits, revenue generating opportunities and the economic output PACCs have on the local community.  It is also shown to be affordable within the rate increases shown in the Draft LTFP (noting that this is based on the $21.35M facility with increased net operational costs), and with some streamlining in service efficiencies across the City.

 

Statutory Environment

The officer recommendation supports the general function of a local government under the Local Government Act 1995 to provide for the good government of persons in its district.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

The financial implications of the officer recommendation are detailed in the Officer Comment section of this report.  The full financial implication of the project are detailed in the attached business case. 

Stakeholder Consultation

The current optimised designs are the result of extensive consultation with stakeholders and user groups through the BEACH Stakeholder Reference Group, and reflect consultation with other PACCs across Australia.  The level of consultation is further outlined in the business case.

 

More broadly the development of a PACC has been a long communicated community desire, being identified as a priority initiative as part of the development of the City’s first Strategic Community Plan (2013) and noted as an ongoing priority in the minor desktop review of the plan (2015), and in the review and development of the 2017 Strategic Community Plan.

Risk Assessment

The attached business case identifies the risks associated with the project. 

 

Additional risks associated with implementing the officer recommendation have been assessed using the City’s risk management framework, with risks assessed taking into account any controls already in place.  The following risk has been identified:

 

Increase in interest rates when the liquidity lending facility is drawn down

Risk Category

Risk Consequence

Likelihood of Consequence

Risk Level

Financial

Moderate

Unlikely

Medium

 

With historically low interest rates and the liquidity lending facility projected to be drawn down in various amounts over a 17-month period, it is highly unlikely that rates will increase significantly; they could in fact decrease further. In addition, the liquidity lending facility allows for each drawn-down amount to be rolled into a standard loan facility at any time, therefore locking in a known fixed interest rate.

Options

As an alternative to the proposed recommendation the Council could:

1.    Reduce the project scope.  Officers do not support this option as it will severely compromise the success of the project and Council risks building a PACC with known shortfalls from the outset.

2.    Not proceed with the project at all.  Officers do not support this option as the development of a PACC is a long aspired community project and significant work has been undertaken to develop business cases to secure Federal and State Government funding. The $10.35m Federal Government Regional Growth Funding will need to be returned, significantly influencing the City’s ability to obtain that level of funding in the future. The arts, cultural and events industry sectors have been one of the hardest hit sectors as a result of the COVID-19 pandemic.  Investment into the BEACH is seen as an economic stimulus initiative that will not only assist in getting the industry back on its feet, it will also provide a much needed injection into the local construction industry, creating ongoing employment opportunities, and increasing spend within the Busselton CBD.  Further, this option will not achieve the vision of connecting the Busselton foreshore and CBD as a key town centre revitalization initiative.

3.    Defer the project design until such time that additional external funding is secured.  Officers do not support this option as the tender for architectural design services was awarded to Kerry Hill Architects in January 2020.  Since this time significant progress has been made on the project which has included a considerable amount of community consultation raising expectations that the project will finally be realized. This option is also highly likely to result in withdrawal of the Federal Government Funding which has strict milestones and timeframes. In addition, the $20m Hilton Garden Inn hotel development was secured with the intention that a significant conference facility would be developed in the town centre.  Suspending the project at this point will create economic uncertainty with CBD traders and the arts and creative industries which have been one of the hardest hit industries through the COVID-19 pandemic.

CONCLUSION

The City has not invested significantly into the arts and cultural sector for decades, despite the provision of cultural and art facilities and experiences being a key strategic community objective.  With an opportunity to enhance funding secured by the Federal Government and low interest rates, now is an opportune time to build a facility for the future instead of building a facility that will have known shortfalls and not meet the needs and expectations of the community.

 

For the purposes of certainty, and transparency, the officer recommendation seeks confirmation from Council that it does wish to proceed as per the optimised design and at a budget of $28.5M - $30.3M, and that, in the event that the City is unable to secure additional funding, a loan as detailed in this report is taken.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Officers will immediately progress the next design phase based on the optimum designs and at a project budget of $28.5M - $30.3M following Council’s endorsement of the officer recommendation.


Council

281

24 June 2020

15.1

Attachment a

BEACH Business Case June 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Council

366

24 June 2020

15.1

Attachment b

Business Case Supporting Document A - BEACH Plans

 


 


 


 


 


Council

383

24 June 2020

15.1

Attachment c

Business Case Supporting Document B - Business Operations Draft Plan June 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


 


 


 



 


 



 


 


 



 


 



 


Council

455

24 June 2020

15.1

Attachment d

Business Case Supporting Document C - BEACH Design Review Presentation

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Council

473

24 June 2020

15.1

Attachment e

Business Case Supporting Document D - Draft Masterplan Busselton Creative Centre

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



 


 



Council

498

24 June 2020

15.1

Attachment f

Business Case Supporting Document E - BEACH Cost Benefit Assessment Final

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Council

499

24 June 2020

15.1

Attachment g

Business Case Supporting Document F - BEACH Cost Status Update Summary

 


Council

512

24 June 2020

15.1

Attachment h

Business Case Supporting Document G - BEACH Lifecycle Management Plan

 


 


 


 


 


 


 


 


 


 


 


 


 



 


 


 


Council

518

24 June 2020

15.1

Attachment i

Estimated Rates Impact of Loan

 


 


Council

519

24 June 2020

15.1

Attachment j

Comparison of Loan Borrowings Draft LTFP

 

 


Council                                                                                      520                                                                    24 June 2020

14.             Engineering and Work Services Report

Nil


Council                                                                                      521                                                                    24 June 2020

19.             urgent business

Nil

 

20.             Confidential Reports  

Nil

 

21.             Closure

The Presiding Member closed the meeting at 8.35pm.

 

 

 

 

THESE MINUTES CONSISTING OF PAGES 1 TO 521 WERE CONFIRMED AS A TRUE AND CORRECT RECORD ON Wednesday, 29 July 2020.

 

DATE:___________________  PRESIDING MEMBER:     _________________________