COB-RGB

 

 

 

Late Items

 

Council Agenda

 

 

 

12 April 2017

 

 

 

 

 


ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

city@busselton.wa.gov.au

 

 


CITY OF BUSSELTON

Late Items FOR THE Council MEETING TO BE HELD ON 12 April 2017

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

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

13.1        GLC HEALTH SUITES. 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Item 13.1 is presented to Council for consideration as a late report.  The report is in regards to the proposed lease of three allied health suites at the GLC to the Hearing Retail Group Pty Ltd (trading as Connect Hearing).  The proposed disposition of property requires public advertising and given the timeframes associated with this, the matter is required to be considered by Council to enable a lease commencement date of 1 May 2017.
 

 

 

 

 

 

 



Council                                                                                      3                                                                        12 April 2017

13.             Community and Commercial Services Report

13.1           GLC HEALTH SUITES

SUBJECT INDEX:

GLC Health Suites Leases Proposal to Advertise Preferred Proponent

STRATEGIC OBJECTIVE:

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

BUSINESS UNIT:

Community Services

ACTIVITY UNIT:

Geographe Leisure Centre

REPORTING OFFICER:

Recreation Facilities Coordinator - Dave Goodwin

Manager, Community Services - Maxine Palmer

AUTHORISING OFFICER:

Director, Community and Commercial Services - Naomi Searle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Attachment a   Valuation dated 13 January 2016  

  

PRÉCIS

 

The four health suites known as health suite  one (1) , health suite two (2), health suite three (3) and health suite four (4) located at the front of Geographe Leisure Centre have been used as offices and allied health practice rooms and leased on a six monthly and annual basis. The latest lease agreements for suite three (3) and suite four (4) have expired and the tenants have vacated. The tenant currently in suite two (2), Life Live it Occupational Therapy has advised that they will be vacating at the end of their first term of the lease being 30 April 2017.  Expressions of Interest (EOIs) have been sought in relation to the vacant suites.

 

This report outlines the outcomes of the EOI process and makes recommendations to Council to advertise its intention to enter into a lease under section 3.58 of the Local Government Act 1995 (LGA)

 

Officers also recommend that there is a sufficient basis for using an existing market valuation that is more than 6 months old for the purpose of carrying out the statutory process under section 3.58 of the LGA for the reasons outlined in this report.

 

BACKGROUND

 

During 2014 GLC underwent a significant expansion and upgrade program, incorporating a new gymnasium, crèche, pool deck showers and change cubicles, universal access facilities, customer service area, offices, meeting room, cycle room, and four (4) health/ professional suites. 

 

The health suites were added to attract health practitioners to provide mental and physical health services that complement existing services offered at the GLC.  Each suite is fully independent and purpose built for health service businesses with exposure to GLC member traffic.  Each suite has a hand basin, telephone and data point, air-conditioning, windows providing natural light and external door access allowing them to function separately from the GLC’s operations.  Suites vary in configuration and size ranging from 16 m2 to 25 m2.  In addition to providing support services for GLC customers, the suites provide an additional revenue source that will assist in reducing the GLC’s net operating deficit.

 

The current rents for all 4 suites were determined by a market valuation (attachment A), dated 13 January 2016.

 

The last Council resolution to use the market valuation was on 27 July 2016. Council considered the market valuation for a proposal to lease Suite one (1) and resolved (C1607/176):

That the Council:

 

1. Enter into a lease, subject to the Minister for Lands approval, with Just Great Pty Ltd as Trustee

for the Wilson Family Trust for the occupation of Health Suite One (1) of a portion of Reserve

29933, being Lot 300, Deposited Plan 50595, Volume LR3137 Folio 982, 1 Recreation Lane,

West Busselton as shown hatched on Attachment A. The terms and conditions of the lease to

include the following:

a. an initial leasehold term of 12 months; with an option for a further three (3) years and

then a further two (2) three (3) year options.

b. rent to commence at $17,160 in the first year then indexed by CPI annually, all amounts

inclusive of GST and outgoings;

c. the tenant to be responsible for telephone and, internet connections and charges applied

to the leased premises; and

d. other terms and conditions consistent with the City’s existing allied health suite leases.

 

Feedback from the exiting Lessees has revealed some suitability constraints with the health suites. Noise transfer from the adjacent group fitness and cycle rooms has been reduced significantly with sound proofing, however not to the satisfaction of the suite four (4) Lessee. Having to utilise the poolside and stadium ablutions and noise from outdoor foot traffic especially during the busy after school and in term school swim times were also issues raised by all Lessees. 

 

Three expressions of interest were received. The most favourable proposal emanating from the EOI came from Hearing Retail Group Pty Ltd, trading as Connect Hearing, who wish to lease suites 2, 3 and 4 from 1st May to 31st December 2017 for a weekly rental of $300 per week inclusive of GST and outgoings. Connect Hearing are recommended to be the most suitable proponent as they offer the longest lease period and utilization of all three vacant suites. All three EOIs proposed the same weekly rent of $300 per week inclusive of GST and outgoings.

 

STATUTORY ENVIRONMENT

 

Section 3.58 of the Local Government Act 1995 (LGA) relates to the disposal of property by a local government and disposal is defined to include leasing.

 

This requires the publishing of prior notice to the local public of the proposed disposition which describes the property concerned, gives details of the proposal and invites submissions to be made before a specified date, not less than two weeks after the notice is first given. Any submissions received must be considered and if a decision is made by the council, the decision and the reasons for it must be recorded in the minutes of the meeting.

 

Section 3.58(4) of the LGA requires that the disposition includes either a valuation not more than six months old or a declaration by resolution that a valuation older than 6 months is considered a true indication of the value at the time of the disposition.

 

A formal valuation of all Suites was obtained on the 13th January 2016 (see attachment A). For the reasons outlined in this report a declaration that the valuation can be considered a true indication of the value of Suites 2, 3 and 4 at this time is sought.

 

RELEVANT PLANS AND POLICIES

 

The leasing of the allied health suites is in line with the GLC Business Plan 2017/18-2020/21.

 

FINANCIAL IMPLICATIONS

 

Connect Hearing have proposed a rental amount of $300 per week inclusive of GST and outgoings for each of the three suites. A market rental value of between $235 and $260 per week (exclusive of GST and outgoings) was provided by an independent valuer on the 13 January 2016.  Outgoings are estimated to be approximately $30 per week per suite and therefore the inclusive rent proposed by Connect Hearing is in line with the 2016 valuation and the current rent paid by the Lessee of Suite 1.

 

Long-term Financial Plan Implications

 

The recommended rental income supports the achievement of revenues forecast in the Long Term Financial Plan and 2017/18 budget.

 

STRATEGIC COMMUNITY OBJECTIVES

 

The leasing of the GLC health suites is consistent with the following City of Busselton Strategic Priorities:

 

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

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

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

 

RISK ASSESSMENT

 

The cost of a market valuation is around $1,300. In the time it will take to obtain a current market valuation rental yield will be lost and the ability to seek a resolution of Council for authority to enter into a lease further delayed.  City Officers also believe that a risk exists that an up to date valuation could be less than the 2016 valuation based on the relatively low levels of interest in leasing the suites and the status of the local market conditions. In addition to which the opportunity to take advantage of an offer to lease all three vacant may be lost.

 

CONSULTATION

 

In accordance with s3.58 of the Local Government Act 1995, pubic advertising will be undertaken for the proposed disposition of property.

 

OFFICER COMMENT

 

The market valuation obtained on 13th January 2016, provided a market rental value for suites 2, 3 and 4 of between $235 to $260 per week (exclusive of GST and outgoings). An offer of within 10% of the assessed rental range would be considered fair and reasonable. Outgoings are estimated to be approximately $30 per week per suite. Therefore the proposed rental offered by Connect Hearing is in line with the 2016 valuation and the current rental amounts paid by the Lessee of Suite 1.

 

The stagnation of the commercial rent market coupled with the location of the Suites and the use to which they can be put, place some limitations on the type of tenant that could be attracted and the level of rent they might generate. 

 

Additionally the proponent, Connect Hearing, is willing to pay the current market value and lease all 3 vacant suites. A valuation at this time could possibly risk a reduction in the rental amount and securing the tenant due to the timeframes involved. The proponents current lease arrangements have come to an end and they wish to move into the suites as soon as possible after 30th April 2017. Any delay could result in them finding alternative premises.

 

CONCLUSION

 

As the most favourable submission under the EOI process and taking into account factors such as the limitations on the suitability of the Suites and the general conditions of the market it is considered that the offer from Connect Hearing should be accepted and statutory advertising undertaken without the requirement for an up to date valuation.

 

OPTIONS

 

Council could come to the view that the valuation dated 13 January 2016 does not provide a true indication of the current market valuation and seek an up to date valuation. This will cost approximately $1,300 inclusive of GST and will take approximately one month to receive.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Advertising of the proposed disposition will take place as soon as possible for a period 14 days. A further report will be presented to Council if any submissions are received.

 

 

OFFICER RECOMMENDATION

 

That the Council:

 

1.         In accordance with Section 3.58(4) (c) (ii) of the Local Government Act 1995, declare that the valuation carried out by Landgate Property and Valuation Services Country South West indicating the market rent for the Health suites 2, 3, and 4 Geographe Leisure Centre, I Recreation Lane, West Busselton of between $235 to $260 per week (exclusive of GST and outgoings), to be a fair value of the current market rental value of the health suites.

2.            Advertises the proposed disposition of land to Hearing Retail Group Pty Ltd in accordance             with Section 3.58 of the Local Government Act 1995 for the term and conditions outlined in    this report and if there are no adverse objections authorise the CEO to enter into a lease      agreement with the Hearing Retail Group Pty Ltd.

 

 


Council

7

12 April 2017

13.1

Attachment a

Valuation dated 13 January 2016