Lower Chittering Sports & Recreation FacilityMonday 10 June 2019

Notice of Invitation

What you will hear about tonight

• Integrated Strategic Planning of the Shire.• Justification for the Lower Chittering Sports & Recreation Facility. • Grant application and its makeup.• Land configuration, land purchase, and land sale.• Capital costs estimates and funding makeup. • Concept Design for the Facility.• Role of the Project Advisory Group.• Self supporting loan to Immaculate Heart College and the loan agreement.• Shire’s Long Term Financial Plan.• Shire’s Sustainability.• Questions Submitted but not answered within the above.

Integrated Strategic Planning (Infrastructure)Strategic Community Plan 2017-2027Focus area: Our communityStrategy: S1.1.2 Develop and enhance existing recreation and social facilities for local communities (recreational and sporting facilities to service the growing population in the Lower Chittering/Muchea area).

Corporate Business Plan 2017-2021Regional Sports Facility in Lower Chittering Two Stages (2019/20 and 2022/23).

Long Term Financial Plan 2018/19 – 2027/28Two Stages (2019 - 21 and 2021 -23) of $9.5m and $6.1m, with grants/contributions of $6.6m and $3.5m (vis. $2.9m and $2.6m Shire contributions = $5.5m total)

The Strategic Community Plan and the Corporate Business Plan (which includes a four year financial plan) progress through a community consultation phase, prior to adoption.

Current Regional Sports & Community Centre Feasibility Study (2016)

Reasonably serviced in terms of volume of facilities, however quality and location of some facilities needs some attention.

There may be some unknown demand for facilities not provided for.

Gaps - Senior sized OvalIndoor Sports CentreFitness/Gym Centre

Most facilities operating at capacity*(*potential flaw as highlighted by feedback)

Additional facilities will be required in Muchea/Lower Chittering (due to population growth).

Maintenance of Existing Facilities needs to be ongoing and to a high standard.

2019 Comments

Still relevant. Service capacity probably less now due to population increase/womens’ sporting expansion.Still relevant.

Still relevant.

Still relevant.

Still relevant.

Still relevant. Would seem even more critical now for some facilities.

Still relevant.

Still relevant (rates v standards).

Local Planning Strategy

2016 Census = 5,472.

Chittering Regional Land Supply Assessment (Department of Planning) estimates population of 7,300 by 2026, and a theoretical population of 10,500 based on identified land availability.

It is accepted that actual numbers will vary with prevailing economic parameters, and projections might be reached earlier or later than expected.

The grant application and its makeup

The configuration of the application with Shire and Immaculate Heart College as contributors to capital and operating costs, as well as facilitating high levels of local usage (students and community members) was a unique and successful combination. It incorporated:

• Building Better Regions Fund Grant Application• Jill Powell Feasibility Studies (1 and 2)• Lucid Economics Study• Architects (Hunt) and Quantity Surveyors• Letters of Support• Council Report – 17 October 2018 (includes copy of grant application)

Note: The Grant Application, plus a number of other documents (including this Presentation) are all loaded onto the Shire’s Web Page under the title of “Lower Chittering Sports & Recreation Facility”

The land configuration, purchase, and sale

• Part of a 10ha State Crown Reserve• Vested in Shire of Chittering• Reserve Purpose - Recreation• 3ha purchased from State

Government for 5% of value ($13,750 (+GST) = $15,125) for the purpose of sale to create funds to develop infrastructure

• Sold to IHC for $275,000

Financials for Stage 1 (Capital)

Construction cost $9.71m (excludes GST)

Federal Government Grant $4.71mImmaculate Heart College $2.00m (includes $275,000 land purchase funds)*Shire of Chittering $3.00m

*Original proposal was for $2m+$275,000 but final negotiations as part of the grant application could only secure $2m.

Stage 2 Note: LTFP lists Stage 2 at $6m with grants and contributions of $3.5m. The nett cost to the Shire will therefore be $2.5m. The total nett cost (to the Shire) of both stages would therefore be $5.5m.

Financials for Stage 1 (Operational Costs)

• Grant Application included an economic study by Lucid Economics. In that study were figures from University of Adelaide.

• Local figures from WA local governments with similar type facilities indicate about $400,000pa.

• A common infrastructure reference point for maintenance/operations is 3 – 5% of the capital cost. 4% = $388,000.

• The Shire currently spends approximately $100,000 on Muchea Hall & Oval Facility. It is a much smaller facility but has an oval.

• Based on all of the above, and using Muchea as a guide, our best early estimate for this facility would be a minimum of $100,000 (with no staff costs added). The College has agreed to meet a portion of the ongoing operational costs (and the Council has required that portion to be a minimum of 25% and up to 50% based on its usage portion).

• Long Term Financial Plan includes loan repayments, but does not include Operational Costs.

Concept Elevation Design

The Site Concept Plan

Stages One and Two

STAGE ONE (2018/19 – 2020/21) STAGE TWO (2022/23)

Multi-purpose Centre (includes two indoor basketball sized courts)

Additional Storage and Toilets/Change-rooms

Club Facility (including function rooms and commercial kitchen)

Outdoor Courts

Senior Rugby/Hockey Field Senior Football Oval

Project Advisory Group

OBJECTIVES • The Advisory Group is to contribute to the task of overseeing the Lower Chittering Sport & Recreation Facility project and to

where required, make recommendations to the Chief Executive Officer and/or Council as per the Roles and Responsibilities outlined below.

ROLES AND RESPONSIBILITIES To make recommendations to the Chief Executive Officer and/or Council on: • development of a Communication Plan to guide how the Shire should share information and seek input from stakeholders and

community;• Updated designs and reports regarding estimated cost, risk, and deliverables;• The register of design changes, including impact to cost / size / scope;• Final documented designs before presentation to Council for endorsement;• Wherever timeliness allows, major variations (over $100,000 in cost, or exceed total budget, or change in scope that affects

functionality or purpose of area) for recommendation to the Chief Executive Officer/Council;• An Agreement of Operational Use and Costs Responsibility for the various Stakeholder Groups and for the various parts of the

Facility; and• The development of a Facility Programming Framework outlining how the various users will utilise the Facility.• Consideration of an “Activation Strategy” would also be useful.

Self supporting loan and the Loan Agreement

• $1,625,000 loan• Shire raises funds through WA Treasury (it is in effect, a Shire Loan)• Immaculate Heart College responsible for repayments• IHC Business Plan indicates a reasonable capacity to repay• Loan Agreement to be put into place between the parties for security• IHC can be legally pursued for the loan/repayments if required. Any activity by the Shire in that

area would significantly damage the College’s reputation and potentially, its education funding streams

• Loan is not secured with a Mortgage/Caveat/Land value security• There is a risk with any self supporting loan arrangement• The Loan Agreement specifies Facility use rights and contribution obligations• IHC sought self supporting loan to enable it to continue to grow using its other borrowing

avenues• The risk is considered to be acceptable in light of the overall benefits of the arrangement, and

that the Lower Chittering Sports & Recreation Facility will be a 100% shire owned facility on land controlled by the Shire.

Shire’s Long Term Financial Plan 2018 - 2028

• 2020 – 2021 – Stage 1 income• $6.6m income (grants and contributions)• $2m in loan funds

• 2022 – 2023 – Stage 2 income• $3.5m income (grants and contributions)• $1.983m in loan funds

• 2018 – 2022 - Stage 1 capital construction costs, $9.6m • 2022 – 2023 - Stage 2 capital construction costs, $6m • 2021/22 – Loan Repayments (Stage 1 $152,710) (Actual = $3m/$229,000 repayment)• 2022/23 – Loan Repayments (Stage 2 +$157,990 = $310,700)• Ongoing operational costs for all other Recreational & Cultural activities are included

(+CPI @ 1.6 – 3.0%, and loan repayments) $1.21 to $1.79m (2018 – 2028)• Rate increase of an average of 3.1% over the 2018 – 2028 period (plus 3% for “natural

growth”).• Much of the information in the Long Term Financial Plan is estimated and therefore

subject to fine-tuning as part of each annual year’s budget.

Shire’s Sustainability (including building the LCS&RF)

• The Shire currently has a high negative operating surplus ratio; however if it is able to contain its operating expenses, whilst attaining revenue targets, the negative operating surplus ratio will continue to reduce. Councils’ long term financial sustainability is dependent upon ensuring, on average over time, its expenses are less than its revenues.

• The Base Case scenario sets the rate increases at between 3.0% and 3.5% per annum;. The modelling shows the Shire being able to exceed the minimum benchmark over the 10 year Plan period for five of the seven financial performance ratios. Forecast modelling indicates that the Shire will not meet the minimum benchmark for the Operating Surplus Ratio, but will have significantly closed the gap by year 10.

• The LTFP modelling shows the Shire has: • 59% of the funding required in the medium term to meet projected Buildings Asset renewals;• 95% of the funding required in the medium term to meet projected Transport Asset renewals;

and• 40% of the funding required in the medium term to meet projected Parks, Ovals & Reserves

Asset renewals.

Asset Consumption Ratio

What is the age condition of assets?

OK, but needs to be monitored

Asset Renewal Funding Ratio

Does the Shire have the financial capacity to fund asset renewals?

Yes.

Asset Sustainability Ratio

Are assets being replaced when at the end of their useful lives?

Indicates more money needs to be allocated to asset renewal.

Debt Service Cover Ratio

Do we raise enough cash to cover our debt payments?

Yes, but it needs to be monitored in out years.

Long Term Sustainability

How does our long term sustainability look?

OK.

Operating Surplus ratio

Do revenues raised provide sufficient cash for operational and capital expenditures?

Poor but improving. Indicates that higher levels of own source revenue (or lower levels of operational expenditure) are required.Can be influenced by a too heavy reliance operational type grants and/or contributions.

Own Source Revenue Coverage Ratio

Do we have the ability to cover our costs through our own revenue streams?

OK and improving.

Financial Health Indicator (Department of Local Government)

Configured as a combination of the seven ratios

The Question I have been Working To?

Is it considered to be:1. more advantageous to the Chittering community to provide the Lower Chittering Sports & Recreation Facility, or 2. would it be better to abandon the project and travel in a different direction?

Considerations

• Population of 4,428 in 2011 (census); 5,472 (2016 census), with potentially rising to 7,290 in 2026;• Population increases are likely to be concentrated in the Muchea/Lower Chittering areas (Local Planning

Strategy);• Growth improves the Shire’s rate base (Industrial, Commercial, and Residential);• Long Term Financial Plan includes loan repayments, but does not include Lower Chittering Sports &

Recreation Facility Operational Costs;• Long Term Financial Plan accommodates ongoing maintenance of existing facilities at historic levels;• Long Term Financial Plan outlines a variety of capital projects across the Shire, the biggest of which is the

Lower Chittering Sport & Recreation Facility;• Shire Financial Health Indicator is consistent with the State and Regional Average, but needs to be

monitored and managed;• The $4.71m Commonwealth Government Grant is not transferrable, so needs to be refunded if not used

on this project;• The $1.725m Immaculate Heart College contribution is not transferrable;• College contribution now includes Land Purchase ($275,000);

Considerations (continued)

• The Shire will receive the $275,000 for the land sale irrespective of the Facility proceeding;• What College contribution is anticipated for the ongoing Operational Costs?• The development proposal for Stage 1 is set, but it might be renegotiable (with the

Commonwealth);• The Shire’s Integrated Planning is set but changeable;• Project Reference Group – established and addressing usage arrangements, and cost sharing;• Last major recreation/cultural facility build was a number of years ago;• Did community engagement (e.g. profiling and demographics) draw out an accurate picture of

requirements?• Can existing facilities be better utilised to take up the current demand?; • Is it possible to accommodate anticipated future demand with currently facilities? • Access and Inclusion requirements need to be accommodated;• Use by Immaculate Heart College needs to be finalised as part of Loan Agreement; and• Locating reliable water supply for grassed surfaces.

Are we on the right track?

• The conclusion I have reached is that the new Facility is still a “good deal”, because of the:• heavily discounted capital price, • optimal usage it will receive as a College/Shire partnership project, • subsidised operational costs, • length of time since the last facility was built in Chittering, and • growing population creating a growing need in the district for additional recreational and cultural facilities.

• Future challenges however will be:• keeping construction costs within budget; • meeting the grant conditions and timelines; • securing water supplies; • activating and managing the Facility; • maintaining other Shire cultural and recreational facilities at their current standards (or better), and • ensuring the Shire’s Long Term Financial Plan is accurately reviewed in 2019/20, and then actively

monitored.

I do not for one minute suggest Chittering has an easy road ahead of it, but I do believe it is on the right road.

Fatal Flaw Considerations CONSIDERATIONS MITIGATIONS

FACILITY CAPACITYAre most facilities operating at capacity and/or do we need to build the Facility at all?

Population increases will certainly create additional demand in the near and long term future.

RISKIs there a risk with the self supporting loan?

The College Business Case provides the basis to justify that the risk of a loan default is acceptable, when considered against the overall community benefits of the Facility. A risk assessment outlines a range of “moderate to high” (that is, an unlikely to rare possibility of a financial impact of $50 – 500,000+).

WATERIs a reliable water supply available?

Initial drilling indicates promising levels of supply. Quantity and Quality testing still required. Future supply levels will always be a risk factor and subject to future environmental conditions.

BUDGETCan Operational Costs be accommodated in the Long Term Financial Plan and what impact does the College’s reduction of contribution ($275,000) have?

Operational costs will need to be accommodated in the budget. It is not apparent that the land sale revenue was included in the Long Term Financial Plan.

Submitted Questions

• To date how many complaints have been received and logged in the complaints register by the SOC in relation to this project?• There have been no complaints registered in the Shire’s complaints register in regard to this project. As the matter relates to Council

decisions made in accordance with legislation, any contributions made are therefore not treated as complaints.

• What was the selection criteria applied to the selection of the Reference Group and what qualifications/experience running Sporting Associations/Clubs/Facilitation of Sports do the selected candidates bring to the group?

• The qualifications/experience sought was included in the public advertising for the Reference Group positions. The selection of candidates for the Reference Group was conducted at the May 2019 Council Meeting and there were suggestions that individual Councillors could take into consideration on how the candidates could be considered in the agenda report. The council report is available on the Shire’s website.

• Are there any declared pecuniary interests from selected members of the Reference Group? That is, are there any with local businesses who may enter into tenders for either the construction, supply or leasing of space within the facility upon competition?

• There has been one meeting of the Reference Group and thus far, there have been no pecuniary interests declared. Whilst there is no legal requirement for financial interests to be declared at this meeting, it would be prudent for members to do so, for the purposes of accountability. The matter of a financial interest is a question that can only be answered by the individual reference group members, but a financial interest is not considered to be relevant at this point in time for the examples referred to in the question.

• Was this a consideration during the selection process to maintain impartiality fair standing for all members of the community?• A possible financial interest is not in itself normally considered to be a disqualifiable consideration. At the point of appointment, no

contracts had been let, and so no applicants would have had a financial interest.

• Is there any declared interests otherwise such as shared business relationships or relationships otherwise?• No.

• Is there any conflicts of interests or colluded interests?

• Other than the obvious nature of the Group’s existence to assist in the facilitation of the Lower Chittering Sports & Recreation Facility, conflicts of interest have not been specifically sought. It would be prudent however, for members to provide any known conflicts of interest. Colluded interests should certainly be brought to the Shire’s attention if they are suspected.

• During the concept development, was there any discussions with the local Bindoon Primary School, any attempt to advertise for or seek requests for expressions of interest from the private school sector other than IHC, Education Department or State Government to inquire as to whether there were any plans for a public or private High School other than IHC to be developed within the Shire area and was there any attempt to offer the same opportunity to other financial partners to come on board? A 3Ha block of land on the other side of the 7Ha for the Sports Facility to build their School in conjunction with this project so Public or non-Catholic Students within the Shire could have been afforded a similar opportunity to further their education without having to travel long distances to the nearest available Public High School or Private High Schools some more than 1 hour each way by bus?

• The Facility was endorsed through the Shire’s Corporate Business Plan 2017-2021 and its Long Term Financial Plan 2018 – 28. Considerations along the lines proposed might have been given to those options at that time, and the community could have suggested those matters be taken up as part of the public advertising undertaken as part of the Corporate Business Plan. If they were raised at that time, they would have been considered by Council as part of the adoption process of those two corporate documents.

• Will the Schools Business Plan/Financial Reports that were shown to Councillors to demonstrate serviceability of the Unsecured self-supporting loan of $1.65M over 20 year term be tabled as part of the Council Minutes from the OCM at which the decision to approve the loan without benefit of Security was made? IHC are a registered Charity so their financial reporting is a matter of public record and these documents were given to Councillors and formed the basis for their decision so under Section 5 of the Local Government Act these records are to be made available to the public upon request (not under the FOI ACT - also available throughthat channel? If not why not as the Business Plan was spoken to by Lucas Hurley in his deputation and Councillors spoke to it during their consideration of the Motion. It is very much a matter of public record given 100% of the risk will be assumed byRatepayers over the term of the loan.

• The May 2019 Council Agenda Report provided a summary of the key points of the Business Plan. That report is available on the Shire’s web page. The report itself was requested to be kept confidential by the College. It is therefore not anticipated that the report will be tabled for public consumption. Anyone particularly interested in viewing the document can either seek a copy from Immaculate Heart College, or lodge a Freedom of Information Request with the Shire. There is no “Section 5” of the Local Government Act. The question might be referring to “Division 5” but it does not require what the question suggests.

• Are Councillors aware that under Section 5 of the Local Government ACT you can not delegate your authority to the CEO to enter into any borrowing arrangements or to sign any documents in relation to such arrangements?

• There is no “Section 5” of the Local Government Act. Councillors are aware though, that Section 5.43 provides for a range oflimitations to CEO Delegations, one of which is the power to borrow money.

• The discussions and supporting documentation in relation to the delegation of authority to the CEO to speak to the school in relation to the loan are all open to be a matter of public record. The CEO is also required to keep detailed records in relation to the exercising of discharge of delegated authority, Can you please provide the records from July 2018-June 2019 when the CEO has entered into discussions/meetings/negotiated funding agreements exercising his delegated authority to do so with IHC before, during and after the Grant Application was submitted and subsequent changes to those funding arrangements following the GrantApplication Approval and subsequent decisions of council by Motions relating to the altering of those funding arrangements?

• No delegated authority is understood to have been given (or used) along the lines outlined in the question. The October 2018 Council Meeting did however, authorise the Chief Executive Officer to negotiate a funding commitment from Immaculate Heart College as a contribution towards the capital cost of the project, and to lodge a funding application under the Building Better Regions Fund (BBRF3).

• What will increasing Shires borrowings to more than $7M do to the Shires Financial Health Indicator Score which is already below the accepted standard for WA Local Governments? It has been falling year on year for the past 3 years.

• The Financial Health Indicator Score is calculated by the Department of Local Government and so this is a question best forward it to that agency.

• What is the difference between $3M and the combined total of repaying a Loan for $3M P&I plus loan fees and charges over a 20 year term?• Interest will be payable on the loan at the relevant Treasury rates, but $3m @ 1.61% is approximately $180,000pa, or $3.6m in total repayments.

So $600,000 of total interest repayments, or $30,000pa.

• Do you realise that the Shires Investment is not just $3M to get a $10M facility it is the Total money invested. How much is it actually costing the Shire to use the $4.71M Grant?

• Yes, full life costing is relevant and (with the exception of the operation costs) these costs have already been included in the Long Term Financial Plan. Over the 20 year life of the loan for example, the Shire will pay $30,000pa interest, plus the annual costs of operations, plus need to look at major refurbishments in the outer years. Internal costings have indicated that using the Muchea Hall & Oval as a guide, the operating costs of the facility could be around $100,000pa, but this is subject to more stringent costing review. If the annual operational costs can be held at $100,000pa, then twenty year operating costs of at least $2.6m (in today’s dollars) should therefore be expected. This is the cost that must be met to enable the community to have access to the facility that would otherwise not be available to it. It is the same principle as borrowing money to buy a home which the owner enjoys at the expense of the interest charged on the loan taken out, plus the other home owner costs.

• Is Shire intending to use an Overdraft to fund any part of the LC Facility Capital Costs, Loan extended to IHC or pay any other expense in relation to this project? Is one Loan being taken out for $5M or will it be made up of a combination of borrowings/loan refinancing?

• Cash flow during the construction stage may on occasion require an overdraft however this will not be known until we have a building contract let and a know timeline and schedule of payments is provided. Other than that, it is not foreseen that an overdraft will be utilise to fund capital costs.

• It would be anticipated that two separate loans will be taken out totalling $5 million. $1.625 million as a self supporting loan on behalf of the Immaculate Heart College and $3m for the Shire. The exact amount of the Shire loan will not be known until the building tender has been accepted.

• In relation to the above question do you see this Facility as financially sustainable the be completed in full along with the other projects Shire have on the to do list to address public service needs of the community?

• Subject to the Operating Costs being incorporated into the Long Term Financial Plan, yes. The current Long Term Financial Plan has been endorsed by Council and includes the provisions for the works to be undertaken. The configuration of the facility’s financials for this facility are an excellent example of how a local government can bring together stakeholders to construct and operate a facility at the lowest possible cost and still provide the maximum possible social benefit to its community.

• What consideration and/or assessment has been applied to ensure ongoing Building Asset Maintenance and Renewals are prioritised in the forward planning of the Shire? There is already a 59% Funding GAP identified in Building Asset Maintenance Plans - What is being done to address this and reduce the funding gap to ensure Building Assets are maintained to the necessary standard across all Assets in the Shire going forward?

• This percentage shortfall is clearly outlined in the Long Term Financial Plan and Council gives consideration to that aspect as part of its Annual Budget and when it reviews its Long Term Financial Plan.

• Is any of the above mentioned measures of the financial health of the Shire KPI's for the executive managers in charge of adherence to standards and budgets for these areas of the Shires Business, Maintenance and Financial Plans? Has there been any Performance Management to address the sub-standard service level and reported results Shire are currently running at? What are the consequences for non-compliance to meeting the minimum or average Local Governments Standards in this regard?

• Officer Key Performance Indicators can only be set for areas the officer authority to manage. As it is the Council that decides on the annual budget and approves the Long Term Financial Plan, it is not possible to make an officer responsible for the outcome of this area. The financial ratios are outlined in the Finance Management Regulations, and must be reported upon to the Department of Local Government. The Department then uses the seven ratios in combination, to develop the Financial Health Indicator Score.

• Does Immaculate Heart College pay Shire Rates like others in the area?• The College pays rates for its vacant land holdings, but does not pay rates to the Shire of Chittering for its

school sites. Most schools are exempt under Section 6.26 of the Local Government Act, which provides that land used exclusively by a religious body as a school for the religious instruction of children; and land used exclusively as a non-government school within the meaning of the School Education Act 1999; are exempt.

• Who authorised and why did the Shire release statements which formed the basis of the article in the Northern Valley News, that the Lower Chittering project was going to go ahead, when that is clearly untrue because nothing has been signed off?

• Council resolved on 20 March 2019 to progress the project, following announcement of the Federal Government grant for $4.71m.

• Is the CEO and the Council willing to accept that the ratepayers do not want this loan burden and therefore reject the Lower Chittering project, or will they run over the aspirations of our community and force the approval through before the next Shire elections?

• The Council has resolved on 17 April 2019 to “use its best endeavours to bringing the project to realisationas soon as reasonably possible, in order that the Chittering community and the Immaculate Heart College students and families can benefit from the facility”. The Council’s role is to govern the local government’s affairs; be responsible for the performance of the local government’s functions; and oversee the allocation of the local government’s finances and resources. It does this in the best overall interest of the district.

• Why is the Shire proceeding in light of the significant community opposition and anger regarding the project and exclusive use arrangements of the proposed facility?

• The role of the Council is to make judgements about the future of the district and how it sees, all things considered, that should be progressed. It is also hoped that tonight’s Information Session will assist with people obtaining a more comprehensive understanding of the parameters of the project, and of the Shire’s capacity to undertake it.

• Poor results and inadequate community consultation on the project• The survey was undertaken by a professional consultant who won a tender for the project. A

random survey of 500 was distributed across the Shire, via Australia Post. The surveys were distributed in accordance with the number of residents in each portion of the district. A total of 64 surveys were also distributed to all known organisations and clubs in the Shire of Chittering with a total of 18 replies.

• What are the projected numbers of students and of rate payers who will use the project’s facilities each year over the first 10 years? How were these figures arrived at?

• The Regional Sports and Community Centre Feasibility Study report indicated an indicative of 509 persons per week utilising the facility based on 2011 population rates (15.2%/76%=11.5% x 4428 = 509 persons per week). School students would likely add to this number.

• Where and how did this “need” originate? Was it promoted by the School, the Council, ratepayers, politicians?

• There are numerous references to the potential of a facility in this location, including in the 2002 Shire of Chittering Sports & Recreation Report “Construction of a joint-use recreation and sports ground at Meryville Estate”. The 2014 – 2024 Community Development Plan includes that “a major project that was identified in the Plan was the development of a regional sports community facility in the lower part of Chittering”.

• The justification and rational to why this proposal is the better option opposed to investing $3M into upgrading and maintain existing facilities? Why are outstanding sporting facilities maintenance not being addressed before adding to Council’s ongoing maintenance costs and significantly increased debt?

• The 2016 Regional Sports and Community Centre Feasibility Study report validated the need for the Lower Chittering Sports & Recreation Facility. Balancing the financials for both proposed new, and existing facilities, is a challenge for Council, and that process is facilitated largely through the Long Term Financial Plan and the Annual Budget. It is a difficult to balance the needs of a growing community with the needs of existing facilities, but it is a role of Council to do so.

• Is it correct that sporting organisations must pay 1/3 costs for facilities? If so, why is it proposed that the company pay a lower share in the capital cost and likely operating costs?

• Sporting groups are on occasion asked for a 1/3 capital contribution, but don’t generally contribute significantly to operational costs.

• Is it true Council officers may benefit from this proposal going ahead?• There is no know indication that this would be the case.

• Why has the operating funding arrangement not been finalised before proceeding further?• The grant application provided an indication of the shared use/cost parameters, but the final

configuration of that will form part of the Loan Agreement.

• How long ago and how accurate are the costings now, particularly with the economic downturn?

• The costings were current at the time of the grant application (October 2018) and with a down-turning market, these costs should be more than adequate.

• Will the four Councillors who support this proposal give personal guarantees for the loan required by the Company concerned?

• The role of a Councillor is outlined in Section 2.10 of the Local Government Act. There is a requirement to make decisions in the best interests of the district, but there is not requirement to provide personal guarantees.

• Has an option of a special rates levy for Lower Chittering been considered to fund this project? If not, why not?

• Specified Area Rates are raised within a specific area for a specific purpose particular to that area. Such a rate might have been possible to have been raised, but this is not normally the case where a facility is considered to have district wide access and benefits.

• If built, will this facility lead eventually to higher valuations on properties and hence possibly increase rates?

• Gross Rental Valuations are (effectively) based on the rental potential of a property. Increasing amenity (like a new Sport & Recreation Facility) could see increased property and rental values. If that occurs and the remainder of the Shire remains static, then rates could rise.

• What are the NPV, IRR and WACC of this proposal? In light of incorrect figures utilised in the business case to establish the NVP and BCR below. As per below table the $1.23M loan repayments were not included in the costs of the project even though the timeframe considered to establish the benefit was over 40 years, the operational savings were based on IHC contributing 50% and revenue predictions were over inflated and unrealistic compared to current user hire and rental return on Shire facilities.

• Due to the effect of taking an extra 5 years (2031) to get to the equivalent population in 2026 or otherwise said 10% lower expectation in population in 2026 which report was used when working out feasibility of the proposed Sport and Rec facility in Lower Chittering? If it was No.10 that was used then should the numbers reworked?

• Who is responsible for checking and proof reading Consultants reports as the ones provided as part of this proposal have been filled with errors and are quite frankly a poor reflection on the Shire and staff responsible.

• The Shire relies upon professional consultants to undertake studies and prepare reports on technical aspects for projects it does not have the internal staff expertise to undertake. In light of than we can only trust that the reports provided are accurate.

Is there something else you would like covered as part of tonight’s presentation?