Agenda of Finance and Governance Committee

Georges River Council – Finance and Governance Committee - Monday, 12 August 2019 Page 3

Committee Reports

Item: FIN051-19 Advice on Costs and Status of Council's Court Proceedings - June 2019

Author: Director Legal Services and General Counsel

Directorate: Office of the General Manager

Matter Type: Committee Reports

Recommendation

That the report “Advice on Costs and Status of Council’s Court Proceedings – June 2019” be received and noted.

Executive Summary

1. Advice on Council’s Court proceedings for the period 1 June 2019 to 30 June 2019 is contained within this report.

2. Total costs to date for the 2018/19 financial year for Court proceedings are $2,062,224.

3. Total legal costs recovered to date for the 2018/19 financial year are $1,124,111.

4. Total nett costs are $938,113.

Background

5. The current Court Proceedings for the reporting period are broken down as follows:

Supreme Court

· 2 x Summons

Land and Environment Court

· 18 x Class 1 (Merit/DA)

· 2 x Class 4 proceedings (including 1 x Contempt of Court proceedings)

· 5 x Class 5 (Environmental Prosecutions) Summons’

Local Court

· 9 x Council Prosecutions (including 1 x Police matter)

Industrial Relations Commission

· 1 x matter

New Matters

6. There were four new Class 1 matters received during this period (Zaki), (Thomas), (Siscus Holdings Pty Limited) and (Icon Construction Group Pty Limited).

Finalised matters

7. Eleven matters were finalised – (Conis), (Australia Fitness Management Pty Limited), (Fusion NSW Pty Limited), (Ezra 1 Pty Limited), (Ng), (Kidd), (Lateral Estates Pty Limited), (W K Strong Pty Limited & Awada), (Ivanov), (Jiongyao Lin & L Z Infinity Pty Limited) and (Sykalos).

Current Table

8. The Court proceedings current for the reporting period are set out below. The external costs include both external legal and expert consultants’ (Court witnesses’) fees.

No.	Property Address / Applicant / Proceedings Number	Description of Matter	Status / Critical Dates
Land and Environment Court Proceedings – Class 1 Appeals
1	10 – 12 Mimosa Street, Oatley Applicant: Ezra 1 Pty Limited Proceedings No: 2018/140860	Class 1 appeal against deemed refusal of Development Application DA2018/0071 for demolition of existing structures and construction of basement car park and 8 attached units to be used as seniors living housing and other ancillary works.		Matter was listed for hearing on 3 and 4 June 2019. Appeal was dismissed. Applicant is to pay Council’s costs. External planner, traffic, acoustic and urban design consultants briefed.
2	158 Connells Point Road, Connells Point Applicant: Chung Kei Ng Proceedings No: 2018/223668	Class 1 appeal against LPP refusal of DA2017/0286 for alterations and additions to a dwelling, construction of a new building to rear and change of use into a child care centre.		Matter was listed for hearing on 15 and 16 August 2019. Applicant discontinued the proceedings prior to the hearing date.
3	70 Kyle Parade, Kyle Bay Applicant: Marilyn Kidd Proceedings No: 2018/214451	Class 1 Appeal against deemed refusal of DA2017/0625 for subdivision into 2 allotments and demolition of carport structure.		Matter was listed for hearing on 17 and 18 June 2019. Appeal was dismissed and DA refused.
4	32 – 38 Montgomery Street, Kogarah Applicant: Lateral Estate Pty Limited Proceedings No: 2018/260971 SSPP concurrence authority	Class 1 Appeal against deemed refusal of DA2018/0139 for the demolition of existing structures and construction of a 12/13 storey mixed use development comprising a residential flat building with 74 apartments over ground floor retail, basement car parking and landscaping.		Matter was listed for hearing on 29, 30, 31 July and 1 August 2019. A S34 Agreement has been submitted to Court following significant amendment of plans. Awaiting Court judgment. External planning, urban design and heritage briefed.
5	505 – 507 Rocky Point Road, Sans Souci Applicant: Al Abrahim Proceedings No: 2018/317003	Class 1 Appeal against deemed refusal of DA 2018/0252 for the demolition of existing dwellings and ancillary structures and the construction of a mixed-use development over basement parking.		Matter was listed for a S34 Conference on 24 May 2019 which was terminated. Matter now listed for hearing on 20 & 21 January 2020. External planning and urban design experts retained.
6	125 Boundary Road, Peakhurst Applicant: Australian Fitness Management Pty Limited Proceedings No: 2018/310085	Class 1 Appeal against deemed refusal of DA2018/0129 for the fit out and use as a fitness studio (recreation facility (indoor) opening 24 hours, 7 days and associated signage.		Matter was listed for S34 Conference on 20 May 2019. S34 Agreement entered into. External traffic expert briefed.
7	31 & 31A Regent Street, Kogarah Applicant: Peter Thanos Proceedings No: 2018/363618	Class 1 Appeal against deemed refusal of DA2018/0214 for the demolition of existing building and construction of a 16 room new generation boarding house comprising 1 ground floor commercial tenancy and a car park for 5 vehicles and 4 motorcycle spaces.		Matter was listed for S34 Conference on 23 July 2019. Matter adjourned to 14 August 2019.
8	143 – 145 Rocky Point Road, Beverley Park Applicant: Adouni & Raad Pty Limited Proceedings No: 2018/369087	Class 1 Appeal against deemed refusal of DA2018/0429 for the demolition of existing building and the construction of a residential flat building, basement car parking, landscaping and associated works.		Matter not resolved at S34 Conference on 31 July 2019. Listed for directions on 7 August 2019.
9	3 Gray Street, Kogarah Applicant: Best Build NSW Pty Limited Proceedings No: 2018/393349	Class 1 Appeal against deemed refusal of DA2018/0201 for the demolition of existing building and the construction of a 6 storey boarding house comprising 44 rooms including site manager room over basement car parking.		Matter listed for S34 Conference on 28 August 2019.
10	301 Kingsgrove Road, Kingsgrove Applicant: Futuristic Design Pty Limited Proceedings No: 2018/390589	Class 1 Appeal against refusal of DA2017/0487 for the demolition of all structures and construction of a two (2) storey child care centre for forty seven (47) children and basement car parking.		Matter listed for S34 Conference on 19 August 2019.
11	22 Empress Street, Hurstville Applicant: Erdogan Kasif Proceedings No: 2019/9753	Appeal against deemed refusal of DA2018/0441 for partial demolition of existing structures and construction of a residential flat building containing 6 apartments with basement car parking.		Matter listed for S34 Conference on 13 September 2019.
12	60 Park Street, Peakhurst Applicant: Costa Kostantopoulos Proceedings No: 2019/70803	Appeal against deemed refusal of DA2018/0414 to demolish the existing building and erect a centre based child care facility.		Matter listed for S34 Conference on 1 November 2019.
13	253 – 255 Princes Highway, Carlton Applicant: Touma Carlton Pty Limited Proceedings No: 2019/150524	Appeal against deemed refusal of DA2019/0116 for demolition of existing structures and construction of a six storey mixed use development.		Matter listed for S34 Conference on 30 January 2020. External planning and traffic consultants retained.
14	2 – 10 Palmerston Street, Kogarah Applicant: A V Jennings SPV No 19 Pty Limited Proceedings No: 2019/152130 Proceedings No:	Appeal against modification of Court granted consent on 20 September 2018 approving DA9/2017/112/1 subject to conditions, for the construction of a residential flat building comprising 51 units and 6 serviced apartments over 3 levels of basement parking for 63 cars. Modification is seeking construction of a mixed use building containing a ground floor retail shop and 11 residential floors comprising a total of 55 units and deletion of s7.13 contributions.		Matter listed for S34 Conference on 1 November 2019.
15	200 Hurstville Road, Oatley Applicant: Maged Zaki Proceedings No: 2019/187513	Appeal against refusal of DA 2018/0267 for alterations and additions to the existing two storey commercial building to facilitate a change of use to a centre based child care facility, external façade beautification works and landscaping.		Matter listed for S34 Conference on 21 January 2020. External lawyer retained.
16	29 Penshurst Street, Penshurst Applicant: Christopher Thomas Proceedings No: 2019/191841	Deemed refusal of DA2019/0160 for the partial demolition of the Penshurst Hotel and construction of a car park.		Matter listed for S34 Conference on 31 January 2020.
17	14 English Street, Kogarah Applicant: Siscus Holdings Pty Limited Proceedings No: 2019/191686	Deemed refusal of DA2018/0213 for the demolition of existing structures and construction of a 6 storey boarding house with 33 rooms over one level of basement parking.		Matter listed for S34 Conference on 25 February 2020. External lawyer retained.
18	22 – 26 Mongtomery Street, Kogarah Applicant: Icon Construction Group Pty Limited Proceedings No: 2019/204549	Modification to development consent granted by the Land and Environment Court in proceedings 2018/167910.		Matter listed for S34 Conference on 20 February 2020.
Land and Environment Court Proceedings – Class 4 Proceedings
1	34 Milsop & 47 Jersey Avenue, Mortdale Parties: Robert Stojanovski & Steven Stojanovski Proceedings No: 2018/99739	Proceedings commenced for unauthorised erection of structures and slabs, including habitation of structure at the premises.		Respondent has failed to comply with Court Orders dated 21 August 2018 requiring demolition of unauthorised structure. Contempt proceedings were listed for hearing on 15 April 2019. Sentencing hearing has been listed for 6 August 2019. External lawyers and Counsel briefed.
2	297 Rocky Point Road, Sans Souci Parties: Alan Frederick Goddard Proceedings No: 2018/366019	Proceedings commenced for hoarding at property.		Matter was listed for an on-site mediation on 1 August 2019. Matter was not resolved. Matter listed for hearing on 2 and 3 September 2019. Counsel briefed.
Land and Environment Court Proceedings – Class 5 Proceedings
1	111 Gungah Bay Road, Oatley Parties: W K Strong Pty Limited Proceedings No: 2018/227315, 2018/227316, 2018/227361, and 2018/227363. Parties: Khaled Awada Proceedings No: 2018/227336	Class 5 appeals in relation to lopping and injuring trees and development not in accordance with development consent at 111 Gungah Bay Road, Oatley.		Council’s evidence in chief filed. W K Strong Pty Limited and Awada entered guilty pleas. The Defendants, W K Strong Pty Limited and Mr Khaled Awada, pleaded guilty to 5 offences. The Court found all offences proven, although did not impose a conviction against Mr Awada. The Court imposed penalties totalling $95,000.00 and awarded Council costs, as agreed or as assessed. Currently chasing costs.
Local Court Proceedings
1	50 Queens Road, Connells Point Parties: SAF Developments Pty Limited	Prosecution for development without consent involving unauthorised road closures, materials being stored on the road reserve area, defective/non-compliant sediment and erosion controls , defective non- compliant signage, defective tree protection facilities and allowing materials to enter the storm water system.		Defendant has pleaded guilty to 4 offences. Matter fixed for hearing on sentence 14 June 2019 and has been listed for judgment on 25 October 2019.
2	Shop 5 & 6, 309 Forest Road, Hurstville (Spicy Orient) Parties: Jiongyao Lin & L Z Infinity Pty Limited	Prosecution for multiple breaches of the Food Act. Defendant has closed business and is unable to be located. Application for substituted service made.		Matter was listed for a sentencing hearing on 4 July 2019. The Defendant was fined $10,000.00 and ordered to pay costs of $5,610.00 within 28 days of judgment.
3	27 Cecil Road, Hurstville Grove Parties: Stephen Ivanov	Prosecution for companion animal not registered.		Matter listed for a contested hearing on 26 and 29 July 2019. The Defendant paid the outstanding dog registration fees and the charges were withdrawn.
4	27 – 29 Andover Street, Carlton Parties: Fusion NSW Pty Limited	Prosecution for development not in accordance with consent.		Matter listed for sentencing on 6 June 2019. The Defendant was fined $20,000 and ordered to pay $500 professional costs.
5	Bunyala Street, Carss Park Parties: Michael Conis	Prosecution for depositing litter from vehicle.		Matter listed for first mention on 13 June 2019. The Defendant agreed to pay the fine and the offence was withdrawn.
6	Todd Park Parties: Nickolaos Valsamis	Appeal against 3 x Penalty Notice issued for littering offences.		Matter listed for mention on 18 July 2019. The Defendant was found guilty of the first two charges and received a Section 10 of the Crimes (Sentencing Procedures) Act. The Defendant was convicted on the third charge and fined $100.
7	18 Riversdale Ave, Connells Point Parties: Ahmad Hijazi	Development carried out not in accordance with consent.		Matter listed for mention on 6 August 2019.
8	14 Myers Street, Sans Souci Parties: Samantha Micallef	Appeal against Council’s dangerous dog declaration.		Matter is listed for further mention on 6 August 2019.
9	Former staff member Police as Prosecutor	Police Charge of Larceny.		Matter is listed for first mention on 3 September 2019.
Supreme Court
1	220 – 226 Princes Highway, Kogarah Bay. Parties: Nikolaos & Marianna Sykalos Proceedings No. 2018/215935	Supreme Court appeal seeking transfer of ownership of public car park on corner of Princes Highway and Park Road to the plaintiffs as adjoining land owners allegedly pursuant to an historic Deed.		Matter listed for formal mediation on 25 February 2019 before Mr Ian Cullinan. Proceedings have now been discontinued with an order to pay Council’s costs as agreed or assessed.
2	977 Forest Road, Lugarno Parties: Taeipo Malifa Proceedings No. 2019/43432	Proceedings seeking leave to appeal Land and Environment Court decision of 12 December 2018.		Applicant has sought leave to appeal against consent orders agreed in December. The issue of whether leave should be granted to appeal was listed for 31 May 2019 and was refused. We are currently seeking payment of Council’s costs.
Industrial Relations
1	Unfair dismissal claim by former temporary staff member	Claim seeking financial compensation and reinstatement.		Deed pending execution and Applicant to file discontinuance.

9. Costs to date are as follows:

Type	Amount
Class 1 Appeals – Consultants for Court Proceedings	$709,220
Class 1 Appeals – Planning DA External Lawyers	$545,068
Class 2 Appeals	$0
Class 3 Appeals	$0
Class 4 Appeals	$176,424
Class 5 Appeals	$39,694
Local Court Prosecutions/Enforcements	$44,213
Supreme Court Proceedings	$58,889
Industrial Relations Commission (IRC)	$0
Total	$1,573,508

Financial Implications

10. Within budget allocation.

Risk Implications

11. No risks identified.

Community Engagement

12. No Community engagement is required.

File Reference

17/1831

Georges River Council – Finance and Governance Committee - Monday, 12 August 2019 Page 19

Item: FIN052-19 Investment Report as at 30 June 2019

Author: Senior Financial Accountant - Reporting

Directorate: Business and Corporate Services

Matter Type: Committee Reports

Recommendation:

That Council receives and notes the contents of the Investment Report as at 30 June 2019.

Executive Summary

1. This report details Council’s performance of its investment portfolio as at 30 June 2019, and compares it against key benchmarks.

2. This report also includes the estimated market valuation of Council’s investment portfolio, loan liabilities and any required update on Council’s legal action against various parties.

3. Council’s annualised rate of return is 2.76%, which is 0.79% above benchmark. Income from interest on investments totals $5.3m, which is $112,000 less than the 2018/19 year-to-date adopted budget.

Background

4. Council’s Responsible Accounting Officer is required to report monthly on Council’s Investment Portfolio and certify that the Investments are held in accordance with Council’s Investment Policy and Section 625 of the Local Government Act (1993).

Investment Performance Commentary

5. Council’s performance against the benchmark for returns of its investment portfolio for June 2019, are as follows:

	1 Month	3 Month	12 Month
Portfolio Performance	0.20%	0.64%	2.76%
Performance Index	0.13%	0.45%	1.97%
Excess	0.07%	0.19%	0.79%

Notes:

a) Portfolio performance is the rate of return of the portfolio over the specified period.

b) The Performance Index is the rate of return of the market (comparable securities) over the specified period.

c) Excess performance is the rate of return of the portfolio in excess of the Performance Index.

6. Council’s investment portfolio as at the end of June was as follows:

Security Type	Market Value $000's	% Total Value
Cash at Bank	10,073	5.98%
11am Cash	7,169	4.26%
31 Day Notice Account	3,023	1.80%
Covered Floating Bond	1,014	0.60%
Flexi Deposit (Fix/Float)	6,000	3.56%
Floating Rate Deposit	5,000	2.97%
Floating Rate Note	47,576	28.25%
Floating Rate TCD	2,509	1.49%
Term Deposit	80,040	47.53%
Managed Funds Trust	5,989	3.56%
Total Cash and Investments	168,393	100.00%

7. At the end of May 2019, Total Cash and Investments were $175.11m and have decreased by just under $7m at the end of June 2019 due to the capital and operational expenditures in the month of June.

8. Council continues to utilise the Federal Government’s current guarantee ($250k) investing in Term Deposits with a range of Authorised Deposit Taking Institutions (ADI’s) on short to medium term investments (generally 30 days to 180 days maturity) where more competitive rates are available.

Legal Matters

9. Georges River Council is participating in a Group Class Action against Fitch Ratings Inc., in respect of losses suffered on the Corsair (Cayman Islands) No.4 Ltd Series 6 Kakadu Collateralised Debt Obligation (CDO) notes. Council suffered a capital loss of $214,812 on these investments dating back to December 2006, and will seek damages of the capital loss including lost interest as part of the action. There is no update on this matter, in terms of an outcome as at 30 June 2019.

Borrowings

10. Council’s loan liability, as at 30 June 2019, was $1.625m which represents the balance of a $5m 10 year loan drawn down on 16 November 2012 for the Jubilee Park upgrade in Mortdale. The next repayment of $125,000 is due on 23 September 2019.

11. The outstanding balance on this facility is at a variable interest rate of 194 basis points above the three month BBSW. At the current three month BBSW rate, the interest rate payable is 3.23% pa.

12. Council receives a 4% p.a. subsidy under the NSW Government’s Local Infrastructure Renewal Scheme funding agreement for the Jubilee Park upgrade facility. It is intended to continue this financially-advantageous arrangement through to full term in 2022.

13. Council’s current other financing arrangements as at 30 June 2019 include bank overdrafts, credit card facility and a bank guarantee. The table below outlines the relevant details:

Investment Term	Limit ‘000
Contingent Liability – Bank Guarantee	1,310
Overdraft	650
Corporate Card Facility	250

Policy Limits

14. The graph below shows the Investment Rating limits, as a percentage of total cash investments, which are allowed under Council’s Investment policy. It also compares them to the amounts actually invested, as a percentage of the total cash investments. It shows that the funds invested are within the limits set in the Investment Policy.

Investment Income

15. Income from interest on investments to 30 June 2019 is $5.3m, which is $112,000 less than the 2018/19 year-to-date adopted budget.

16. Investments have been made in accordance with the Local Government Act (1993), Minister’s Guidelines, Regulations and Council’s Investment Policy.

Analysis of Investments

Investment Duration

Investment Term	Market Value ‘000	% Total Value	Policy Limits
0 to < 1 Year	93,101	55.28%	100%
1 to < 3 Years	59,048	35.07%	70%
3 to < 5 Years	16,244	9.65%	50%
Portfolio Total	168,393	100.00%

17. Council’s portfolio is liquid, with 55.28% of assets maturing within 12 months. FRNs, At-Call Funds and Fixed Bonds also provide additional liquidity in an emergency.

18. The following graphs show analysis of the total cash investment by institution:

Type of Investments

19. The majority of Council’s investment portfolio is made up of fixed term deposits, which account for approximately 51% of total investments.

20. Bank Floating Rate Notes (FRN) offer liquidity and a higher rate of income accrual, which is highly recommended by our Investment Advisors (CPG Research & Advisory).

21. The following are the types of investments held by Council:

a) Cash and Call Accounts refer to funds held at a financial institution and can be recalled by Council either same day or on an overnight basis.

b) An FRN is a debt security issued by a company with a variable interest rate. This can either be issued as Certificates of Deposit (CD) or as Medium Term Notes (MTN). The interest rate can be either fixed or floating, where the adjustments to the interest rate are usually made quarterly and are tied to a certain money market index such as the Bank Bill Swap Rate.

c) A Fixed Term Deposit is a debt security issued by a company with a fixed interest rate over the term of the deposit.

d) A managed fund is a professionally managed investment portfolio that individual investors can buy into, purchasing 'units' rather than shares. Each managed fund has a specific investment objective. This is usually based around the different asset classes (cash, fixed interest, property and shares). The money you invest is used to buy assets in line with this investment objective. When you invest in a managed fund, you are allocated a number of 'units'. The value of your units is calculated on a daily basis and changes as the market value of the assets in the fund rises and falls.

* These managed funds have been grandfathered since the NSW State Government changed the list of Approved Investments as a result of the Cole enquiry (which was reflected in the Ministerial Order dated 31/7/2008).

Credit Rating

22. Credit ratings are generally a statement as to an institution’s credit quality. Ratings ranging from AA to BBB (Short Term) & AA to BBB (long term) are considered investment grade.

23. A general guide as to the meaning of each credit rating that Council deals with is as follows:

Short-term

AA: The best quality companies, reliable and stable. An obligor’s capacity to meet its financial commitments on the obligation is very strong.

A: The obligor’s capacity to meet its financial commitments on the obligation is still strong but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

BBB: Adequate capacity to meet financial commitments, but adverse economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitments.

Unrated: This category includes unrated Authorised Deposit-Taking Institutions (ADI’s) such as some Credit Unions and Building Societies to the extent not Commonwealth-guaranteed. No rating has been requested, or there is insufficient information on which to base a rating.

Long-term

AA: Quality companies, a bit higher risk than AAA. An obligor has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree.

A: Economic situation can affect finance. An obligor has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.

BBB: Medium class companies, which are satisfactory at the moment. An obligor has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.

24. The credit quality of Council’s portfolio is relatively high with approximately 76% of assets rated ‘A’ or higher. The ‘AAA’ assets represent the deposit investments covered by the Federal Government’s Financial Claims Scheme (FCS).

25. The remaining 24% rated ‘BBB’ or ‘unrated’ reflects the deposit and FRN investments with the regional and unrated ADIs.

Council’s Investment Powers

26. Council’s investment powers are regulated by Section 625 of the NSW Local Government Act (1993), which states:

· A council may invest money that is not, for the time being, required by the council for any other purpose.

· Money may be invested only in a form of investment notified by order of the Minister published in the Gazette.

· An order of the Minister notifying a form of investment for the purposes of this section must not be made without the approval of the Treasurer.

· The acquisition, in accordance with section 358, of a controlling interest in a corporation or an entity within the meaning of that section is not an investment for the purposes of this section.

27. Council’s investment policy and strategy requires that all investments are to be made in accordance with:

· Local Government Act 1993 - Section 625

· Local Government Act 1993 - Order (of the Minister) dated 12 January 2011

· The Trustee Amendment (Discretionary Investments) Act 1997 – Sections 14A (2), 14C (1) & (2)

· Local Government (Financial Management) Regulation 1993

· Investment Guidelines issued by the Department of Local Government

Financial Implications

28. Income from interest on investments totals $5.3m, which is $112,000 less than the 2018/19 year-to-date adopted budget.

Risk Implications

29. Enterprise risk/s identified and management process applied.

30. Council’s enterprise risk identified was ‘poor financial management adversely impacts Council’s long term financial sustainability’. The risk has been managed by Council’s management of investments in accordance with the relevant act and regulations, along with Council adopted Investment Policy. To further minimise the risk, Council will progressively move towards the placement of investments only in investments rated A or above.

Community Engagement

31. No community consultation is required as a result of this report. Members of the community are able to attend and address Council at the Council meeting in relation to this matter in accordance with Council’s Code of Meeting Practice.

File Reference

D19/162592

ATTACHMENTS

Attachment ⇩1

Investment Report as at 30 June 2019

Georges River Council – Finance and Governance Committee - Monday, 12 August 2019 Page 40

Item: FIN055-19 2019/2020 Festive Period Annual Close-Down

Author: Executive Manager, People and Culture

Directorate: Business and Corporate Services

Matter Type: Committee Reports

Recommendation

(a) That consistent with Council’s adopted 2019/2020 Budget, Council implements the annual close-down period from Monday 23 December 2019 to Friday 3 January 2020 with Council’s non-essential services and operations not being staffed during this close-down period.

(b) That the General Manager provide sufficient staff for essential services in the areas of cleansing, street sweeping, regulatory services, call centre and information management technology to ensure management of urgent matters and the delivery of essential services to the community occurs.

Executive Summary

1. At the Council meeting held on 24 September 2018, Council resolved to provide three additional annual leave days to eligible staff in the festive period. At the Council meeting held on 24 June 2019 Council resolved to adopt the 2019/2020 budget inclusive of an annual close-down period (that reduces Council’s current leave liability by more than $550,000) during the festive season at Christmas.

2. The practice of providing additional annual leave days exceeds the leave provisions provided to staff under the applicable Local Government State Award (LGSA). In considering the above and in accordance with the applicable LGSA, it is proposed to implement the two week annual close-down period from Monday 23 December 2019 to Friday 3 January 2020 during the festive season.

3. During the period of close-down, eligible full time and applicable part time staff will use either three or four days of their annual leave accrual, thus reducing Council’s current leave liability by more than $550,000.

4. Council has resolved to take strategic action to improving the long term financial sustainability of the organisation and this approach is being reflected in workplace policy decision making.

Background

5. Traditionally, with the exception of public holidays, Council has operated with skeleton staffing in all areas during the festive season period between Christmas and New Year. During this period, both customer service centres as well as Council’s libraries remain open. It has been established through data and staff feedback that during the festive period, the need for Council to operate full services is not required including the opening of both customer service centres and all libraries.

6. In accordance with Council’s adopted budget, it is proposed to implement the annual close-down period for the majority of Council operations from Monday 23 December 2019 to Friday 3 January 2020. This is in essence a further close-down period of four days to what has occurred in the past.

7. During this period, and the additional four day close-down period, it is recommended that Council’s customer service centres remain closed, however both Hurstville and Kogarah Libraries will remain open with skeleton staffing. All other branch libraries would remain closed from 23 December 2019 to 3 January 2020.

8. Council has a current employee leave entitlement liability of approximately $13.6 million. This amount is indexed annually consistent with the applicable Local Government State Award increase.

9. In accordance with the LGSA (Clause 20), Council has the option to provide a four week period of notice and direct an employee to use their annual leave during an annual close-down period.

Proposed 2019 Close Down and Leave Arrangements

10. As previously stated, it is proposed to implement then annual close-down period for the majority of Council operations from Monday 23 December to Friday 3 January 2020.

11. During the ten day close-down, eligible staff (full time and applicable part time staff) will be paid the three public holidays and the three additional annual leave days (grant days). These payments are not deducted from annual leave entitlements.

12. In addition, full time and applicable part time employees will be directed to use and be paid three days of annual leave during the close-down period.

13. The final day during the close-down period will require an employee to use their flexi accrual, RDO or an additional day of annual leave. This will depend on their current working arrangements and roster.

14. Using the payroll data from 2018 and applying the upcoming applicable Local Government Award increase of 2.5%, this strategy will reduce Council’s leave liability by approximately $550,000.

15. During the close-down period, essential services will continue to operate. These include cleansing, street sweeping, regulatory services, call centre, information management technology and Hurstville and Kogarah Libraries.

16. Employees who do not have the adequate accrual of annual leave to use during the close-down period will be allowed to carry over their flexi accrual or RDOs from six weeks prior to 23 December 2019.

17. Casual employees are not entitled to the above arrangements. This is consistent with previous years as Council’s casual workforce is not utilised during the annual festive period.

Financial Implications

18. While it is anticipated that a reduction to Council’s leave liability of approximately $550,000 will be realised as a direct result of the annual close-down, it should be noted that the annual cost of providing staff with the above-Award entitlement of 3 additional annual leave days (grant days) is also costed at approximately $550,000.

Risk Implications

19. Having regard to the relevant data, Council’s level of service during the annual close-down period is anticipated to remain at the same level as previous years.

Community Consultation

20. Community consultation is not deemed necessary as a result of this report.

File Reference

D19/133194

Georges River Council – Finance and Governance Committee - Monday, 12 August 2019 Page 52

Item: FIN057-19 19 (17/8 July 2019 (17/1831)Rate Restructure Proposed Program

Author: Chief Financial Officer, Director and Coordinator, Communications

Directorate: Business and Corporate Services

Matter Type: Committee Reports

Recommendation

(a) That Council endorse the 2020/2021 Rate Restructure Program, which includes the Community Engagement Framework and the proposed timeframe.

(b) That the General Manager formally notify the Independent Pricing and Remuneration Tribunal (IPART) of Council’s intention to cease using the former Hurstville City Council’s and former Kogarah City Council’s rating structures and special rate variations at the end of financial year 2019/2020, subject to IPART approval of Council’s application on a harmonised minimum rate and a special rate variation.

(c) That the General Manager formally notify IPART that following consideration of community engagement, Council’s intention is to apply for a special rate variation (SRV) of 8.1% (plus the 2020/2021 rate peg) on Council’s 2019/2020 general rate income base, in order to replace cessation of the former Hurstville City Council’s SRV and to ensure Council’s long term financial sustainability.

(d) That the General Manager formally notify IPART that following consideration of community engagement, Council’s intention is to apply for one of the following proposals:

a. Harmonised minimum rate of $942.24 (plus the 2020/2021 rate peg amount) commencing in the 2020/2021 rating year, or

b. Harmonised minimum rate structure, as per the following categories/sub-categories:

i. Residential harmonised minimum rate of $942.24 (plus the 2020/2021 rate peg amount) commencing in the 2020/2021 rating year

ii. Business harmonised minimum rate of $942.24 (plus the 2020/2021 rate peg amount) commencing in the 2020/2021 rating year

iii. Commercial/Strategic Centre sub-category harmonised minimum rate of $1,100 commencing in the 2020/21 rating year.

(e) That Council notify the Minister for Local Government that at this time it is not intending to participate in a rate path freeze extension, however, Council will formally reserve its right to opt into the rate path freeze extension should the outcome of the community consultation not enable Council to proceed with model 3 of the Georges River Council 2019/2020 to 2028/2029 Long Term Financial Plan and a harmonised minimum rate commencing in the 2020/2021 rating year.

(f) That the General Manager provide a submission to the Office of Local Government on IPART’s Review of the Local Government Rating System, 2016.

Executive Summary

1. The purpose of this report is to provide information to Council on the following items:

· The 2020/2021 Rate Restructure Program, which includes:

o the necessary financial modelling studies;

o community consultation framework; and

o timeframes and costs for preparation of the new rate structures.

· Overview of proposed changes to the rating system within the Local Government Act 1993 (the Act) and Council’s submission

· Impact on Council as a result of the amendments made to the Act through a bill in June 2019, regarding the rates freeze.

Background

2. Council resolved in 2018/2019 to develop a program for the preparation of a new residential and business rates structure for the Georges River Council Local Government area (LGA), which was also to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s Special Rate Variation (SRV) from July 2021.

3. In conjunction with this process, there has been recent announcements on proposed amendments to the rating system within the Act, along with an amendment made in June 2019, enabling the Minister for Local Government to extend the rates path freeze for an additional 12 months for those councils formed in 2016 that need more time to consult with communities about rating harmonisation.

2020/21 Rate Restructure Program

Councillor Workshops

4. In December 2018, the first Rate Restructure Program Councillor workshop was held to provide a broad overview of what the restructure would entail along with anticipated timeframes. Since this time, a further 5 councillor workshops have provided details and financial modelling on the following policy items, but not limited to:

· 10 Year Long Term Financial Plan and the impact of the cessation of the former Hurstville City Council’s SRV from July 2021;

· Three models for rate calculation options;

· Council’s current income split by residential and business rates;

· Comparison of average unit and average single dwelling rates;

· The impact of different minimum rates scenarios; and

· Comparisons of metropolitan Council rate structures.

5. Councillor workshops will continue to take place to provide details and financial modelling on the following policy items, but not limited to:

· Business sub-category development based on centres of activity;

· Rate income yield split across categories and sub categories;

· Outcome and consideration of options based on community feedback;

· Refinement of the Long Term Financial Plan based on 2018/2019 results; and

· IPART application submission.

Special Rate Variation

6. At the time of proclamation, former Kogarah City Council maintained only an ordinary rate structure, whereas former Hurstville City Council maintained an ordinary and special rate structure along with a time-bound SRV, which expires on 1 July 2021. When the SRV expires, this results in a $2.2 million reduction to Council’s rate income in that rating year. Since this reduces Council’s general rates income base, the impact of this reduction increases each year by the percentage rate peg increase that Council would otherwise have received. This equates to $19.5 million from 2021/2022 to 2028/2029, as outlined in Council’s Long Term Financial Plan, adopted 24 June 2019. Due to this, the Net Results of Council reduces substantially in 2021/2022 financial year and deteriorates further from that year onwards.

7. Councillor feedback during workshops has indicated preference to model 3 of the Georges River Council 2019/2020 to 2028/2029 Long Term Financial Plan. Model 3 outlines a permanent SRV of 8.1% to replace this loss of rate income, along with additional rate income to strengthen Council’s financial sustainability by bridging the widening gap between income and expenditure. Model 3 also involves Council reducing the longer term reliance on rate revenue. Based on this premise, Council has established a Georges River Council Financial Sustainability Working Group with the purpose of exploring options available to strengthen Council’s long term financial sustainability, which may include service efficiencies, user fees and charges and the rationalisation of assets.

Minimum Rate and Sub Categories

8. Council currently levies two different ordinary and special rates based on the former Council’s rating systems. The 2019/2020 financial year minimum rate for the former Hurstville City Council is $570.88, and is $942.24 for former Kogarah City Council.

9. To ensure equity in the rates and annual charges across the Council LGA a harmonised and equity based minimum rate and rate in the dollar is being proposed, for residential and business categories, along with a different minimum rate for a new Commercial/Strategic Centre sub-category. These changes are based on the LGA’s centres of activity and high mix of units and single dwellings.

10. Councillor feedback during the workshops has indicated preference towards a harmonised rate of $942.24 (plus the 2020/2021 rate peg).

Community Engagement Framework

11. Council will conduct the following community engagement to inform the community of Council’s proposal to set harmonised minimum rates and apply for a special rate variation.

12. The changes as a result of the harmonised minimum rate and the SRV will affect all rateable properties (including businesses) within the Georges River Council LGA.

13. Community engagement is scheduled to commence mid-September 2019, with a community awareness campaign to target the whole community that formal community consultation will commence October and run through to mid-December 2019.

14. The following community engagement methods will be used to capture community feedback/input.

Community Engagement Methods

1. A mail-out to all residents in a letter format to create awareness that community consultation is on its way for this project – distributed across local government area mid-September 2019.

2. A mail-out to all ratepayers (including businesses) with a reply-paid survey

3. Community Information Workshops across the local government area (each wards)

4. A random and representative telephone survey of 600 residents across the local government area

5. An online survey facilitated through Council’s Your Say platform

6. Council’s Your Say online panel members will be notified

7. Fact sheets in an easy to read format and translated into Council’s top four community languages which are: Chinese simplified, Greek, Arabic and Macedonian.

15. This community engagement strategy has been developed in line with IPART’s Fact Sheet – Community awareness and engagement for special variations, and is based on council’s community engagement materials that have been successful in their applications to IPART.

16. Council is committed to engaging with its community and will extensively promote the above community engagement activities through the following communication channels:

· Advertisements in the St George Leader newspaper;

· Editorial in Council’s magazine – Community which features upcoming events, information on major infrastructure projects, environmental news and council initiatives;

· A fortnightly community e-Newsletter;

· Councils social media including Facebook and Instagram;

· Media releases, hardcopy brochures, posters and letters to residents;

· Councils website and mobile app;

· Your Say online engagement portal accessed via Council’s website.

Costs

17. There are three main stages of the rate restructure program, estimated costs are outlined below:

Stage	Estimated Cost
Modelling	$5,000
Community Engagement	$90,000
Implementation	$55,000

Timeframes

18. Attachment 1 outlines the timeframe across the key stages of the rate restructure program. Note IPART is anticipating the release of the key dates for 2020/2021 applications in September/October 2019.

Proposed changes to the Rating System

19. At the Government’s request, IPART undertook a broad ranging review of the local government rating system. The Government released an interim response based on submission received in 2016.

20. The Government is now seeking additional feedback from councils on the remaining recommendations in IPART’s final report on the rating system.

21. Based on the feedback from Councillor workshops, the overall position will be a submission that ensures the rating system enables flexibility for Council to administer, and equity for the community needs. The following items will be covered, but not limited to:

· Additional rating option of Capital Improved Value (CIV);

· Tighter restrictions on eligibility for rate exemptions;

· Maintain the ability to apply minimum amounts;

· Introduction of a maximum residential rate; and

· Increase the maximum base rate to 80%.

Rate Freeze

22. The Local Government Amendment Act 2019 was assented to on 24 June 2019 and a number of provisions came into effect on 25 June 2019. These changes enable the Minister of Local Government to extend the rates path freeze for an additional 12 months for those councils formed in 2016 that need more time to consult with communities about rating harmonisation.

23. Based on the considerable work conducted thus far on the rate restructure and the opportunity to seek community feedback, it is recommended that Council formally reserve it’s right to opt into the rate path freeze extension should the outcome of the community consultation not enable Council to proceed with the model 3 of the Georges River Council 2019/2020 to 2028/2029 Long Term Financial Plan and harmonised minimum rates commencing in the 2020/2021 rating year.

Financial Implications

24. Within budget allocation. The rate restructure program costs of $150,000 have been incorporated into the 2019-20 draft budget.

Risk Implications

25. Enterprise risk/s identified and management process applied.

Community Engagement

26. Community engagement will be conducted based on the community engagement framework outlined within this report.

File Reference

19/754

ATTACHMENTS

Attachment ⇩1

Rate Restructure Timeframe