AGENDA


Finance and Governance Committee

 

Monday, 11 November 2019

6.00pm

 

Level 1, Georges River Civic Centre

Hurstville

 

 

 

 

 

 

 

 

 

 

 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                          

 

          Finance and Governance Committee

ORDER OF BUSINESS

1.      Opening

2.      Acknowledgement of Country

3.      Apologies / Leave of Absence

4.      Notice of Webcasting

5.      Disclosures of Interest

6.      Public Forum

7.      Confirmation of Minutes of Previous Meeting  

MINUTES: Finance and Governance Committee - 14 October 2019 (17/1831)

8.      Committee Reports

FIN074-19         Quarterly Budget Review Statement for quarter ended 30 September 2019

(Report by Chief Financial Officer)............................................................................. 1

FIN075-19         Rate Restructure Community Engagement - Adoption of the amended Delivery Program and the Resourcing Strategy

(Report by Chief Financial Officer)........................................................................... 33

FIN076-19         Investment Report as at 30 September 2019

(Report by Senior Financial Accountant - Reporting)......................................... 119

FIN077-19         2019/2020 Chief and Senior Executive Service - Annual Determination

(Report by Executive Manager, People and Culture)......................................... 137

FIN078-19         Property Matter - Proposed Sale of Vacant Land - 582 Railway Parade, Hurstville

(Report by Strategic Property Specialist)............................................................... 145

FIN079-19         Property Matter - 2F The Crescent, Kingsgrove - Proposed Easement to Drain Water Over Adjoining Property

(Report by Strategic Property Specialist)............................................................... 149

FIN080-19         Draft Georges River Council Property Portfolio Strategy

(Report by Head of Strategic Property).................................................................. 152

FIN081-19         Report on Outstanding Council Resolutions for the period 01 April 2019 - 30 September 2019 (deferred report from 14 October 2019)

(Report by Manager, Office of the General Manager)......................................... 156  


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                            Page 1

Committee Reports

Item:                   FIN074-19                    Quarterly Budget Review Statement for quarter ended 30 September 2019 

Author:              Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

Recommendation

(a)     That Council receive and note the Quarterly Budget Review for the first quarter ending 30 September 2019.

(b)     That Council approves the variances to the 2019/2020 Capital Budget, as detailed in Attachment 1, as a result of the first quarter ending 30 September 2019 Budget Review.

 

Executive Summary

1.      The purpose of this report is to highlight Council’s first quarter performance against the 2019/2020 original adopted budget and present any proposed budget variations in line with the 2018/2019 year end result and the 2019/2020 projected year end result.

Background

2.      Section 203 of the Local Government (General) Regulation 2005 requires that a Quarterly Budget Review be considered by Council that shows current estimates for income and expenditure for the year; indicates whether Council’s financial position is satisfactory and makes recommendations for remedial action, if required.

Quarter Budget Review for quarter ending 30 September 2019

Financial Performance Overview

3.      Details of Council’s financial performance and proposed quarter variations and carryovers are outlined in Attachment 1.

4.      The overall financial performance to date of Council is considered to be satisfactory and reflects sound management of income and expenditure.

5.      The Operating Surplus over the 3 month period is trending to be ahead of the annual budget and as a result no proposed changes have been recommended to the operational budget.

6.      While the Operating Surplus is in line with the year to date budget, there are some cost pressures that will need to be strictly managed, to achieve Council’s budgeted result. Cost pressures include higher depreciation charges as a consequence of Council’s extensive capital works program.

Operating Income

7.      Operating income for the quarter is trending to be above the year-to-date budget. This is primarily due to capital grants, user fees and charges and interest.

8.      For user fees and charges, restorations, hoarding and construction work zones have had favourable variances to the year-to-date budget. This will be reviewed in quarter 2 to assess whether the trend continues until year-end.

 

9.      Interest income is performing above budget as a result of the additional capital grants received above budget in 2018/19. The forecast income will be revised in quarter 2 based on the revised capital budget expenditure forecast and after assessing the investment portfolio performance rate.

10.    Capital grants and contributions were impacted favourably by the receipt of a $1.8m developer contribution against the Kogarah Town Centre Contributions Plan.

 

Operating Expenditure

11.    Operating expenditure for the quarter is trending to be above the annual budget. This is due to employee costs and depreciation quarter 1 results. 

12.    In terms of employee costs, expenditure is higher in the first quarter from the all staff annual River Run conference and the annual leave liability accrual. River Run is a one off expense and therefore the expenditure will not continue for the year. Annual leave liability accrual is high for the first quarter with the lead up to Christmas but with the implementation of the festive period close down and other budget strategy items such as vacancy management, employee costs is expected to be within target.

13.    Depreciation budget forecast is being review in line with the financial results of 2018/2019. Asset revaluations at the end of 2018/19 (30 June 2019) resulted in an increase in the value of assets by $80m. In addition, a higher than budgeted capital works program added to the value of assets being depreciated. Consequently, the Depreciation charge is expected to be greater than the annual budget by year end.  Any proposed variations will be recommended in quarter 2.

 

Capital Program

14.    The capital program has been revised in line with the 2018/2019 year-end results. The proposed changes for quarter 1 include a $13.4m carryover and $7.5m variations that have resulted from council reports, tenders and/or reforecasting.  

15.    The phasing of the capital program will be reviewed in preparation of the 2020/2021 budget.

16.    Capital expenditure for quarter 1 was $12.5m with material expenditure within the major projects, recreational space and buildings asset class. Overview of material capital expenditure projects for the quarter included:

·    Gannons Park Stage 2 (works) and 3 (irrigation) - $1.4m

·    Oatley West Childcare Centre construction - $1m

·    Community Pavilion Amenities Building - Harold Fraser Oval - $1m

·    Carss Park Foreshore Naturalisation Project (Stages 2 & 3) - $800,000

·    Oatley Park Adventure Playground - $840,000

·    Charles Pirie Reserve - Amenities Building - $750,000

 

 

 

 


 

Financial Implications

17.    Details of the financial impact are outlined in Attachment 1.

18.    Despite the variations to budget highlighted by the quarter 1 results, the year-end budgeted Surplus is being maintained as the forecast result for the year. While the annual budget shows a Surplus of $6.1m, this is influenced substantially by Capital Grants of $14.1m. The result, net of capital grants, is an operating deficit of $7.9m.

Risk Implications

19.    Enterprise risk identified and management process applied.

 

20.    Council’s enterprise risk identified was ‘poor financial management adversely impacts Council’s long term financial sustainability’. The purpose of this report is to provide an update to Council on the financial performance each quarter. This is to enable financial information for sound decision making, to ensure financial sustainability of Council.

Community Engagement

21.    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

D19/233697

 

ATTACHMENTS

Attachment 1

Quarterly Budget Review Report - Q1 30 September 2019

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN074-19              Quarterly Budget Review Statement for quarter ended 30 September 2019

[Appendix 1]          Quarterly Budget Review Report - Q1 30 September 2019

 

 

Page 4

 


 


 



 



 


 


 


 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 33

Item:                   FIN075-19                    Rate Restructure Community Engagement - Adoption of the amended Delivery Program and the Resourcing Strategy 

Author:              Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

Recommendation

(a)     That Council, in accordance with Sections 403 of the Local Government Act 1993, adopt  the amended Draft Long Term Financial Plan within Council’s Resourcing Strategy.

(b)     That the General Manager be delegated authority to make formatting and minor editorial adjustments to the amended Draft Long Term Financial Plan within the Resourcing Strategy prior to publishing the final version on Council’s website.

 

 

Executive Summary

1.      Based on Council’s adoption of the rate restructure report on the 26 August 2019, there is a requirement within the Community engagement framework for the relevant Integrated Planning and Reporting documents to be updated to clearly illustrate the rate structure options the community will be presented with, along with social economic information of the Local Government Area.

2.      This report contains the amendments to the Long Term Financial Plan that is within the Resourcing Strategy.

3.      No public submissions were received following the 28 day community consultation, which closed on 30 October 2019.

 

Background

4.      Council resolved at the August 2019 meeting, to commence community engagement on the proposed changes to the rates structure. As per the resolution community engagement has commenced and the Long Term Financial Plan has been updated in accordance, in order to support community engagement activities.

Integrated Planning and Reporting

5.      Like all Councils, Georges River Council operates under the Local Government Act 1993. The Act requires us to produce a suite of documents as part of an Integrated Planning and Reporting Framework.

6.      The Framework brings together Council's various plans, giving both Council and the community a clear understanding of how each of the plans interact. This process maximises Council efforts to strategically and holistically plan for the future.

7.      This Resourcing Strategy has been developed alongside our first-ever Community Strategic Plan, which is based on extensive community engagement during 2017. The Community Strategic Plan 2018-2028 contains the community’s priorities and aspirations as well as the strategies for achieving these goals.

8.      Our Delivery Program sets out the proposed actions to achieve the goals and strategies in the Community Strategic Plan. Normally, the Delivery Program runs for four years; as a recently merged Council, our first Delivery Program is for three years to align with the local government election cycle.

9.      The Resourcing Strategy details the overall plan on how Council will resource its’ planned activities over the next decade through the use of its money, people and assets, to meet the community’s needs and desires.

10.    The Long Term Financial Plan forecasts Council’s financial position for the next 10 years based on our Delivery Program and Operational Plan. These projections form a roadmap of the operations and give Council an opportunity to assess different courses of corrective action and quantify the potential outcomes to ensure sustainability, positive net results and the structure of the operations, based on affordability.

Overview of Long Term Financial Plan Amendments

11.    Community engagement was conducted on the original 2019/20 Resourcing Strategy for 28 days prior and subsequently for an additional 28 days to cover the amendments.  . Overview of the changes to the June 2019 adopted Long Term Financial Plan, include, but are not limited to:

·    Update of the current situation and three models to reflect the final 2019/20 Adopted Budget

·    Addition of the changes to rates sections, aligned to community engagement material

·    Expansion of model information to align to the rate structure options being presented to the community as part of the engagement process

·    Socio and economic city snapshot

·    Amalgamation Journey report overview

·    Minor amendments to the governance principles and strategy.

 

Financial Implications

12.    No budget impact as a result of this report.

 

Risk Implications

13. Enterprise risk/s identified and management process applied. That Council note the Long Term Financial Plan as an essential decision making tool that is to be updated in line with decisions that may impact and affect the sustainability of Council.

 

Community Engagement

14. Community engagement was conducted including the public review and exhibition for a period of at least 28 days.  Appropriate media releases and on-line notifications were utilised.

15. No submissions were received.

 

File Reference

D19/221609

 

ATTACHMENTS

Attachment 1

Amended Draft Long Term Financial Plan (2019/20 Resourcing Strategy)

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN075-19              Rate Restructure Community Engagement - Adoption of the amended Delivery Program and the Resourcing Strategy

[Appendix 1]          Amended Draft Long Term Financial Plan (2019/20 Resourcing Strategy)

 

 

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Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 119

Item:                   FIN076-19                    Investment Report as at 30 September 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 September 2019.

 

Executive Summary

1.      This report details Council’s performance of its investment portfolio as at 30 September 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 2.60% which is 0.86% above benchmark. Income from interest on investments totals $989,000 which is $178,000 more than the 2019/2020 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 (NSW) 1993.

Investment Performance Commentary

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

 

1 Month

3 Month

12 Month

Portfolio Performance

0.14%

0.55%

2.60%

Performance Index

0.08%

0.29%

1.74%

Excess

0.06%

0.26%

0.86%

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 September was as follows:

Security Type

Market Value $000's

% Total Value

At Call Deposit

5,847

3.30%

31 Day Notice Account

3,037

1.71%

Consolidated Cash Fund

14,467

8.16%

Covered Floating Bond

1,010

0.57%

Flexi Deposit (Fix/Float)

6,000

3.38%

Floating Rate Deposit

5,000

2.82%

Floating Rate Note

56,144

31.66%

Floating Rate TCD

501

0.28%

Term Deposit

79,041

44.57%

Managed Funds Trust

6,301

3.55%

Total Cash and Investments

177,349

100.00%

 

7.      At the end of August 2019, Total Cash and Investments were $175m and have increased by $2m at the end of September 2019.

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).

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 September 2019.

Borrowings

10.    Council’s loan liability, as at 30 September 2019 was $1.5m, 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 December 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 2.92% 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.

 

 

 

 

Policy Limits

 

13.    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

14.    Income from interest on investments to 30 September 2019 is $989,000, which is $178,000 more than the 2019/2020 year-to-date adopted budget.

15.    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

88,514

49.91%

100%

1 to < 3 Years

79,329

44.73%

70%

3 to < 5 Years

9,506

5.36%

50%

Portfolio Total

177,349

100.00%

 

 

16.    Council’s portfolio is liquid, with 49.91% of assets maturing within 12 months. FRNs, At-Call Funds and Fixed Bonds also provide additional liquidity in an emergency.

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

 

 

 

 

Type of Investments

 

18.    The majority of Council’s investment portfolio is made up of fixed term deposits, which account for approximately 48% of total investments.

19.    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).

20.    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

21.    Credit ratings are generally a statement as to an institution’s credit quality. Council’s Investment Advisors (CPG Research & Advisory) use Standard & Poor’s Credit ratings to classify the investments held by Council. Ratings ranging from AA to BBB (Short Term) & AA to BBB (long term) are considered investment grade.

22.    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.

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.

 

23.    The credit quality of Council’s portfolio is relatively high with approximately 73% of assets rated ‘A’ or higher. The ‘AAA’ assets represent the deposit investments covered by the Federal Government’s Financial Claims Scheme (FCS).

24.    The remaining 27% rated ‘BBB’ or ‘unrated’ reflects the deposit and FRN investments with the regional and unrated ADIs.

AMP Bank Downgraded to BBB+

25.    On 27 August 2019, S&P Global Ratings lowered its global ratings for AMP Limited and its subsidiaries from “A-“ to “BBB+” in response to AMP Group revealing plans to sell its life insurance business unit to Britain’s Resolution Life in early August 2019. S&P Global believes the sale of the insurance unit means AMP’s earnings reliance on its wealth and investment management operations as well as its small domestic banking unit will materially weaken the group’s credit profile and lower its future diversification.


 

Council’s Investment with AMP as at 30 September 2019 was as follow:

Investment Type

Market Value ‘000

At Call Accounts

8,453

Term Deposits

500

Floating Rate Notes (FRN)

5,000

Total Cash and Investment with AMP

13,953

         

26.    As at 30 September 2019, Council has approximately $14m invested in cash, term deposits and floating rate notes with AMP Bank. Advice provided by our investment advisor (CPG Research & Advisory) states, “with AMP Limited selling the life insurance business, a downgrade in the substantially smaller parent has resulted in a flow-on downgrade in the banking subsidiary. However, the asset sale is not a sign of distress as it gives the group excess capital.” Based on this advice, the rating downgrade on AMP Bank should not have any impact on Council’s financial position, as AMP continues to have a robust balance sheet with its level of capital remaining above the minimum regulatory requirement set by the Australian Prudential Regulation Authority (APRA). 

27.    However, in-line with Council’s current practice of only dealing with institutions who have a global rating of A and above, Council has transferred approximately $5m of the AMP At Call Investments to the Commonwealth Bank of Australia in mid of October 2019. The remaining Term Deposits and At Call Accounts will be reinvested with other institutions during the month of November 2019. The FRN’s will mature between May 2021 and March 2022 and at this stage, due to the current investment interest rates that are being offered and the advice received from CPG Research & Advisory, no change will occur. This, however, will be monitored on a monthly basis.  

 

Council’s Investment Powers

28.    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.

29.    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

 

Reserve Movement Overview

30.    Council’s investment portfolio is allocated across a variety of reserves which are used for funding future projects such as capital works or asset acquisitions. The Council has two types of reserves: Externally Restricted Reserves and Internally Restricted Reserves.

31.    Externally Restricted Reserves include funds raised for sewerage, domestic waste, Environmental Levy, Section 7.11 and Section 7.12 Contributions, Voluntary Planning Agreement, Town Improvement such as car parking facilities, anti-litter services etc. and can only to be used for the purpose they were raised.

32.    Internally Restricted Reserves are created to ensure Council has sufficient funds for a specific internal purpose.

33.    On 13 September 2019, the Commercial Property Reserve funded a 5% deposit ($95,550), for the acquisition of a property located at 36-40 Penshurst Street, Penshurst with a sale price of $1.9m.

Financial Implications

34.    Income from interest on investments totals $989k, which is $178k more than the 2019/20 year-to-date adopted budget.

Risk Implications

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

36.    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

37.    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

D19/217776

 

ATTACHMENTS

Attachment 1

Investment Report as at 30 September 2019

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN076-19              Investment Report as at 30 September 2019

[Appendix 1]          Investment Report as at 30 September 2019

 

 

Page 127

 


 


 


 


 



 


 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 138

Item:                   FIN077-19                    2019/2020 Chief and Senior Executive Service - Annual Determination 

Author:              Executive Manager, People and Culture

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

 

Recommendation:

(a) That the determination by the Statutory and Other Officers Remuneration Tribunal (SOORT) in relation to the amount of increase of 2.5% in remuneration for senior executive office holder’s in accordance with the Standard Contract for General Managers and Senior Staff through the Office of Local Government, be received and noted.

(b) That the increase be implemented on the anniversary of the commencement date for the General Manager and Senior Staff.

 

Executive Summary

1.      On 27 August, 2019 the report and determination under section 24C of the Statutory and Other Offices Remuneration Act 1975 was published.

2.      In accordance with the Standard Contract for General Managers and Senior Staff each anniversary of the commencement date, the total remuneration package will be increased by a percentage amount that is equivalent to the latest percentage amount increase in remuneration for senior executive office holders as determined by the SOORT.

3.      This report is to inform Councillors of the percentage amount that will be applied to the remuneration packages of the General Manager and Council’s Senior Staff.

Background

4.      The employment of the General Manager and Senior Staff is administered through the Office of Local Government, Standard Contract of Employment for Local Councils. Clause 8 of the employment contract outlines the structure of the remuneration package and how increases to this package are applied.

5.      In accordance with Clause 8.5 on each anniversary of the commencement date, the total remuneration package will be increased by a percentage amount that is equivalent to the latest percentage amount increase in remuneration for senior executive office holders as determined by the SOORT.

6.      On 27 August, 2019 the report and determination under section 24C of the Statutory and Other Offices Remuneration Act 1975 was published. (Refer to Attachment 1) The Tribunal has determined a general increase of 2.5% for all senior executive officers, effective 1 July 2019.

7.      This increase will apply to the remuneration package of the General Manager and Council’s Senior Staff. The increase will be effective from the individual officer’s anniversary commencement date.


 

 

Financial Implications

8.      Within budget allocation.

Risk Implications

9.      No risks identified.

Community Engagement

10.     Community engagement is not required in relation to this report.

 

File Reference

D18/187827

 

 

ATTACHMENTS

Attachment 1

2019 Annual Determination-SOORT-Chief and Senior Executive Service

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN077-19              2019/2020 Chief and Senior Executive Service - Annual Determination

[Appendix 1]          2019 Annual Determination-SOORT-Chief and Senior Executive Service

 

 

Page 144

 


 


 


 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 146

Item:                   FIN078-19                    Property Matter - Proposed Sale of Vacant Land - 582 Railway Parade, Hurstville  

Author:              Strategic Property Specialist

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

Recommendation

(a)     That Council negotiate the sale of the vacant parcel of land at 582 Railway Parade, Hurstville, being Lot 100 in Deposited Plan 880038, with the owner of the adjoining properties at 3-5 West Street, Hurstville, providing the price negotiated is at least the same as or in excess of the amount specified in the attached confidential Sales Advice.

(b)     That Council authorise the General Manager  to execute the Contract for Sale, Transfer Document and all other associated documentation to effect the sale of Lot 100 in Deposited Plan 880038 at 582 Railway Parade, Hurstville to the owner of the adjoining property at 3-5 West Street, Hurstville. 

 

Executive Summary

1.      Council owns a vacant parcel of land at 582 Railway Parade, Hurstville, legally described as Lot 100 in Deposited Plan (DP) 880038.  The subject parcel has an area of approximately 229.8 square metres and is currently zoned B4 Mixed Use under the Kogarah Local Environmental Plan, 2012.   The parcel has a Floor Space Ratio (FSR) of 4.5:1 and a height limit of 39 metres. A location plan is provided in Attachment 1 to this report. 

2.      The property is considered to be incapable of development in isolation. 

3.      The owner of the adjoining properties at 3-5 West Street, Hurstville has approached Council with a view to negotiating a purchase in order to develop across all of the properties. 

Background

4.      The property at 582 Railway Parade, Hurstville was purchased by the former Kogarah City Council for road widening purposes in April 1996. At that time, there was a building on the property which Council subsequently leased to the existing occupier.

5.      The property was reclassified from community to operational land by way of Notice in the Government Gazette on 6 March 1998.

6.      In early 1998, the former Kogarah City Council rejected an offer from the existing occupier to purchase the property from Council.  Records indicate that an unsuccessful attempt was made to sell the property on the open market before the building was eventually demolished and the property laid to grass.

7.      In early 1999, the then owners of 3 to 5 West Street, Hurstville approached the former Kogarah Council with a view to negotiating a purchase of Council’s land in order to develop across all of the properties. At around the same time, the then owners submitted a Development Application that proposed an FSR of 4.5:1. Planning controls at the time stipulated an FSR of 2.5:1 and ultimately, neither the development proposal nor the sale proceeded.

8.      The former Kogarah Council subsequently made several further attempts to sell the property on the open market to owners of adjoining properties, but none of these proved successful.

9.      Under the Kogarah Local Environmental Plan 2012, 582 Railway Parade and 3 to 5 West Street are currently zoned B4 Mixed Use with an FSR of 4.5:1 and a height limit of 39 metres.

10.    Recently, an agent for the current owners of 3-5 West Street approached Council’s managing agent with a view to negotiating a purchase in order to amalgamate and develop across all of the properties.

11.    In accordance with Council Policy in relation to the disposal of real property, two valuation reports have been obtained, which are annexed to this report as confidential Attachments 2 and 3 together with a brief discussion of their contents shown in confidential Attachment 4.

12.    This report will recommend that the General Manager be authorised to negotiate a sale substantially in accordance with the “Discussion of Contents and Sales Advice” as detailed in Attachment 4.

13.    A contract for the purchase or sale by a council of land is exempt from the tendering provisions of Section 55 of the Local Government Act, 1993 (see Part (3) Clause (d))  .

 

Financial Implications

14.    Proceeds from any sale would be placed in the Commercial Property Reserve for future investment opportunities.

 

Risk Implications

15.    No risks identified as a result of this report.

 

Community Engagement

16.    It is considered that no Community engagement will be required  in respect of this matter:

 

 

File Reference

19/1613

 

 

ATTACHMENTS

Attachment 1

Location Plan - 582 Railway Parade Hurstville

Attachment 2

Valuation Report Prepared by HillPDA - Potential Sale - 582 Railway Parade Hurstville published in separate document (Confidential)

Attachment 3

Valuation Report Prepared by CivicMJD - Potential Sale - 582 Railway Parade Hurstville published in separate document (Confidential)

Attachment 4

Discussion of Contents of Valuation Reports and Sales Advice published in separate document (Confidential)

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN078-19              Property Matter - Proposed Sale of Vacant Land - 582 Railway Parade, Hurstville

[Appendix 1]          Location Plan - 582 Railway Parade Hurstville

 

 

Page 148

 


 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 150

Item:                   FIN079-19                    Property Matter - 2F The Crescent, Kingsgrove - Proposed Easement to Drain Water Over Adjoining Property 

Author:              Strategic Property Specialist

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

 

Recommendation

(a) That Council grant an Easement to Drain Water over Lot 64 in Deposited Plan (DP) 1177674, being an existing Drainage Reserve as generally detailed in this report.

(b) That the General Manager be authorised to execute the Section 88B Instrument or Transfer Granting Easement and all associated documentation to create the easement and under Common Seal of the Council, if required.

(c)  That all costs associated with the granting of the easement be met by the applicant.

 

Executive Summary

1.   The owner of 2F The Crescent, Kingsgrove seeks to redevelop that property and has been advised that he is required to obtain an Easement to Drain Water over adjoining Council owned land described as Lot 64 in DP 1177674, being an existing Drainage Reserve.

2.   The proposed easement is 1m wide by 2m long and will permit a subsurface drainage connection to an existing drainage facility located within the reserve.

3.   The purpose of this report is to seek approval to grant the proposed easement at market value.

 

Background

4.   Georges River Council is the registered proprietor of a Drainage Reserve legally described in part as Lot 64 in DP 1177674.  A location plan is annexed to this report as Attachment 1.

5.   Council has received a request from the owner of 2F The Crescent, Kingsgrove for an easement to drain water from their property to the existing public drainage infrastructure located within the adjoining Drainage Reserve.

6.   The owner of 2F The Crescent has received pre-lodgement advice that the proposed easement will be a condition of any Development Consent.  The owner seeks to construct a resource recycling facility.

7.   The proposed easement to drain water is able to be granted over a Council owned parcel of “community” classified land.  In accordance with community provisions of the Local Government Act 1993, Council is permitted to grant easements for drainage over community classified land in order to allow connection into existing public storm water drainage facilities located within public reserves.

8.   The proposed subsurface easement will encumber Council’s land by approximately 2m2 and will permit connection into the existing public drainage infrastructure within the Drainage Reserve.

 

 

Financial Implications

9.      In exchange for granting the proposed easement, the applicant will be required to pay market value consideration for encumbering Council’s land.  The market value determination is annexed to this report as Attachment 2.

10.    In addition to the determined market value, the applicant has agreed to pay Council’s incurred valuation, legal and all associated easement survey, lodgement and registration costs as well as costs for the necessary infrastructure works and subsequent “make good” provisions.

Risk Implications

11.   No risks identified as a result of this report.

 

Community Engagement

12. Community engagement is not required as a result of this report.

 

File Reference

19/1670

 

 

 

ATTACHMENTS

Attachment 1

Location plan - 2F The Crescent Kingsgrove

Attachment 2

Valuation report - Proposed easement - 2F The Crescent Kingsgrove - published in separate document (Confidential)

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN079-19              Property Matter - 2F The Crescent, Kingsgrove - Proposed Easement to Drain Water Over Adjoining Property

[Appendix 1]          Location plan - 2F The Crescent Kingsgrove

 

 

Page 151

 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 155

Item:                   FIN080-19                    Draft Georges River Council Property Portfolio Strategy 

Author:              Head of Strategic Property

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

Recommendation

(a)     That Council endorse the actions as generally recommended in the (confidential) Draft Georges River Council Property Portfolio Strategy.

(b)     That Council approval in principle to the disposal of the properties identified in the Georges River Council Property Portfolio Strategy, with further detailed reports to be submitted to Council in regard to all individual acquisition and disposal actions in accordance with Section 377(h) of the Local Government Act, 1993.

(c)     That proceeds from the disposal of surplus property assets be transferred to Council’s Commercial Property Reserve for the purpose of reinvestment in future commercial opportunities.

 

Executive Summary

1.      Georges River Council owns and manages more than 1,270 community and operationally classified real property assets. The portfolio includes properties set aside for community, recreational, civic and administrative purposes, together with commercial and investment properties that provide a financial return to Council.

2.      In order to reduce Council’s reliance on rates revenue, Council’s property portfolio is viewed as a future source of income through both the disposal of surplus assets and the redevelopment of strategic landholdings that have the ability to provide Council with a future source of long term recurrent income.

 

3.   To achieve this objective, a Property Portfolio Strategy (Commercial Property Strategy) was prepared by Colliers International (Colliers) to provide a clear direction for Council in regard to the potential divestment, future investment, realignment or consolidation of properties for future development.

4.      The proposed Strategy is a high level overview of Council’s predominantly commercial property portfolio.  The strategy aims to identify opportunities to increase revenue that will subsequently better support service delivery objectives and make a greater contribution to Council’s long-term financial sustainability.

5.      On 16 September 2019, Colliers presented the proposed strategy to Councillors at a Councillor Briefing session.  The input received has assisted Colliers in finalising the proposed strategy in relation to acquisitions, disposals, redevelopments and particularly the time frames associated with each identified property.

 

6.      Future divestment and redevelopment opportunities will have due regard to Council’s other strategies i.e. Car Parking Strategy, Foreshore Strategy and Commercial Car Parking Strategy.

 


 

Background

7.      According to the Council Land Register, Georges River Council owns 1,006 community classified parcels of land, 237 operationally classified parcels of land and 28 other miscellaneous parcels located in the Georges River Local Government Area (LGA). The properties owned by Council, for the most part, are held for community purposes, civic/operational usage and investments.

8.      Council has a commercial property portfolio that comprises two multi-story commercial office buildings (held for investment purposes), and approximately 30 other commercial and retail properties that generate an annual return to Council in excess of $4.5 million gross. 

9.      Council recently engaged the services of Colliers to undertake a review of the Council’s property portfolio and subsequently create a Commercial Property Strategy.  It is intended that the strategy will provide a high-level assessment of selected properties that will identify opportunities, which may be realised over the short, medium and longer term. The strategy can be viewed in (confidential) Attachments 1 and 2 to this report.

10.    In this regard, Colliers commenced the process of categorising and prioritising Council’s operational land holdings in order to provide it with a commercial perspective and an indicative timeline, to deal with the property portfolio that ultimately will result in a greater contribution being made to Council’s long term financial sustainability.

11.    Whilst Council’s overarching Community Strategic Plan 2018-2028 will provide general direction for the entire Council operation, the focus of the Commercial Property Strategy is to identify individual properties with commercial potential for renewal, redevelopment, acquisition and disposal, consistent with the long-term financial plan as detailed in Council’s Resourcing Strategy.

12.    The properties identified in the attached high-level assessment will need to be supported by detailed investigation and planning, which may include valuations, historical title searching, costs benefit analysis and robust feasibility studies.  Further, modelling of the cumulative financial implications on the Council’s entire portfolio as a result of actions regarding specific properties will need to be considered.

13.    Council’s Commercial Property Strategy will likely also include reviews of community needs, with reference to the identified properties for disposal or redevelopment potential. This analysis is the first step in the preparation of prioritised disposal plans and programmes for selected properties.

14.    This approach is guided by the Council’s objective to supplement income with an ongoing annuity from property investments with the aim of securing long-term financial sustainability whilst providing relief from the reliance of rates derived income.

15.    The Strategy recommends disposal of underperforming or surplus real property assets which is considered to be a realignment of assets within the commercial portfolio.  It is proposed that any income derived from disposals, be held in Council’s Commercial Property Fund pending reinvestment into suitable future income generating assets.

 

16.    While the strategy is focused on commercial property, Colliers has provided Council with broad details of alternative residential investment models that Council may wish to consider for some of its future redevelopment sites.  These options have been provided due to the demographics of Georges River Council. The two models referenced relate to Purpose Built Student Accommodation (PBSA) and high quality Build to Rent (BTR). 

 

17.    It is noted that while the PBSA and BTR models are well established in foreign markets, they are in their relative infancy in Australia.  Further detailed cost analysis would be required before these models could be considered for future investment by Council.

 

Principles and Objectives of the Commercial Property Strategy

18.   In order to create opportunities for future recurrent income streams through the property portfolio, Colliers initially undertook a “sift and sort” exercise, removing Council owned land-holdings that were currently being used (and zoned) for public recreation purposes, followed by eliminating land-holdings currently being used for civic, administrative and operational purposes.

 

19.    The Strategy has then identified properties that fell into Council’s commercial property portfolio that either were held for investment purposes, redevelopment or could be considered for divestment.  These properties were then organised into categories with time-lines being attributed to each category (being long term, medium and short term respectively) dependent on the type of actions required.

 

20.    The Strategy then applies the following integrated principles in guiding future planning associated with the portfolio:

 

Ø Maximise community benefit and public value from the property portfolio.

Ø Ensure the property portfolio is fit for purpose, financially and environmentally sustainable.

Ø Planning holistically and undertaking strategic evaluation of the property portfolio on an ongoing basis.

Ø Proactively manage the financial legal and insurance risks associated with the property portfolio.

Ø Ensure that proceeds from property sales will be used to fund other commercial opportunities or community facilities and infrastructure.

Financial Implications

21.    In relation to properties recommended for divestment or acquisition, no current budget allocation has been recommended.  In this regard, it is proposed to use available funds from the Commercial Property Reserve and ultimately realign funds derived from the disposal of surplus assets to properties capable of generating future recurrent income sources.

22.    As the Commercial Property Strategy will make recommendations in relation to future acquisitions and development, it is considered appropriate that the report remain confidential so as to not financially disadvantage Council in any future property negotiations.

Risk Implications

23.    Failure of divesting property considered surplus to requirements will have an impact on funding for future property projects identified for redevelopment that have the potential to increase revenue for Council.

24.    Further, Georges River Council has an ageing property portfolio.  There is an operational risk that Council could be exposed to a loss of rental income due to failures of essential plant and equipment that are nearing their end of life.


 

25.    The Commercial Property Strategy will provide a guide to Council in relation to key commercial assets that should be retained, further requiring the evolution of existing asset management plans that will aim to minimise Council’s potential exposure to loss of commercial revenue.

 

Community Engagement

26.    The adoption of the Strategy does not require community engagement to be undertaken.

 

File Reference

19/2005

 

 

ATTACHMENTS

Attachment 1

Draft Commercial Property Strategy Part 1 for Council Report - published in separate document (Confidential)

Attachment 2

Draft Commercial Property Strategy  Part 2  For Council Report - published in separate document (Confidential)

 


Georges River Council – Finance and Governance Committee -  Monday, 11 November 2019                                  Page 156

Item:                   FIN081-19                    Report on Outstanding Council Resolutions for the period 01 April 2019 - 30 September 2019 (deferred report from 14 October 2019) 

Author:              Manager, Office of the General Manager

Directorate:      Office of the General Manager

Matter Type:     Committee Reports

 

Recommendation:

That the report on Outstanding Council Resolutions for the period 1 April 2019 to 30 September 2019 be received and noted.

 

Executive Summary

1.      Council resolved that commencing April 2018 a progress report on all Council resolutions be reported to Council on a quarterly basis.

2.      This report provides progress on outstanding resolutions as at 30 September 2019.

3.      This report was previously considered at the October 2019 Council meeting and was deferred to enable Councillors to seek updates on any previous resolution of Council.

Background

4.      Attachment 1 contains Council resolutions that remain outstanding or require further action. 

5.      The Outstanding Council Resolutions Report (Attachment 1) has been updated and takes into consideration feedback and request for additional information provided by Councillors.

6.      Completed items have been marked accordingly and will be removed from future reports in accordance with the usual practice. 

Financial Implications

7.      There are no budget implications for this report.

Risk Implications

8.      The Enterprise Risk Management Strategy contains relevant actions in regards to the provision of an open, accessible and transparent decision making and meeting process.  The quarterly consideration of this report ensures that Councillors and members of the community are informed in regard to the status of implementation of Council resolutions.  

Community Engagement

9.      Members of the community are able to attend and address Council meetings in accordance with Council’s Code of Meeting Practice.

File Reference

D19/193152

 

ATTACHMENTS

Attachment 1

Outstanding Council Resolutions as at 30 September 2019

 


Georges River Council - Finance and Governance Committee - Monday, 11 November 2019

FIN081-19              Report on Outstanding Council Resolutions for the period 01 April 2019 - 30 September 2019 (deferred report from 14 October 2019)

[Appendix 1]          Outstanding Council Resolutions as at 30 September 2019

 

 

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