AGENDA


Finance and Governance Committee

 

Monday, 09 March 2020

6.00pm

 

Level 1, Georges River Civic Centre

Hurstville

 

 

 

 

 

 

 

 

 

 

 


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 2

 

          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 - 10 February 2020

8.      Committee Reports

FIN007-20         2019/20 Half Yearly Progress Report and Budget Review Statement for Quarter Ending 31 December 2019

(Report by Integrated Planning and Reporting Officer).......................................... 3

FIN008-20         Audit, Risk and Improvement Committee Minutes from 19 August 2019 and 18 September 2019

(Report by Internal Auditor)...................................................................................... 145

FIN009-20         Investment Report as at 31 January 2020

(Report by Senior Financial Accountant - Reporting)......................................... 160

FIN010-20         Quarterly Commercial Property Portfolio Report

(Report by Strategic Property Specialist)............................................................... 178

FIN011-20         Property Matter - Classification of 17 Carrington Avenue Hurstville

(Report by Head of Strategic Property).................................................................. 180

FIN012-20         Legal Report

(Report by Director Legal Services and General Counsel)................................ 184  

 

 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN007-20              2019/20 Half Yearly Progress Report and Budget Review Statement for Quarter Ending 31 December 2019

[Appendix 1]          Half Yearly Report 2019-20 - FIN Report

 

 

Page 3

 

Committee Reports

Item:                   FIN007-20          2019/20 Half Yearly Progress Report and Budget Review Statement for Quarter Ending 31 December 2019 

Author:              Integrated Planning and Reporting Officer and Chief Financial Officer

Directorate:      Office of the General Manager

Matter Type:     Committee Reports

 

 

 

Recommendation:

(a)     That Council receive and note the Half Yearly Progress Report July 2019 – December 2019 (Attachment 1) of performance made against Georges River Council’s Delivery Program 2018/19 to 2020/21 and Operational Plan 2019/20 including the Quarterly Budget Review for Quarter Ending 31 December 2019.

(b)     That Council approve the variances to the 2019/20 Budget, as detailed in Attachment 1, as a result of the Quarter Ending 31 December 2019 Budget Review.

(c)     That Council endorse the Delivery Program and Operational Plan items recommended for cancellation, being placed on hold, altered or proposed to be carried over, as detailed in Attachment 1.

(d)     That a copy of the Half Yearly Progress Report July 2019 – December 2019 be published on Council’s website.

(e)     That the General Manager be delegated authority to make minor editorial changes to the Half Yearly Progress Report prior to publishing on Council’s website.

 

 

 

Executive Summary

1.      The July 2019 – December 2019 Half Year Progress Report of performance made against Georges River Council’s Delivery Program 2018/19 to 2020/21 and Operational Plan 2019/20 including the Quarterly Budget Review for Quarter Ending 31 December 2019 is submitted for the information of Council and the community.

 

Background

2.      Section 405(5) of the Local Government Act 1993 requires that the General Manager ensure that regular progress reports are provided to the Council on its progress with respect to the principal activities detailed in its Delivery Program at least every six months.

3.      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.

4.      Council’s Three Year Delivery Program 2018/19 to 2020/21 and One Year 2019/20 Operational Plan sets the strategic and financial objectives of the year. The Plans also detail the goals and strategies for Council’s six pillars which underpin Council’s planning, their relevant performance measures and the projects Council plans to deliver.

 

 

 

Progress against Delivery Program and Operational Plan

5.      Attachment 1 includes details for each of the six pillars and the 25 goals, detailing the targets adopted by Council and the performance to date in achieving these targets by 30 June 2020.

6.      All departments are progressing well towards delivering their Operational Plan actions with 90% of items either complete, ongoing or on track.

7.      Less than 3% of projects are behind schedule or on hold with 6 carry overs to future years due to changing priorities or situations outside Council’s control, 3 items are proposed for cancellation or are to be reassigned to another Directorate.

8.      Progress against Council’s Three Year Delivery Program 2018/19 to 2020/21 is also tracking well with 95% of items either complete, ongoing or on track. Less than 5% of projects are behind schedule or on hold.

9.      Any projects that are proposed to be carried over, placed on hold, altered or cancelled are listed in this report for Council’s consideration.

Delete

CSP Goal

Strategy

Delivery Program (DP) or Operational Plan (OP) item

Project Description

Reason

4.3 The ambition for Hurstville and Kogarah as strategic centres are realised

4.3.1 Advocate at all levels of government to ensure critical infrastructure accompanies significant residential and employment growth.

OP

Continue to work with the NSW Government and Canterbury-Bankstown Council on the orderly development of Riverwood as a Planning Precinct.

This action will be reassigned to Manager Strategic Planning from Coordinator CSI.

6.3 Leadership focuses on innovation and improving the customer experience

6.3.2 Demonstrate a culture of continuous improvement and effective governance throughout Council services

OP

Develop a Digital Innovation Strategy

The Innovation Strategy will touch on elements of digital innovation. Chief Information Officer has this action.

6.6 Council has a regional approach to service delivery and facilities

6.6.1 Plan for regional –level services and facilities and share information across State agencies and neighbouring councils

OP

Implement actions from the Kogarah Collaboration Area Place Strategy.

Duplicate Action

 

 

Carry Overs

CSP Goal

Strategy

Delivery Program or Operational Plan item

Project Description

Reason

6.1 The community is involved and listened to

6.1.1b

OP

Deliver training to relevant staff concerning updates to the Community Engagement Strategy

This action will be reassigned to city Strategy and Innovation Directorate for action in Q3.

6.1 The community is involved and listened to

6.1.2c

OP

Create and implement an Engagement Communication Plan for major projects where Council is seeking community engagement in 2019.20 including use of print media and traditional marketing methods.

This action will be reassigned to City Strategy and Innovation Directorate for action in Q3.

6.1 The community is involved and listened to

6.1.3a Publicly and regularly report on our performance against strategic, financial and operational plans.

OP

Create interactive PDF and videos where appropriate to share Council’s progress against the Community Strategic Plan, Delivery Program and Operational Plan.

This action will be carried over to 2020/21 as item was not a priority during the 2018/19 financial year.

6.1 The community is involved and listened to

6.1.3b

OP

Create an annual Community Consultation Progress Report

This action will be reassigned to City Strategy and Innovation Directorate for action in Q3.

6.4 Council’s assets and resources are managed responsibly and with accountability

6.4.2 Maintain a sustainably strong financial position, balanced with demand for essential services And New projects, and having regard for Section 8B(d)(ii) of the Local Government Act (the current generation funds the costs of its services

OP

Submit a proposed new Georges River Council rate structure to the Independent Pricing and Regulatory Tribunal.

All actions were completed with the application prepared and reports to Council delivered. Council decided to defer on 10 February 2020.

6.4 Council’s assets and resources are managed responsibly and with accountability

6.4.2 Maintain a sustainably strong financial position, balanced with demand for essential services and new projects, and having regard for Section 8B(d)(ii) of the Local Government Act (the current generation funds the costs of its services

OP

Submit a Georges River Council Special Rate Variation request to the Independent Pricing and Regulatory Tribunal.

Reports and applications completed.

Council resolved to defer the matter on 10 Feb 2020.

Holds

CSP Goal

Strategy

Delivery Program or Operational Plan item

Project Description

Reason

6.3 Leadership focuses on innovation and improving the customer experience

6.3.2 Demonstrate a culture of continuous improvement and effective governance throughout Council services

OP

Implement a consistent project management methodology with overarching reporting for consistency and service delivery.

This action is not a priority for the Directorate at this stage due to competing priorities.

 

 


 

Quarter Budget Review for period ending 31 December 2019

Financial Performance Overview

10.    Quarter 2 results and the projected year end results for 2019/2020 are forecast to remain in an operating deficit after capital grants.

11.    Council recorded an Actual Net Surplus of $4.4m at the end of 6 months in the 2019/20 financial year. This was $3.6m higher than the Budgeted surplus at the same stage. Income exceeded the budget estimate by $6.3m while Expenditure was higher than the year to date estimate by $2.6m.

12.    The result without Capital Grants however, recorded a deficit of $4.03m.

13.    As outlined in previous quarterly reviews and Council’s adopted Long Term Financial Plan, Council is facing declining profitability through the widening gap between decreasing operating income and increasing operating expenditure each year. One example of income declining is interest on investments which has reduced by $3m in 2 years as a result of the falling cash rate and expiring high rate term deposits.  This situation will be amplified by the loss of operating income of $2.2m from the former Hurstville Council Special Rate Variation (SRV) 2021/2022. If unaddressed, this will have an adverse impact on the long term financial sustainability of Council.

14.    The overall financial performance to date of Council is considered to be satisfactory in terms of current known factors; the projected estimates of income and expenditure and the original budgeted income and expenditure.

Operating Income

15.    Income is trending above the budgeted income for the quarter by 9%. Items performing above budget are within other revenue from the additional games being held at Net Strata Stadium and the greater than budgeted receipt of operating and capital grants/contributions. Rates and annual charges is also trending above budget based on additional supplementary properties processed following the budget adoption. This figure may fluctuate during the year based on pensioner rebate applications.

16.    Interest income is slightly below budget for the quarter and based on an expected cash rate reduction this will contribute to a further reduction in actual income against the original adopted budget.

Operating Expenditure

17.    Savings within Other Expenses is forecast to continue as a result of gains in street lighting expenditure.

18.    Material and Contracts is currently projected to be higher at year end though gains in operating grants and user fees and charges and timing of expenditure will assist in offsetting any increases. Grant income and expenditure is difficult to budget for over multiple financial years, as the income must be accounted for on receipt whereas the expenditure may occur in following year/s.

19.    In terms of employee costs, expenditure is higher in the first two quarters from the all staff annual River Run conference, annual leave liability accrual and the first termination payments from the round of voluntary redundancies.

20.    River Run is a one off expense and therefore the expenditure will not continue for the year.

21.    Annual leave liability accrual is high for the first two quarters with the lead up to Christmas. With the implementation of the festive period close down, this will assist in reducing the annual leave liability accrual.

22.    The quarter ending 31 December 2019, also included the first round of voluntary redundancy payments. Whilst the redundancies will result in staff saving these will not occur in this financial year based on staff who voluntarily took a redundancy as the termination payments were high due to their length of service at Council.

23.    Cost pressures that will need to be strictly managed to achieve Council’s budgeted result, include higher depreciation charges as a consequence of Council’s ambitious capital works program. Depreciation will increase, though the final figure will be confirmed after year end, which will be based on the completion rate of the capital program and asset revaluations.

Capital Program

24.    The capital works program at the quarter ending 31 December 2019 had year to date (YTD) actuals of $31.5m.

25.    In preparation of the 2020/21 capital budget the 2019/20 capital program has been rephrased over based on the expected completion, capacity and start dates of projects. The budget has been revised to $61.3m, which is a reduction of $9m from Quarter 1, which included carryovers from 2018/19.

26.    Material capital expenditure occurred within the major projects, recreational space, buildings and roads asset classes.

27.    Details of Council’s financial performance and proposed quarter variations and carryovers are outlined in the attachment.

 

Financial Implications

28.    Details of the financial impact are outlined with the attachment.

29.    Proposed quarter 2 budget changes result in a reduction to the capital program of $9m, with a revised capital budget of $61.3m.

30.    Quarter 2 results and the projected year end results for 2019/2020 are forecast to remain in an operating deficit after capital grants.

 

Risk Implications

31.    Council’s enterprise risk identifies that ‘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

32.    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

D20/53453

Minutes: Finance and Governance Committee Meeting - 10 February 2020

 

ATTACHMENTS

Attachment 1

Half Yearly Report 2019-20 - FIN Report

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 144

Item:                   FIN008-20          Audit, Risk and Improvement Committee Minutes from 19 August 2019 and 18 September 2019 

Author:              Internal Auditor

Directorate:      Office of the General Manager

Matter Type:     Committee Reports

 

 

 

 

Recommendation:

That the Minutes of the Audit, Risk and Improvement Committee meetings held on the 19 August 2019 and 18 September 2019 (Special Financial Statements) be noted.

 

 

Executive Summary

1.      Council’s Audit, Risk and Improvement Committee Charter (Clause 5.1) provides for the reporting of Audit, Risk and Improvement Committee (ARIC) Minutes to the Council.         

 

2.      The Minutes of the ARIC meetings held 19 August 2019 and 18 September 2019 (Special Financial Statements) were confirmed by the ARIC at their meeting of 11 November 2019 and are now presented for Council’s information (Attachments).

Background

3.       Council’s Audit, Risk and Improvement Committee Charter adopted by Council’s Finance and Governance Committee on 13 November 2017, provides in Clause 5.1 for the periodic reporting of Audit, Risk and Improvement Committee Minutes to the Council, as follows:

“The Committee shall report back to Council within a six (6) months period following each meeting. Summary reports may be presented to the Council. The report shall provide Council with the following as appropriate and applicable:

 

- Minutes of each meeting

- All significant issues which can be reported without prejudice to the audit function.

 

This provision is to permit the implementation of Committee recommendations in a reasonable window of confidentiality, to optimise the effectiveness of Committee actions.”

 

4.      The Audit, Risk and Improvement Committee meet four times per year to review, note and recommend on items identified in their Charter with an additional meeting to review the audited Financial Statements.

 

5.      These Minutes relate to the ARIC meetings held on 19 August and 18 September 2019 (Special Financial Statements) and were confirmed at the ARIC meeting held on 11November 2019.

 

Financial Implications

6.      There are no budget impacts for this report.

 

 File Reference

D20/6169

 

 

 

ATTACHMENTS

Attachment 1

ARIC Minutes-19 August 2019

Attachment 2

ARIC Minutes 18 September 2019

 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN008-20              Audit, Risk and Improvement Committee Minutes from 19 August 2019 and 18 September 2019

[Appendix 1]          ARIC Minutes-19 August 2019

 

 

Page 154

 


 


 


 


 


 


 


 


 


 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN008-20              Audit, Risk and Improvement Committee Minutes from 19 August 2019 and 18 September 2019

[Appendix 2]          ARIC Minutes 18 September 2019

 

 

Page 157

 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 164

Item:                   FIN009-20          Investment Report as at 31 January 2020 

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 31 January 2020.

 

 

Executive Summary

1.      This report details Council’s performance of its investment portfolio as at 31 January 2020, 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 2.33% which is 0.93% above benchmark. Income from interest on investments totals $1.8m which is slightly lower 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 January 2020, are as follows:

 

1 Month

3 Month

12 Month

Portfolio Performance

0.18%

0.49%

2.33%

Performance Index

0.08%

0.24%

1.40%

Excess

0.10%

0.25%

0.93%

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 January was as follows:

Security Type

Market Value $000's

% Total Value

At Call Deposit

405

0.27%

Consolidated Cash Fund

6,100

4.12%

Covered Floating Bond

1,010

0.68%

Flexi Deposit (Fix/Float)

6,000

4.06%

Floating Rate Deposit

5,000

3.38%

Floating Rate Note

45,597

30.82%

Term Deposit

77,542

52.41%

Managed Funds Trust

6,301

4.26%

Total Cash and Investments

147,955

100.00%

 

7.      At the end of December 2019, Total Cash and Investments were $155m and have decreased by $7m at the end of January 2020 because of capital and operational expenditures in the month of January.

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 31 January 2020.

Borrowings

10.    Council’s loan liability, as at 31 January 2020 was $1.375m, 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 March 2020.

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 2.83% 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 31 January 2020 is $1.8m, which is slightly lower 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

66,639

45.04%

100%

1 to < 3 Years

72,810

49.21%

70%

3 to < 5 Years

8,506

5.75%

50%

Portfolio Total

147,955

100.00%

 

 

16.    Council’s portfolio is liquid, with 45.04% 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 53% 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 81% 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 19% rated ‘BBB’ or ‘unrated’ reflects the deposit and FRN investments with the regional and unrated ADIs.

 

Council’s Investment Powers

25.    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.

26.    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

27.    Income from interest on investments totals $1.8m, which is slightly lower than the 2019/20 year-to-date adopted budget.

 

28.    The Reserve Bank of Australia (RBA) maintained the official cash rate at 0.75% in February 2020 due to a better than expected unemployment rate for December 2019.

 

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

D20/38071

 

 

ATTACHMENTS

Attachment 1

Investment Report as at 31 Jan 2020

 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN009-20              Investment Report as at 31 January 2020

[Appendix 1]          Investment Report as at 31 Jan 2020

 

 

Page 168

 


 


 


 



 


 


 


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 177

Item:                   FIN010-20          Quarterly Commercial Property Portfolio Report 

Author:              Strategic Property Specialist

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

 

Recommendation:

That Council receives and notes the Quarterly Commercial Property Portfolio Report for the quarter ending 31 December 2019.

 

 

Executive Summary

1.   At its meeting on 1 May 2017, Council resolved to report regularly on the Commercial Property Portfolio and other associated leases and licences.

2.   In addition, at the Council meeting held on Monday 16 December 2019, Council resolved the following (FIN 083-19):

(a) That Council receives and notes the Quarterly Commercial Property Portfolio Report for the quarter ending 30 September 2019.

(b) That Council receives Quarterly Financial Reports on Major Sports Facilities and Recreational Facilities including but not limited to Hurstville Aquatic Centre, Hurstville Oval, Penshurst Indoor Cricket, Beverley Park Golf Course and Sans Souci Pool.

(c) That a briefing session is organised for Councillors in the new year to review the Quarterly Financial Reports for the above properties.

 

3.   In relation to resolution (b), results for the above facilities will be submitted in a separate report on a quarterly basis via the Assets and Infrastructure Committee.

 

4.   In relation to resolution (c), a briefing has been scheduled for Monday 15 June 2020, to review Quarterly Financial Reports for Major Sports and Recreational Facilities.        

Background

5.   The report now presented to Council includes information on the commercial properties within the portfolio including commercial car parking.

6.   The report is an evolving document and responds to the ongoing audit of Council’s commercial leases and licences and the execution of new leases and licences. 

 

7.   The table below shows the performance of the portfolio for Q2 of the 2019/20 financial year.  A list of commercial properties can be found in Attachment 1 of this report.

 

Property Type

No. of Properties

No. of Current Vacant Premises

Q2 Net Income Actual

Q2 Net Income Budget

Variance

 

Comments

Commercial

76

2

$1,170,882

$1,144,041

$26,841

(surplus)

·      Includes hoarding rental.

Retail

5

0

    $58,214

     $67,622

 $9,408

(deficit)

·      Vacancy of one retail property during this quarter.

Car Park

4

0

$75,204

$139,049

$63,845

(deficit)

·      Greenbank Street car park income below expectations.

Footway Trading

 

 

$41,098

  $25,000

$16,098

(surplus)

·      Positive uptake from retailers.

Outdoor Furniture Advertising

4

0

$100,877

 $105,000

  $4,123

(deficit)

·      Variation due to reduced advertising income.

Telecommunications

4

0

$115,227

   $21,922

 $93,305

(surplus)

·      Additional income from Reddin Place, Connells Point and The Green, Kyle Bay.

Total Income

93

2

$1,561,502

$1,502,634

 $58,866

Surplus

 

8.   There are currently two (2) vacancies across the portfolio with zero (0) rental arrears being reported.

 

9.   In accordance with NM010-10 presented to Council on 24 February 2020, it was resolved that future leases entered into under delegation by the General Manager are to be reported to the next available Council meeting.  No new leases were entered into by Council during this period.

Financial Implications

10. Budget implications have been highlighted in the table above.

Risk Implications

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

Community Engagement

12.  No community engagement is required for this matter. 

File Reference

17/2939

 

 

 

  


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 179

Item:                   FIN011-20          Property Matter - Classification of 17 Carrington Avenue Hurstville 

Author:              Head of Strategic Property

Directorate:      Business and Corporate Services

Matter Type:     Committee Reports

 

 

 

Recommendation:

That Council classify Lot 77 in DP1958 located at 17 Carrington Avenue, Hurstville as operational land in accordance with Section 31 of the Local Government Act 1993 (the Act).                      

 

Executive Summary

1.      In accordance with Section 31 and 34 of the Local Government Act 1993 (the Act), a public notification process was undertaken inviting public submissions on the proposed operational land classification for Lot 77 in DP1958 located at 17 Carrington Avenue, Hurstville.

2.      Public submissions were invited for a statutory period of twenty eight (28) days, closing on 25 February, 2020.  No public submissions were received in relation to the proposed operational land classification for Lot 77 in DP1958.

 

Background

3.      At the Council meeting of 16 December 2019, Council via FIN032A-19 resolved the following in relation to this matter:

(a)     That Council delegate to the General Manager authority to negotiate the proposed acquisition of 17 Carrington Avenue, Hurstville in accordance with this report.

(b)     That Council proposes to classify 17 Carrington Avenue Hurstville, described as Lot 77 in DP1958, as Operational Land in accordance with Part 2, Division 1 (Section 31) of the Local Government Act 1993 (the Act) and in accordance with Section 34 of the Act, Council gives public notice of the proposed resolution specifying a public notice period of 28 days.

(c)     That Council considers any such submissions following the public notice period of 28 days and based on the public submissions resolves whether to classify the land as Operational Land.

(d)     That Council resolves the acquisition to be funded from Council’s Commercial Property Reserve.

(e)     That Council authorises the General Manager to execute and exchange the Contract for Sale, Transfer Document and all other associated documentation to effect the acquisition of Lot 77 in DP1958 located at 17 Carrington Avenue, Hurstville.

4.      In accordance with Section 34 of the Act, statutory advertising of the proposal was required as follows:

·        A council must give public notice of a proposed resolution to classify or reclassify public land.

·        The public notice must include the terms of the proposed resolution and a description of the public land concerned.

·        The public notice must specify a period of not less than 28 days during which submissions may be made to the council.

5.      A copy of the public notice is annexed to the report as Attachment 1.  A plan of the land is provided as Attachment 2.

6.      As no submissions were received, the land is now considered to be classified as operational land.

Financial Implications

7.      There are no financial implications as a result of this report.

Risk Implications

8.      No risks identified.

Community Engagement

9.      Community engagement occurred as a result of the statutory 28 day advertising of the proposal to classify the land as operational. No public submissions were received in this regard. The public notification process to classify the land as operational has been undertaken in accordance with the Act.

File Reference

19/2139

 

 

 

ATTACHMENTS

Attachment 1

Public Notice of Proposed Classification

Attachment 2

Location Plan - 17 Carrington Ave Hurstville

 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN011-20              Property Matter - Classification of 17 Carrington Avenue Hurstville

[Appendix 1]          Public Notice of Proposed Classification

 

 

Page 180

 


Georges River Council -         Finance and Governance Committee - Monday, 9 March 2020

FIN011-20              Property Matter - Classification of 17 Carrington Avenue Hurstville

[Appendix 2]          Location Plan - 17 Carrington Ave Hurstville

 

 

Page 181

 


Georges River Council – Finance and Governance Committee -  Monday, 9 March 2020                                            Page 182

Item:                   FIN012-20          Legal Report 

Author:              Director Legal Services and General Counsel

Directorate:      Office of the General Manager

Matter Type:     Committee Reports

 

 

 

RECOMMENDATION:

a)   That Council no longer receive monthly reports on Court matters.

b)   That the detailed monthly report on the status of current Court cases, including costs for the financial year, continue to be published on Council’s website.

 

 

EXECUTIVE SUMMARY

1.      Council has formerly resolved that in circumstances where the legal report includes company names, company searches are provided on each party to avoid Councillors’ potential breaches of the Code of Conduct.

2.      Council has also resolved that a detailed monthly legal report on the status and cumulative costs for the financial year of Council’s Court proceedings be published on Council’s website.

3.      Following receipt of advice, including from the Office of Local Government, it is recommended that a better approach, to assist Councillors to manage any perceived conflicts of interest, is to maintain the monthly detailed and public reporting of legal matters on Council’s website and to cease the practice of reporting legal matters to Council.

BACKGROUND

4.      Council had resolved that, “Company extracts be provided to all Councillors for all matters included in all Advice on Costs and Status of Council’s Court Proceedings”.

5.      The Council further resolved that:

a.      A monthly detailed report on the status of current Court cases including costs for the financial year, is published on Council’s website; and

b.      That company searches are not required to be obtained for legal reports where a summary only is provided, until such time as legal advice is received on the matter.

6.      The issue arose as a result of the obligations in the Model Code of Conduct for Local Councils 2018 and adopted by Council (Code of Conduct) that require Councillors to disclose and manage conflicts of interest.  Councillors had expressed concern that in circumstances where a report is being considered that refers to a company name, they need a company search to ascertain the director(s) of that company in order to manage any potential conflicts and avoid a breach of the Code of Conduct.

7.      Advice has confirmed that:

a.      The provision of company searches to Councillors may be unnecessary and may work against the objective of Councillors by bringing pecuniary interests to the attention of Councillors of which they were unaware and in respect of which no disclosure or management would have been required.

b.      A simplified reporting which does not reveal details of applicants or addresses relevant to legal proceedings, could avoid Councillors becoming aware of any potential conflict, thus avoiding any breach of pecuniary interest disclosure obligations.

c.       Further, to avoid any breach of a potential non pecuniary conflict of interest, a simplified reporting system where Councillors are passively receiving information, rather than actively undertaking a function in respect of particular legal matters, no potential for a pecuniary or non-pecuniary conflict of interest arises.

8.      The Office of Local Government concurs with the above. 

9.      Therefore, for the avoidance of doubt, to ensure that Councillors do not have the potential for either a pecuniary or non-pecuniary conflict of interest with regard to legal matters, it is recommended that legal reports no longer be submitted to Committees or Council, particularly in circumstances where Councillors have no role to play in directing or instructing on Court matters.

10.    It is proposed that the publication of the detailed monthly legal report on Council’s website continue due to the public interest in Council’s legal matters and to maintain transparency.

11.    An alternative to this approach is that a simplified quarterly report be provided on completed Court matters where all pertinent details (such as the applicant/defendant and relevant property address) have been de-identified.

FINANCIAL IMPLICATIONS

12.    Within budget allocation.

RISK IMPLICATIONS

13.    Potential risks around conflicts of interest identified.

COMMUNITY ENGAGEMENT

14.    A detailed report on Council’s current legal proceedings (status and costs) is published monthly on Council’s website.

FILE REFERENCE

17/1831