City of Campbelltown
Section 48 Prudential Report
Campbelltown Leisure
Centre
May 2014
Disclaimer: This document is for the exclusive use of the person named on the
front of this document (‘Recipient’). This document must not be relied upon by
any person who is not the Recipient. BRM Holdich does not take responsibility
for any loss, damage or injury caused by use, misuse or misinterpretation of
the information in this document by any person who is not the Recipient. This
document may not be reproduced in whole or in part without permission.
Liability limited by a scheme approved under Professional Standards
Legislation.
BRM HOLDICH
BUSINESS RESOURCE MANAGEMENT
Level 8, 420 King William Street, Adelaide SA 5000
Tel 08 8168 8400 Fax: 08 8168 8499
ABN: 79 392 957 230
Table of Contents
1.
INTRODUCTION ................................................................................................................... 1
1.1 Background ................................................................................................................. 1
1.2 Rationale ..................................................................................................................... 3
1.3 The Project .................................................................................................................. 3
1.4 Legal Framework and Prudential Issues ................................................................... 3
2.
RELATIONSHIP WITH RELEVANT STRATEGIC MANAGEMENT PLANS ......................... 5
2.1 Relevant Strategic Management Plans...................................................................... 5
2.2 City of Campbelltown Strategic Plan 2010 - 2020 ..................................................... 6
2.3 Annual Business Plan and Budget ............................................................................ 8
2.4 Long-Term Financial Plan .......................................................................................... 8
2.5 Infrastructure and Asset Management Plan.............................................................. 9
2.6 Physical Activity and Sport Policy .......................................................................... 10
2.7 Regional Objectives.................................................................................................. 11
2.8 South Australian State Objectives........................................................................... 11
2.9 National Objectives .................................................................................................. 14
3.
OBJECTIVES OF THE DEVELOPMENT PLAN .................................................................. 16
3.1 City of Campbelltown Development Plan................................................................ 16
3.2 General Section ........................................................................................................ 17
3.3 Development Zone.................................................................................................... 17
3.4 Approving Authority ................................................................................................. 18
4.
CONTRIBUTION TO ECONOMIC DEVELOPMENT ........................................................... 19
4.1 Contribution to Economic Development ................................................................. 19
4.2 Impact on Businesses in Proximity ......................................................................... 21
4.3 Fair Competition ....................................................................................................... 22
5.
COMMUNITY CONSULTATION.......................................................................................... 25
5.1 Level of Consultation ............................................................................................... 25
5.2 Community Influence ............................................................................................... 27
6.
FINANCIAL ASSESSMENT ................................................................................................ 28
6.1 Revenue Production, Revenue Projections and Potential Financial Risks .......... 28
6.2 Recurrent and Whole-of-Life Costs, Financial Arrangements ............................... 30
6.3 Financial Viability ..................................................................................................... 32
7.
PROJECT RISKS AND MITIGATION STRATEGIES .......................................................... 34
7.1 Risk Management ..................................................................................................... 34
7.2 Risk Mitigation .......................................................................................................... 35
8.
PROJECT DELIVERY ......................................................................................................... 36
8.1 Project Procurement Implications ........................................................................... 36
8.2 Construction Options ............................................................................................... 38
8.3 On-going Operations ................................................................................................ 39
9.
CONCLUSION..................................................................................................................... 40
APPENDIX ONE - COUNCIL RESOLUTIONS ............................................................................. 42
APPENDIX TWO - LOCAL GOVERNMENT ACT, 1999 - SECTION 48 ....................................... 45
ATTACHMENT ONE- CAMPBELLTOWN LEISURE CENTRE OPTION B .................................. 47
Executive Summary
The following report has been prepared in accordance with Section 48 of the Local
Government Act 1999 which requires a council to consider a report addressing the prudential
issues set out in subsection 2 of the Act before engaging in a project where the expected
capital cost over the ensuing five years is likely to exceed $4 million.
The Campbelltown City Council intends to redevelop the Campbelltown Leisure Centre at an
estimated cost of $24.2 million in order to provide state of the art community recreation and
sport facilities. The Campbelltown Leisure Centre Redevelopment Project is considered to
be closely aligned to the vision, mission, goals and strategies identified within the
Campbelltown Strategic Plan, Towards 2020, as it will enable Council to deliver a range of
enhanced services and provide additional facilities for the community. Furthermore, the
Project supports or advances various regional, state and national priorities and targets.
The Leisure Centre Redevelopment Project has received Development Approval under the
Campbelltown Council Development Plan. However it is noted that due to changes to the
approved form of development, in the form a larger Leisure Centre, a variation to this
consent may be required. If these changes materially impact on car parking or the removal
of regulated or significant trees then a new Development Approval may be required.
The Project will also advance the economic development of the Council area and provide
wider economic impacts for the economy of the State, delivering tangible economic benefits
to the community. The redeveloped Leisure Centre may be considered to be a significant
business with advantages derived from public ownership. Campbelltown should therefore
consider whether competitive neutrality principles should be applied to the operations of the
Leisure Centre in order to ensure the private sector is not unfairly disadvantaged by the
operation of the Leisure Centre business under public ownership.
The Project has been the subject of extensive consultation and communication consistent
with the Campbelltown Public Consultation Policy, this process has also provided the
community with the opportunity to influence the final form of the Project.
The redeveloped Leisure Centre is forecast to significantly increase revenue compared to
current operations. There is evidence of support for these revenue projections from potential
users of the Leisure Centre, however there is some risk that these projections will not be
achieved. This risk can be mitigated through effective marketing and promotion of the
redeveloped facility. Capital of $14 million for the Leisure Centre Redevelopment Project
and a provision of $100,000 per annum as an operating subsidy is provided for within the
Campbelltown Long Term Financial Plan. This Plan shows the Project can be undertaken
within the key financial targets established by Council without the need for any additional
increases in council rates other than those already provided for in the Plan.
Campbelltown has identified and mitigated risks associated with the Project, a Risk
Management Plan has been establishment and maintenance of a risk register is
recommended to be undertaken to ensure the Project is delivered to achieve Council’s
objectives. Campbelltown has also identified appropriate arrangements for the procurement
and delivery of the Project consistent with Council’s Policy. Campbelltown will need to
assess whether it wishes to accept the business risk of operating the Leisure Centre and the
associated financial return or whether it wishes to mitigate this risk and potentially accept a
lower financial return.
Campbelltown has considered and addressed the prudential issues associated with the
Leisure Centre Redevelopment Project.
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
1.
INTRODUCTION
1.1
Background
1.1.1
The Campbelltown Leisure Centre (Leisure Centre) was built in the 1970 and is
located off Lower North East Road at Botanic Grove, Campbelltown on a footprint of
2,900m².
1.1.2
The Leisure Centre was originally managed by the South Australian Community
Recreation Centre under the name of the St Bernard’s Recreation Centre but has
been operated by the City of Campbelltown (Campbelltown) since 2001 when it was
renamed as the Campbelltown Leisure Centre.
1.1.3
The Leisure Centre has been upgraded over time and its facilities now include:
1.1.4
•
two court stadiums with stage / performance area;
•
one single court stadium;
•
kiosk area;
•
administration and reception area;
•
atrium meeting area;
•
toilets and shower facilities;
•
cardio / weight room; and
•
one aerobic / dance room.
The Leisure Centre attracts approximately 8,000 visits per month and services a
wide range of sport, recreational and leisure needs including:
Activities for youth and the elderly
Indoor soccer / Futsal
Badminton
Martial arts
Basketball
Netball
Dance
Roller skating
Fitness / gymnasium
Volleyball
Indoor bowls
1.1.5
In FY2014 the Leisure Centre is budgeted to generate an operating loss excluding
depreciation of $92,650 based on anticipated income of $278,500.
1.1.6
Notwithstanding the various upgrades to the Leisure Centre that have occurred over
time, sporting facility standards have changed significantly and a greater variety of
sports are now being played by a much larger population base.
BRM Holdich ©
49024
Page 1
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
1.1.7
Campbelltown identified the Leisure Centre is struggling to meet the current needs
of the community and is in need of significant refurbishment, this has been verified
by independent consultants GHD.
1.1.8
There are two options being considered for the proposed redevelopment. Option A,
to increase the footprint of the Leisure Centre to approximately 6,500m2, has already
been approved by Campbelltown Council and involves a total capital investment of
$18.6 million, including $8.1 million from Campbelltown. Option B has been
developed in response to demand for swimming facilities for people of all ages and
abilities. This option requires a total capital investment of $24.2 million and would
require $13.7 million from Campbelltown, the footprint of the Leisure Centre would
be significantly increased to approximately 10,400m2.
1.1.9
The proposed redevelopment has been informed by a Leisure Centre Steering
Committee established for this purpose, with input sought from various
stakeholders. Key factors considered in the preferred design development were:
1.1.10
1.1.11
BRM Holdich ©
49024
•
a floor plan providing the greatest flexibility and adaptation for multipurpose
recreational use with multiple sports to be played at one time;
•
improved safety and parking for visitors and patrons;
•
an increase in the number of courts, including international competition sized
courts for showcase events;
•
improved spectator seating;
•
the opportunity to offer improved services and programs;
•
the retention of existing vegetation and large trees;
•
an increase in storage areas, multipurpose function/meeting/recreational
rooms and appropriate administration facilities and office space; and
•
environmental initiatives, such as solar panels, biodiversity, water reuse, and
energy smart designs.
Under both Option A and Option B the overall concept of the Leisure Centre
redevelopment provides for the construction of:
•
a two court sports hall including a 'show court';
•
swimming pool and learn to swim area; and
•
community sports and recreation areas including squash courts, dance,
weights/ergo, meeting rooms and a clubhouse or function space.
Following redevelopment, the Leisure Centre will therefore be able to provide a
number of different court configurations for a wider range of sports and activities
than presently offered. It will also have the infrastructure to function as a sport
incubator to support the activities of smaller sporting groups.
Page 2
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
1.2
1.3
1.4
Rationale
1.2.1
Campbelltown has resolved to redevelop the Leisure Centre with the vision of
providing a state of the art community facility which offers sport and recreation
opportunities for over 40,000 visitors per month. Relevant Council resolutions are
included as Appendix One.
1.2.2
The Campbelltown Strategic Plan, Towards 2020, articulates a strong commitment
to providing a quality lifestyle for its people, in a financially, socially and
environmentally responsible manner, whilst ensuring it remains responsive to the
needs of the community in a changing world.
1.2.3
It is intended that the proposed redevelopment of the Leisure Centre will assist
Campbelltown to progress this commitment.
The Project
1.3.1
Campbelltown has determined that the Leisure Centre will need to be substantially
demolished and new facilities constructed so that the building can function as a
community activity centre and adequately provide recreation and sporting
opportunities to meet both the current and future needs of the Campbelltown
community and for the North East region of Adelaide.
1.3.2
For the purpose of this report we are instructed to consider Option B as the Leisure
Centre Redevelopment Project in accordance with the Council resolution of 1 April
2014, where relevant we reference or comment on Option A. Option B is shown as
Attachment One.
1.3.3
Option B requires a total capital investment of $24.2 million and would require $13.7
million from Campbelltown, the footprint of the Leisure Centre would be significantly
increased to approximately 10,400m2 and incorporates increased swimming
facilities in comparison to those facilities provided in Option A.
Legal Framework and Prudential Issues
1.4.1
This report has been prepared in accordance with Section 48 of the Local
Government Act 1999 (Act), this section is reproduced in full as Appendix Two. The
Campbelltown Leisure Centre Redevelopment Project meets certain criteria
specified in section 48 (1) (b) (ii) that require Council to consider a report addressing
the prudential issues set out in subsection 2, namely that the expected capital cost
of the project over the ensuing five years is likely to exceed $4 million.
1.4.2
The prudential issues identified in Section 48 are:
(a)
the relationship between the project and relevant strategic management plans;
(b)
the objectives of the Development Plan in the area where the project is to occur;
(c)
the expected contribution of the project to the economic development of the
local area, the impact that the project may have on businesses carried on in the
proximity and, if appropriate, how the project should be established in a way
that ensures fair competition in the market place;
BRM Holdich ©
49024
Page 3
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
(d)
the level of consultation with the local community, including contact with
persons who may be affected by the project and the representations that have
been made by them, and the means by which the community can influence or
contribute to the project or its outcomes;
(e)
if the project is intended to produce revenue, revenue projections and potential
financial risks;
(f)
the recurrent and whole-of-life costs associated with the project including any
costs arising out of proposed financial arrangements;
(g)
the financial viability of the project, and the short and longer term estimated net
effect of the project on the financial position of the council;
(h)
any risks associated with the project, and the steps that can be taken to
manage, reduce or eliminate those risks (including by the provision of periodic
reports to the chief executive officer and to the council);
(i)
the most appropriate mechanisms or arrangements for carrying out the project.”
1.4.3
BRM Holdich ©
49024
BRM Holdich has been engaged by the City of Campbelltown to prepare a report to
satisfy the requirements of Section 48.
Page 4
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.
RELATIONSHIP WITH RELEVANT STRATEGIC MANAGEMENT PLANS
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(a) the relationship between the project and relevant strategic management plans;
2.1
Relevant Strategic Management Plans
2.1.1
Section 122 of the Act requires a council to develop and adopt strategic
management plans; these are required to incorporate the extent to which a council’s
objectives are related to regional, State and national objectives.
2.1.2
For the purposes of this report, the relationship between the Leisure Centre
Redevelopment Project and the following plans is considered relevant.
2.1.2.1
•
Strategic Plan 2010-2020, Towards 2020;
•
Annual Business Plan and Budget 2013-2014;
•
Long Term Financial Plan 2014/15 to 2023/24;
•
Infrastructure Asset Management Plan; and
•
Physical Activity and Sport Policy.
2.1.2.2
•
2.1.2.3
Regional Objectives
Eastern Region Alliance Recreation Plan.
South Australian State Objectives
•
South Australian Strategic Plan;
•
30 Year Plan for Greater Adelaide;
•
Strategic Infrastructure Plan for South Australia 2005/20062014/15; and
•
Office for Recreation and Sport Strategic Plan 2013 -2015, Active
for Life.
2.1.2.4
•
BRM Holdich ©
49024
City of Campbelltown
National Objectives
Sport and Active Recreation Policy Framework.
Page 5
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.2
City of Campbelltown Strategic Plan 2010 - 2020
2.2.1
The Campbelltown Strategic Plan 2010 - 2020, Towards 2020, was developed to
ensure that Council remains responsive to its community's needs and is considerate
of economic, social and environmental sustainability pressures. The Strategic Plan
has a 10 year outlook which identifies the council’s Vision, Mission, Values, goals,
Objectives and Strategies.
2.2.2
The Council’s stated vision is as follows.
“Campbelltown provides a quality lifestyle for its people”.
2.2.3
The Campbelltown Leisure Centre Redevelopment Project would provide enhanced
lifestyle opportunities for its community.
2.2.4
Council’s mission is.
“At Campbelltown we will place a high value on living together, respecting each
other’s views and building strong partnerships to support the needs of the
community.”
2.2.5
The Campbelltown Leisure Centre Redevelopment Project involves significant
financial commitment from the Federal and State governments which is evidence of
the strong partnership established by Campbelltown with these tiers of government,
consistent with its stated Mission.
2.2.6
The Campbelltown Strategic Plan 2010 - 2020, Towards 2020 has the following five
goals.
2.2.7
BRM Holdich ©
49024
•
Goal 1 – Quality Living – A quality lifestyle that meets the changing needs of
the community.
•
Goal 2 – Leadership – A Council with strong leadership and excellent service
delivery.
•
Goal 3 – City Planning – Planning that achieves a balance between
infrastructure, development and community needs.
•
Goal 4 – Environmental Responsibility – An enhanced local environment
delivered in partnership with the community.
•
Goal 5 – Local Economy – A Council which supports a strong and diverse
local economy.
The relevance of the Leisure Centre Redevelopment Project to specific objectives
and strategies in the Campbelltown Strategic Plan, Towards 2020 is shown in Table
One.
Page 6
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Table 1: Campbelltown Strategic Plan 2010 – 2020 Alignment with the Project
Goal
Strategic Plan Reference
Rationale
Objective 1.3: City infrastructure that provides a range
of welcoming, attractive and safe facilities that
encourage social interaction and an active community.
The project offers a
number
of
diverse
recreational
activities
that offers all community
members an opportunity
to interact in state of the
art facilities.
Quality Living
Strategy 1.3.1: Provide leisure services that deliver a
wide range of sporting, leisure and recreational
opportunities.
Objective 1.4: Strong Partnerships and effective
management of resources to achieve mutual benefits
for the community.
Strategy 1.4.2: Develop partnerships and seek grants
that improve infrastructure, services, and recognition
of the City.
Objective 1.5: A healthy and safe community through
planning, advocacy and compliance
Strategy 1.5.1: Improve infrastructure to support and
promote a healthy lifestyle
Leadership
Objective 2.1: Open, transparent and accountable
decision making.
Strategy 2.1.4: Provide effective community and
stakeholder engagement to support informed decision
making processes.
Objective 2.4: Effective interaction between Council
and the community.
The Federal and State
governments have made
a significant financial
contribution
to
the
Project.
The
Project
will
significantly improve the
Leisure
Centre
infrastructure.
There
has
been
extensive
community
consultation on various
options
for
the
redevelopment using a
wide
range
of
communication
and
consultation tools and
methods.
Objective 2.4.2: Provide effective communication with
the community using a range of tools and strategies.
City Planning
Objective 3.1: An effective Development Plan that is
sustainable and builds strong communities.
Strategy 3.1.4: Ensure open space is accessible for all
members of the community.
Objective 3.2: Effective Infrastructure and Asset
Management that allows for growth.
Environmental
Responsibility
Strategy 3.2.4: Develop, review and implement
Infrastructure Asset Management Plans.
BRM Holdich ©
49024
Objective 4.1: Valuable Recreation and open spaces
enhanced
through
effective
planning
and
management.
Strategy 4.1.1: Implement integrated planning and
management of Community facilities and open spaces
to optimise social and environmental outcomes.
Engagement proposed
of a specialist Disability
Discrimination Act (DDA)
consultant to ensure
DDA compliance.
The Project is included in
the
relevant
Asset
Management
Plans,
redeveloped
Centre
caters for growth.
The Project will improve
social outcomes provide
additional and enhanced
community
and
recreational facilities.
Page 7
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Local
Economy
Goal
2.2.8
2.3
2.4
Strategic Plan Reference
Rationale
Objective 5.3: Promotion of community events,
facilities and attractions to enhance the local
economy.
The new redevelopment
will attract an increasing
number of patrons to the
Centre, as well providing
opportunities to host
community events.
Strategy 5.3.2: Provide opportunities to enhance civic
pride by providing opportunities for people to connect
and interact locally.
It is evident there is considerable strategic alignment between the goals, objectives,
and strategies detailed in the Campbelltown’s Strategic Plan 2010 – 2020, Towards
2020, and the Leisure Centre Redevelopment Project.
Annual Business Plan and Budget
2.3.1
The forecast income and expenditure from the current operations of the Leisure
Centre are included within the 2013/2014 Annual Business Plan and Budget.
2.3.2
The operating statements show the Leisure Centre is budgeted to operate at a
deficit of $92,650 in the current financial year before accounting for the depreciation
of the facility, estimated to be $103,650.
2.3.3
The third Budget Review of the 2013/2014 Budget contains a provision of $103,600
for costs associated with the Leisure Centre Redevelopment Project incurred during
FY2014, this provision is intended to covers a range of professional series required
to progress the Project.
2.3.4
Council has resolved to fund the additional $30,800 cost of the Community
Engagement Strategy for the Leisure Centre Redevelopment Project as part of the
December Budget Review.
2.3.5
The 2013/2014 Annual Business Plan and Budget, as amended, appropriately
recognises the costs of the Leisure Centre Redevelopment Project.
Long-Term Financial Plan
2.4.1
The Campbelltown Long Term Financial Plan 2014/15 to 2023/24, adopted 4 March
2014, (LTFP) is a tool to assist in determining Council’s long term financial
sustainability by projecting the impact of any known decisions and to provide
guidance on the parameters to use when developing future budgets.
2.4.2
The Leisure Centre Redevelopment Project is included within the LTFP at a cost of
$24.5 million which may be considered to be a conservative allocation as it is slightly
higher than current Project estimates. The LTFP also contains provision for a
contribution of $14 million from Campbelltown towards funding the Project and
increased depreciation resulting from the expanded works.
2.4.3
The capital cost of the Project (Option B) $24.5 million has been categorised within
the LTFP as “Renewal & Replacement” of $8.574 million and “New Capital” of
$15.926 million, where new or expanded facilities are being provided.
BRM Holdich ©
49024
Page 8
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.5
2.4.4
The LTFP contains a Leisure Centre Redevelopment Reserve of $443,644 which is
comprised of a transfer of the net sale proceeds from 68 Stradbroke Road
(2011/2012) and Amos Street Reserve (2012/2013), this is to be used to offset the
costs of the Leisure Centre Redevelopment project. We note this Reserve is not
cash-backed, but shown on the Balance Sheet and represents amounts available for
future asset replacement expenditure.
2.4.5
The LTFP incorporates the extended construction timeframe associated with
Project, with income and expenses split in the following manner:
•
2013/2014 (Estimate Year) 10%
•
2014/2015 (Year 1) 40%
•
2015/2016 (Year 2) 40%
•
2016/2017 (Year 3) 10%
2.4.6
It is acknowledged that it is difficult to accurately forecast the income and expenses
associated with the future operations of the facility at this time without understanding
the management model that will be used once the Leisure Centre has been
redeveloped.
2.4.7
However, the LTFP has a net cost allocation of $100,000 per annum from
2016/2017 to take into account the anticipated additional expenses associated with
the larger, redeveloped facility. In essence this is the forecast on-going operational
deficit before accounting for depreciation, maintenance and financing of the facility
and is consistent with the current treatment of the Leisure Centre in the LTFP.
2.4.8
We note that the Project preliminary financial forecasts indicate the operating
subsidy is not required and that an operating surplus before interest, depreciation
and amortisation may be generated. Notwithstanding this, the current LTFP
provision does establish a parameter for Campbelltown to work towards in finalising
the operating business case.
2.4.9
It is noted the LTFP forecasts Campbelltown will have operating surpluses at the
time the redeveloped Leisure Centre is expected to become operational.
2.4.10
The impact of the Leisure Centre Redevelopment Project is appropriately provided
for in the LTFP.
Infrastructure and Asset Management Plan
2.5.1
The existing Leisure Centre building is included within Campbelltown’s Asset
Management Plan.
2.5.2
The construction of the proposed new building elements of the Leisure Centre
Redevelopment Project are not included within this Plan.
2.5.3
Once the final form of the Leisure Centre Redevelopment Project is determined the
Asset Management Plan should amended to reflect the lifecycle costs of the Project.
BRM Holdich ©
49024
Page 9
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.6
Physical Activity and Sport Policy
2.6.1
Campbelltown has adopted a Physical Activity and Sport Policy to define Council’s
position in respect to:
•
Physical activity and sport development and facilities.
•
Supporting Community groups that facilitate sport and physical activity
participation by members of the local Community.
the Policy relates to Goal 1 of the Campbelltown Strategic Plan, Towards 2020.
2.6.2
2.6.3
2.6.4
BRM Holdich ©
49024
Of relevance to the Project the Policy states that with respect to Facilities the
Council:
•
will endeavour to provide sustainable facilities that are safe and attractive,
optimise Community usage, that contribute to an improved quality lifestyle
and increased local participation in sport and physical activity into the future;
•
is committed to ensuring that all residents have access to physical activity,
sport facilities and activities, in particular disadvantaged and isolated
residents; and
•
is committed to planning for the provision of sporting facilities that meet the
needs and aspirations of the local Community and allow for a range of
competition levels to occur.
Furthermore, the Policy also states that new or upgraded facilities will:
•
Provide for a range of uses to optimise use of the Community asset.
•
Be considerate of crime prevention through environmental design strategies
to increase safety and security.
•
Where possible, link to footpaths, cycle ways and track networks, as well as
consider the provision of seating and shade.
•
Comply with current Disability Discrimination Act codes and policies.
A consideration for Council in determining the operating model for the Leisure
Centre is that the Policy states Council:
•
will offer a flexible tenure system for leased and licensed assets that
prioritises resources to groups that can demonstrate a commitment to
inclusive programs for local residents;
•
is committed to implementing and recording environmentally sustainable
practices in the management of Council facilities; and
•
set fee structures that will contribute to the long term financial sustainability
of facilities, whilst being mindful when setting lease and licence fees that
these fees may potentially be passed onto local participants/residents.
Page 10
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.6.5
2.7
Regional Objectives
2.7.1
Campbelltown is a member of the Eastern Region Alliance (ERA) a group of eastern
metropolitan councils who voluntarily work together for the benefit of their local
communities and the eastern region community as a whole. The Member Councils
of ERA are the Cities of Burnside, Campbelltown, Norwood Payneham & St Peters,
Prospect, Tea Tree Gully, Unley, and the Town of Walkerville.
2.7.2
ERA has established a number of portfolios which work across 13 main focus areas,
which aim to deliver tangible benefits to the residents of the eastern region councils.
Open Space and Recreation is one portfolio area.
2.7.3
ERA has recognised that Open Space and Leisure Facilities need to be developed
on a regional basis, as people seeking recreation do not concern themselves with
Council boundaries.
2.7.4
The ERA Open Space and Recreation portfolio working group is tasked with the
development of a regional recreation plan to include:
2.7.5
2.8
It is evident the Campbelltown Physical Activity and Sport Policy will be significantly
progressed through the Leisure Centre Redevelopment Project.
•
mapping current facilities of regional significance;
•
reviewing and prioritising facilities for relevance, regional promotion and
potential funding opportunities; and
•
developing open space and recreation strategies for the region that link
existing plans for each council.
In this context, the ERA Councils have each expressed their support for the
redevelopment of the Campbelltown Leisure Centre.
South Australian State Objectives
2.8.1
2.8.2
BRM Holdich ©
49024
The South Australian State objectives with respect to sport and recreation are
articulated in a number of plans and by various agencies, of relevance tot the
Project are:
•
State Strategic Plan;
•
30 Year Plan for Greater Adelaide;
•
Strategic Infrastructure Plan for South Australia 2005/06 – 2014/15; and
•
Office for Recreation and Sport Strategic Plan 2013 – 2015.
The alignment of the Leisure Centre Redevelopment Project with these plans is
detailed below.
Page 11
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.8.3
The State Strategic Plan is built on six pillars and identifies a number of targets.
Table Two identifies that three of these pillars and a number of goal and targets are
supported or advanced through the Project.
Table 2: South Australian State Strategic Plan Alignment with the Project
Relevant State
Pillar
Our Community
State Goals and Targets Advanced
Goal: We are committed to our towns and cities being well designed,
generating great experiences and a sense of belonging.
Target 1 Urban Spaces
Goal: We spend quality time with our families.
Target 13 Work-life Balance
Goal: People in our community support and care for each other,
especially in times of need.
Target 23 Social Participation
Goal: Governments demonstrate strong leadership working with and
for the community.
Target 32: Customer and client satisfaction with government services
Our
Environment
Goal: We reduce our greenhouse gas emissions.
Our Health
Goal: We make healthy choices in how we live.
Target 61: Energy efficiency – government buildings
Target 78: Healthy South Australians
Goal: We are physically active
Target 83: Sport and recreation
2.8.4
The Leisure Centre Redevelopment Project is considered to be aligned to a number
of the goals and targets identified within the State Strategic Plan.
2.8.5
The 30 Year Plan for Greater Adelaide was prepared by the South Australian
Government to guide the community, local government, business and industry in the
planning and delivery of services and infrastructure such as transport, health,
schools and community facilities.
2.8.6
The 30Year Plan has three key objectives all of which appear relevant to the Leisure
Centre Redevelopment Project, these are:
BRM Holdich ©
49024
•
Maintain and improve liveability;
•
Increase competitiveness; and
•
Drive sustainability and resilience to climate change.
Page 12
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.8.7
A key element of the 30 Year Plan is to increase the ratio of infill development and
create a more compact urban form. As a consequence of this there will be a need
for more facilities which provide sport and recreation opportunities, a redeveloped
Leisure Centre will provide a greater range of opportunities for residents to
participate in structured and unstructured sport and recreation activities.
2.8.8
It is evident the objectives of the 30 Year Plan for Greater Adelaide are supported
and advanced through the Leisure Centre Redevelopment Project.
2.8.9
The principal purpose of the Strategic Infrastructure Plan for South Australia
2005/06 -2014/15 is to guide new infrastructure investment by government and the
private sector over the next five and 10 years and improve the management and use
of the state’s existing infrastructure assets.
2.8.10
The plan incorporates four broad strategies. First, to coordinate infrastructure
planning and construction across the state. Second, to pursue more efficient and
competitive infrastructure systems. Third, to pursue and promote sustainable
development through sound planning and use of infrastructure. Fourth, to meet
future demands in a timely and innovative manner.
2.8.11
The plan also identifies strategic priorities for 14 infrastructure sectors such as
transport, energy, health, and recreation and sport.
2.8.12
The Strategic Infrastructure Plan identifies that State Government wants “Programs
will have been implemented to increase the use and improve the quality of existing
facilities, and to develop new infrastructure to meet needs and maximise
opportunities. Expansion and greater use of key sporting hubs will have addressed
the current gaps in elite and community-level sporting facilities. There will be
increased use of government land and buildings, particularly education facilities,
which will help meet community recreation and sporting needs.” by 2015.
2.8.13
A redeveloped Leisure Centre will have improved facilities and provide new
infrastructure designed to meet the needs of the community and to maximise sport
and recreation opportunities.
2.8.14
The Leisure Centre Redevelopment Project is considered to support the strategies
identified within the Strategic Infrastructure Plan for South Australia.
2.8.15
The State Government Office for Recreation and Sport Strategic Plan 2013 –
2015, Active for Life, articulates a vision “All South Australians enjoying lives
enriched through regular participation in sport and active recreation.”
2.8.16
The Leisure Centre will provide increased and enhanced opportunities to progress
the Office for Recreation and Sport vision.
2.8.17
The South Australian State government is providing grant funds and advice to the
Leisure Centre Redevelopment Project which will advance two of the three strategic
priorities identified in Active for Life as shown in Table Three.
BRM Holdich ©
49024
Page 13
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Table 3: Active for Life Strategic Plan Alignment with Project
2.8.18
2.9
Degree of
Alignment
Strategic Priority
Strategy Advanced
1. Build a capable
and
sustainable
industry
1.1 Target investment in the industry to deliver agreed
strategic outcomes.
Medium
1.3 Improve whole of sport participation pathways and
inclusive delivery.
Medium
2. Deliver
places
participate
perform
2.1 Provide sport and active recreation facility policy
and planning advice to industry and government.
High
2.2 Implement a sports hub approach to the
development of shared local and regional facilities.
High
2.3 Plan and design for the development of major
sports facilities for state, national and international
competitions.
High
2.4 Contribute to the development of strategic
community sport and active recreation infrastructure.
High
better
to
and
The Leisure Centre Redevelopment Project is considered to be closely aligned to
the strategic priorities identified in the State Government Office for Recreation and
Sport Strategic Plan 2013 – 2015, Active for Life.
National Objectives
2.9.1
The Australian Government, through the Department of Health, which administers
the Australian Sports Commission Act 1989 is committed to, amongst other things,
encouraging increased participation by Australians in sport and providing
resources, and facilities to enable Australians to pursue sport whilst also furthering
their educational and vocational skills and other aspects of their personal
development.
2.9.2
In June 2011, Commonwealth, state and territory Sport Ministers agreed to establish
the First National Sport and Active Recreation Policy Framework (the Framework) to
help guide the development of sports policy across Australia. The Framework
provides a mechanism for the achievement of national goals for sport and active
recreation and sets out the agreed roles and responsibilities of governments and
their expectations of sport and active recreation partners.
2.9.3
The Framework outlines Commonwealth, State and Territory Government
Expectations of Other Stakeholders including Regional and Local Government,
these are as follows.
BRM Holdich ©
49024
•
Facilitating a strategic approach to the provision of sporting and active
recreation infrastructure including open space, and other needs.
•
Establishing local management and access policies to sport and recreation
facilities.
Page 14
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
2.9.4
BRM Holdich ©
49024
•
Supporting and coordinating local and regional service providers (venues
and programs).
•
Liaising and partnering with state and territory governments on targeted
program delivery.
•
Supporting and partnering with non-government organisations that enable
sport and active recreation participation.
•
Incorporating sport and recreation
opportunities in Council plans.
•
Collaborating, engaging and partnering across government departments on
shared Policy agendas.
•
Investment in sport and active recreation infrastructure.
development
and
participation
The Leisure Centre Redevelopment Project could be considered to support the
objectives of the Act through improved and increased sports and recreation facilities
and is consistent with the Framework agreed by the Commonwealth and state
governments.
Page 15
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
3.
OBJECTIVES OF THE DEVELOPMENT PLAN
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(b)
3.1
the objectives of the Development Plan in the area where the project is to occur;
City of Campbelltown Development Plan
3.1.1
Development in Campbelltown is governed by the Development Plan Campbelltown (City), pursuant to Section 33 of the Development Act 1993.
3.1.2
The Development Plan covers matters including zoning issues, building appearance
and neighbourhood character, land division, building siting and setbacks and
environmental guidelines.
3.1.3
The Development Plan is structured as follows:
•
General, containing general policy that applies across the council area and
relates to a range of social, environmental, and economic development
issues.
•
Zones, these provisions give greater certainty and direction about where
certain forms of development should be located and identifies generally
envisaged forms of development. The objectives and design requirements
for development in the particular area are also expressed.
•
Tables that list the conditions which are applicable to complying
development, numeric values for setbacks from road boundaries and car
parking rates for certain types of development.
•
Mapping, showing the broad distribution of land uses and movement patters
throughout the council area.
3.1.4
The current version of the Development Plan is dated as consolidated on 28
February 2013.
3.1.5
The version of the Development Plan applying to the development proposal is dated
as consolidated on 14 January 2010, as the date of lodgement of the Development
Application relating to the proposal was 17 December 2010.
3.1.6
Development Plan consent was granted on 11 May 2011 for the development as
contemplated in Option A. The consent requires building work associated with the
consent to be substantially commenced within 12 months of the approval.
Campbelltown has sought, and been granted, an extension of time to 11 May 2015
for this consent.
3.1.7
If Campbelltown proceeds with the development proposed as Option B, given the
use is not changing and the impacts of the building are not any greater it is likely to
be considered as a variation to the original consent. However, a new development
consent may be required if car parking further impacts on open space or regulated
or significant trees require removal.
BRM Holdich ©
49024
Page 16
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
3.2
General Section
3.2.1
Relevant policies within the General section of the Development Plan relating to the
Leisure Centre Redevelopment Project which will need to be taken into account if
there is a new approval required or if the approval requires variation are:
3.2.1.1
Centres and Retail Development;
3.2.1.2
Community Facilities;
3.2.1.3
Design and Appearance;
3.2.1.4
Energy Efficiency;
3.2.1.5
Landscaping Fences and Walls;
3.2.1.6
Metropolitan Open Space System;
3.2.1.7
Open Space and Recreation;
3.2.1.8
Orderly and Sustainable Development;
3.2.1.9
Regulated Trees;
3.2.1.10 Significant Trees; and
3.2.1.11 Transportation and Access.
3.3
Development Zone
3.3.1
The Leisure Centre is located at 531 Lower North East Road, Campbelltown and is
zoned Residential.
3.3.2
The development is within the Residential Zone and is consistent with the Public
Realm desired character statement that significant community facilities and
recreation areas shall continue to remain readily accessible and well-resourced.
3.3.3
The redevelopment of the Leisure Centre is considered to be a land use which is
generally not consistent with the objectives and principles of development control
within the Residential Zone in the Campbelltown Development Plan.
3.3.4
The proposed redevelopment comprises a single building which will accommodate a
number of activities, some of which (in isolation) such as indoor recreation centres
are identified as a non-complying form of development.
3.3.5
The assessment of the proposed development was approached as a single building
to be operated as one leisure centre accommodating a range of activities. It was
therefore processed as a consent use on this basis, recognising that given the
nature of the proposal it would be artificial to break it down into each of its
component parts and then process it as non-complying if one of those parts was of
itself non-complying.
BRM Holdich ©
49024
Page 17
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
3.3.6
3.4
The proposed redevelopment of the Leisure Centre as detailed in Option A was
assessed on merit.
Approving Authority
3.4.1
BRM Holdich ©
49024
Pursuant to the Development Act 1993, Council received direction from the
Minister’s Office confirming that Council’s Development Assessment Panel (CDAP)
or Council is the relevant authority for the development assessment (planning
consent) for the Leisure Centre Redevelopment Project.
Page 18
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
4.
CONTRIBUTION TO ECONOMIC DEVELOPMENT
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(c)
4.1
the expected contribution of the project to the economic development of the local
area, the impact that the project may have on businesses carried on in the proximity
and, if appropriate, how the project should be established in a way that ensures fair
competition in the market place;
Contribution to Economic Development
4.1.1
4.1.2
Economic development can be defined as efforts that seek to improve the economic
well-being and quality of life for a community by creating and/or retaining jobs and
supporting or growing incomes and the tax base. The contribution to economic
development of the local area from the Leisure Centre Redevelopment Project will
primarily come from the following sources:
•
Construction activity; and
•
Potential employment opportunity through the expansion of the services
provided at the Leisure Centre.
There are economic and employment multiplier benefits to the broader economy
from the economic activity that will be generated during the construction phase of
the Leisure Centre Redevelopment Project.
4.1.2.1 The economic impact assessment undertaken to identify the potential jobs
and incomes that may be associated with the Project is based on a
measure of the value added and employment associated with the
investment. This is consistent with the predominant measure of national
economic activity, Gross Domestic Product.
4.1.2.2 The expenditures associated with the project will have direct economic
effects, indirect effects of related purchases in the broader economy and
induced effects of spending on goods and services by the employees of the
companies providing goods and services to the Leisure Centre.
4.1.3
These multiplier effects have been analysed by the City of Onkaparinga using InputOutput methodology, a common tool for measuring secondary and tertiary economic
effects. Based on the relevant economic multipliers the impact of the expenditure
associated with the Project has been estimated to have the following impact.
4.1.4
Total output, including all direct, industrial and consumption effects is estimated to
increase by up to $58.161 million. This is comprised of the following.
BRM Holdich ©
49024
4.1.4.1
The value of the construction investment.
4.1.4.2
A rise of $21.484 million in the demand for intermediate goods and
services from a direct increase in output from the construction
investment, including the flow on effects as demand for local
goods and services increases.
Page 19
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
4.1.4.3
4.1.5
The consumption effects from the creation of jobs in the economy
arising from the increases in direct and indirect output which are
estimated to be $9.213 million.
Based on the Project capital expenditure of the construction output should result in
an increase of up to 232 jobs, as detailed below.
4.1.5.1 The direct effect is estimated to create up to 115 jobs.
4.1.5.2 The indirect or flow on effect is estimated to result in the gain of a further 75
jobs.
4.1.5.3 The consumption effect is estimated to boost employment by 42 jobs.
4.1.6
4.1.7
4.1.8
The Project is estimated to impact wages and salaries by up to $12.417 million as
detailed below.
4.1.6.1
The increase form the direct effect is estimated at $5.318 million.
4.1.6.2
The indirect or flow on effect is estimated at $4.874 million.
4.1.6.3
The consumption effect is estimated at $2.225 million.
The impact on value added is estimated to increase by up to $23.430 million,
comprised of the following.
4.1.7.1
A direct impact of $9.812 million.
4.1.7.2
An indirect or flow-on effect of $8.521 million.
4.1.7.3
A consumption effect of $5.097 million.
The overall impact summary is shown in Table Four.
Table 4: Economic and Employment Benefits from the Project
4.1.9
BRM Holdich ©
49024
Impact
Direct
Indirect
Consumption
Total
Output ($M)
$27.463
$21.484
$9.213
$58.161
Employment (Jobs)
115
75
42
232
Wages and salaries ($M)
$5.318
$4.874
$2.225
$12.417
Value-added ($M)
$9.812
$8.521
$5.097
$23.430
Under a model where Campbelltown continue to operate the Leisure Centre,
Campbelltown staff forecast that employment will rise from just over 3 FTE’s at
present to provide employment for approximately 20.35 FTE staff many of whom will
predominantly be engaged on a casual basis, consistent with industry norms. We
have clarified this and note that this estimate was intended to be the total staff
required and not the total number of FTE’s as previously reported to Council.
Page 20
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
4.2
4.1.10
The Leisure Centre Redevelopment Project will provide the infrastructure to create a
sports incubator or “sports house” model. This will cater for local sports clubs and
state sporting associations alike by providing permanent office accommodation with
access to facilities (board or meeting rooms) they otherwise may not be able to
afford.
4.1.11
The sports house concept will also provide an opportunity for Campbelltown to
partner with registered training organisations to deliver traineeship programs aimed
at increasing the skills, knowledge, experience and professionalism of the sports.
Although no revenue has been included from this source the sports house concept
is likely to have a positive impact on local businesses and create employment
opportunities in the leisure sector.
4.1.12
The redeveloped Leisure Centre creates a multi-use facility which will position
Campbelltown to deliver national sports and recreation programs at the regional and
local level. Participants in these programs are also likely to have a positive benefit
on the local retail economy.
4.1.13
The Leisure Centre will also have an indirect positive economic impact through its
contribution to improving the health of the community.
4.1.14
It is widely acknowledged that better community health provides a range of
economic benefits. According to Access Economics this includes reducing health
care costs, enhancing workforce productivity and increasing the amount of labour
available.
4.1.15
The rising incidence of obesity will place cost pressures on government outlays
which could be mitigated by preventative health measures such as those offered
through a sports and fitness centre.
Impact on Businesses in Proximity
4.2.1
The redevelopment of the Leisure Centre will result in the creation of a modern
accessible community and recreation centre offering a broader range of services
than is currently provided.
4.2.2
There will be an increase in the number of community and fitness rooms and an
increase in the number of car parking spaces from 180 to 290, all of which are
expected to contribute to an increase in patronage.
4.2.3
There are only two other facilities that offer similar recreation and sports facilities
within a three kilometre radius of the Leisure Centre, although these are of a
differing standard to that proposed in the Leisure Centre Redevelopment Project.
These are:
BRM Holdich ©
49024
•
Magill Sports Centre – owned by the University of South Australia and
operated with a focus on university student access and some community
access; and
•
Mars Sports Centre – a commercially operated three court indoor facility and
gym located at Marden.
Page 21
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
4.2.4
Furthermore, there are three other centres offering a mix of recreation and sport
programmes just outside this three kilometre radius, these are:
•
Stepney ICA - a forecourt facility predominately targeting indoor cricket,
mixed netball and soccer with little direct impact on services or facilities
offered by the Leisure Centre;
•
The Turramurra Recreation Centre - a two court stadium equipped with
meeting rooms, a crèche, 4 squash courts and a dance studio located at
Highbury; and
•
Walkerville YMCA - a one court and gymnasium facility targeting users to the
West of the River Torrens, thus having limited impact on the catchment of
the Leisure Centre.
4.2.5
Seven other gym facilities operate within the Campbelltown area.
4.2.6
The Leisure Centre is the only facility of its type in the eastern suburbs of Adelaide
that provides a wide array of active and passive opportunities for community
participation in sport and recreation and which is provided with direct local
government financial support.
4.2.7
The focus for increased participation at the Leisure Centre is on sports organisations
who have presented proposals regarding the potential for their involvement in the
Leisure Centre Redevelopment Project and the benefits they see for their sport
arising from the redevelopment. In summary, these proposals are expected to
significantly increase the number of visits over time to an average in excess of
40,000 per month as shown below.
Organisation
Futsal SA
Norwood Basketball Club
4.3
200
3,000 to 5,000
Squash SA
3,000
State Swim
13,000 to 16,000
Volleyball SA
4.2.8
Estimated increase in participation per month
3,000 to 5,000
The operations of the redeveloped Leisure Centre are likely to have some impact on
the operations of the other gym, fitness and leisure centres located within the
general area.
Fair Competition
4.3.1
The operations of a community and recreation centre impact on competition in the
local market place to the extent that they provide a number of services which are
also provided by the private sector.
4.3.2
The Leisure Centre is likely to offer an increased range of sport and recreation
services and a higher standard of facilities following the redevelopment, this is likely
to have an impact on the operations of other fitness, leisure and recreation
businesses operating in the area.
BRM Holdich ©
49024
Page 22
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
4.3.3
Through the Council of Australian Governments the Australian Government and all
state and territory governments have undertaken, through the National Competition
Policy and Competition Principles Agreement, to ensure that their publicly owned
businesses do not enjoy any net competitive advantage simply because they are
publicly owned.
4.3.4
The Clause 7 Statement of the Competition Principles Agreement and the
Government Business Enterprises (Competition) Act 1996 provide the framework for
implementing National Competition Policy by local government entities in South
Australia.
4.3.5
Part 4 of the Clause 7 Statement describes the competitive neutrality obligation on
local government. The statement requires that Local Government significant
business activities are subject to the same rules and regulations as private
businesses.
4.3.6
The Clause 7 statement provides definitions on what constitutes a “business activity”
and “significant business activities”. Of relevance to the Leisure Centre is that a
business activity includes any activity undertaken:
“(b)
where:
(i)
the activity is primarily involved in producing goods and services for
sale in the market; and
(ii)
the activity has a commercial or profit-making focus; and
(iii)
there is user charging for goods and/or services; and
(iv)
the activity is not primarily funded from rate or grant revenue;”
and, significant business activities are categorised as:
“Category 1: business activities with an annual revenue in excess of $2 million, or
employing assets with a value in excess of $20 million; and
Category 2:
4.3.7
all other significant business activities.”
Furthermore, for category two business activities, these will be deemed to be
significant when:
4.3.7.1
the business enterprise possesses market power to create a
competitive impact in the market that is more than nominal or
trivial; and
4.3.7.2
its size relative to the size of the market as a whole is more than
nominal or trivial.
4.3.8
Although annual revenue is not forecast to exceed the $2 million threshold, the
asset value is greater than $20 million and the relative size of the Leisure Centre in
the geographic area may constitute a significant business activity under category
two.
4.3.9
If the Leisure Centre is considered to be a significant business activity there is an
obligation to consider the application of competitive neutrality principles to the
operations of the Leisure Centre. However, before such principles are applied it is
BRM Holdich ©
49024
Page 23
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
necessary to undertake various assessments including a cost benefit analysis to
determine whether the costs of applying competitive neutrality principles will
outweigh the benefits of doing so.
4.3.10
Competitive neutrality is about ensuring that the significant business activities of
publicly owned entities compete fairly in the market.
4.3.11
The application of competitive neutrality principles is about transparent cost
identification and pricing in a way which removes or neutralises the net cost
advantages arising from public ownership when compared to private sector
operators, these principles do not apply to those activities which are non-business,
or non-profit activities such as providing community meeting rooms.
4.3.12
The advantages Campbelltown may have over private sector operators in the same
industry include:
•
reduced direct costs of operating the business (e.g. exemptions from
Commonwealth taxes, exemptions from Council rates etc.);
•
indirect subsidies (e.g. the sharing of costs between the Leisure Centre and
other areas of council operations e.g. centralised administrative or
accounting functions);
•
being able to operate without the pressure of business risk;
•
access to cheaper finance;
•
no requirement to earn a rate of return on capital utilised by the Leisure
Centre; and
•
exemption from certain legislation.
4.3.13
In order to ensure fair competition Campbelltown should ensure it has systems in
place to identify all direct costs associated with the operations of the Leisure Centre
as well as council rates, facility maintenance, depreciation and the benefits
associated with public ownership.
4.3.14
These costs may then be applied to the prices charged by the Leisure Centre in
such a way that any operating subsidy provided by Campbelltown is for those
activities which are non-business or not-for profit.
4.3.15
Campbelltown must assess whether the operations of the Leisure Centre constitute
a significant business activity and if so the competitive neutrality principles should be
applied.
4.3.16
It should be noted that the Government Business Enterprises (Competition) Act sets
out a process for the investigation of competitive neutrality complaints. A person
that competes, or seeks to compete, in a particular market may make a complaint to
the relevant Minister alleging an infringement of the principles of competitive
neutrality by a State Government or Local Government agency.
BRM Holdich ©
49024
Page 24
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
5.
COMMUNITY CONSULTATION
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(d)
5.1
the level of consultation with the local community, including contact with persons
who may be affected by the project and the representations that have been made
by them, and the means by which the community can influence or contribute to the
project or its outcomes;
Level of Consultation
5.1.1
The Campbelltown Public Consultation Policy, last reviewed 22 January 2013, dated
12 July 2005, sets out how Council will communicate with and engage the
community in inclusive, transparent and accountable processes to contribute to
Council’s decision making.
5.1.2
Through the Policy Campbelltown recognises a commitment to engaging with the
local community and that community engagement and participation processes are a
vital part of local democracy.
5.1.3
Council’s community engagement process is based on the International Association
of Public Participation (IAP2) Model and the South Australian ‘Local Government
Community Engagement Handbook – March 2008’.
5.1.4
The Policy prescribes that staff will apply community engagement methodologies
appropriate to the circumstances and desired outcomes of any specific engagement.
Where the engagement is significant, staff are required to formulate a
comprehensive Community Engagement Strategy and Action Plan for that
engagement.
5.1.5
The Policy defines community engagement as involving the Community in problem
solving or decision making processes and establishes that engagement can include:
5.1.6
BRM Holdich ©
49024
•
INFORMING the Community with balanced and objective information to
assist understanding about something that is going to happen or has
happened.
•
CONSULTING using two way communication designed to obtain public
feedback about ideas, alternatives and proposals.
•
INVOLVING with processes designed to help identify issues and views to
ensure that concern and aspirations are understood and considered prior to
decision making.
•
COLLABORATING with the Community to develop an understanding of all
issues and interests and to work out alternatives and identify preferred
solutions.
In line with the Public Consultation Policy, CONSULT was selected as the
appropriate level of community engagement for seeking feedback on Option A and
Option B.
Page 25
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
5.1.7
5.1.8
A community engagement strategy was developed and implemented, with
consultation over a four week period. The strategy included the following activities:
•
Distribution of an Information Pack to all residents and ratepayers of
Campbelltown.
•
Half page advertisement in the East Torrens Messenger.
•
Notice in the Council monthly column in the East Torrens Messenger.
•
Notice in the Council Events and Activities newsletter.
•
Notice on Council’s website, Twitter and Facebook and on street banners.
•
Promotional display and Information Packs available at Council’s Office,
Campbelltown Library and the Campbelltown Leisure Centre.
The community were invited to provide feedback through multiple channels,
including:
•
Completing an online or hard copy feedback form.
•
Sending a submission either by email or letter.
•
Posting a comment on Council’s Facebook page or via Twitter.
•
Telephoning Council and providing verbal feedback.
•
Visiting the Campbelltown Leisure Centre Open day (10 March 2014).
5.1.9
There has been extensive and appropriate community consultation on the Leisure
Centre Redevelopment Project consistent with the Campbelltown Policy.
5.1.10
We note that as the Project progresses the community engagement strategy should
be amended to reflect the Commonwealth grant requirement that successful funding
proponents will be required to comply with a range of branding and recognition
requirements. These requirements are clearly identified in the Funding Agreement
and Project Agreement.
5.1.11
We note also that there has been considerable community and stakeholder
information and consultation over the proposed redevelopment of the Leisure Centre
for a number of years, this has included:
BRM Holdich ©
49024
•
Regular distribution of information sheets;
•
Use of Council’s online Community Panel;
•
Information on Council’s website;
•
Council’s monthly column in the East Torrens Messenger;
Page 26
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
5.2
•
Articles in Council’s quarterly publication “outlook”;
•
Displays in the Campbelltown Leisure Centre and Campbelltown Council
Office; and
•
Verbal Updates at Council meetings, Ward Forums and Campbelltown
Speakers Forum.
Community Influence
5.2.1
The consultation process has actively sought community input into the development
options for the Project, this consultation also segmented responses from
respondents who live in close proximity (within 100 metres) or are users of the
Leisure Centre.
5.2.2
The consultation process identified Option B as the preferred concept plan for the
Project.
5.2.3
The Community Engagement Outcomes report stated that there were numerous
suggestions for improvements to the design of the concept plans and all should be
considered during the development of the detailed design.
5.2.4
Furthermore, addressing the specific concerns of neighbouring residents relating to
the design of the car park, traffic movement, removal of vegetation, noise, visual
impact and the potential impact on property values through the detailed deign phase
will be evidence of community influence on the Project.
5.2.5
It is evident that both internal and external stakeholders have been provided with an
opportunity to influence the outcome of the Project.
5.2.6
It is also evident there has been an acceptable level of consultation with the local
community, including contact with persons who may be affected by the Project.
Furthermore, it is apparent that the representations made to Council were given due
consideration in influencing the final brief for the Project.
5.2.7
Campbelltown residents may also be provided with an opportunity to comment on
and influence the Project through the Development (Planning) Approval process for
the proposed building works.
5.2.8
Campbelltown has resolved to provide an opportunity to residents living in close
proximity to the Leisure Centre to provide further feedback on car parking options.
BRM Holdich ©
49024
Page 27
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
6.
FINANCIAL ASSESSMENT
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
6.1
(e)
if the project is intended to produce revenue, revenue projections and potential
financial risks;
(f)
the recurrent and whole-of-life costs associated with the project including any costs
arising out of proposed financial arrangements;
(g)
the financial viability of the project, and the short and longer term estimated net
effect of the project on the financial position of the council;
Revenue Production, Revenue Projections and Potential Financial Risks
6.1.1
The Leisure Centre currently produces revenue from game fees, court fees, kiosk
sales and room hire. As shown below, FY2014 Leisure Centre revenue is estimated
to be $278,550 with lower revenue of $260,300 in FY2015 due to proposed
construction activity associated with the redevelopment.
Income
Game Fees and Court Hire
Room Hire
Kiosk Sales
Total Revenue
6.1.2
FY2014
FY2015
$204,650
$23,300
$50,600
$278,550
$220,200
$10,100
$30,000
$260,300
The Leisure Centre Redevelopment Project will provide opportunities to generate
increases in revenue from game fees, court fees, kiosk sales and from tenancy
arrangements with commercial operators of the gym or sports bodies entering into
long term use arrangements. For example:
6.1.2.1
Game Fees and Court Hire income from the existing three courts is
currently estimated at $205,000 per annum, benchmarking suggests
gross revenue of $100,000 per court is not uncommon.
Assuming good utilisation, a five court stadium should therefore be
capable of generating gross revenue of $500,000 per annum from this
source.
6.1.2.2
Room Hire is currently estimated at $23,300 per annum.
The redevelopment will provide the opportunity to increase revenue from
this source, this may come from commercial lease arrangements with a
gym operator, for the additional rooms which will be available for hire,
from tenancy arrangements with sports associations and from the
utilisation of the squash courts as multi-purpose rooms for use as group
training facilities.
There may also be an opportunity to generate rental income from allied
health practitioners as 25% of fitness organisations around Australia offer
such facilities.
BRM Holdich ©
49024
Page 28
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
6.1.2.3
Kiosk turnover is currently just over $50,000 or approximately an average
of $0.53 per visitor.
Based on this rate, revenue would rise to between $127,000 (20,000 visits
per month) and $254,400 (40,000 visits per month).
The expansion of the Leisure Centre and the enhancement of the facilities
will provide the opportunity to increase the average revenue per visit.
Benchmarking a kiosk in a venue with comparable court configurations
and a large gym showed turnover averaged $0.65 per visitor, it is
conceivable that revenue from the kiosk could potentially exceed
$300,000 per annum.
6.1.3
The preliminary financial revenue forecasts for the first four years of full operations
are shown below. These forecasts are based on a significant increase in operating
revenue, up from $278,500 in FY2014 to $957,500 in the first full year of operations.
Income
Game Fees and Court Hire
Room Hire
Kiosk Sales
Total Revenue
Year 1
Year 2
$501,800
$153,909
$301,860
$957,569
$516,854
$158,526
$310,916
$986,296
Year 3
$532,360
$163,282
$320,243
$1,015,885
Year 4
$548,330
$168,181
$329,851
$1,046,362
Note: figures may be subject to rounding
6.1.4
We note the preliminary financial forecasts do not include revenue from the aquatic
facilities on the assumption that a capital contribution from State Swim or a similar
body will fund this component of the redevelopment.
6.1.5
Campbelltown should consider whether the financial viability of the Leisure Centre
would be improved if it was to retain control of this source of revenue which has
been estimated at approximately $600,000 per annum.
6.1.6
The potential financial risks associated with the redevelopment of the Leisure Centre
include:
BRM Holdich ©
49024
•
Operating costs exceed budget;
•
Increase in interest rates beyond projected levels;
•
Revenue below projections;
•
Higher capital expenditure during the construction phase, resulting in an
increase in depreciation and interest costs;
•
Increased subsidy required due to commercial viability being affected by
design issues; and
•
Lower profitability due to lower attendance figures than projected.
Page 29
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Appropriate mitigation strategies have been identified or are in place for these risks.
We note these capital cost estimates are preliminary and the risk of an increase in
construction costs will be borne by Campbelltown this risk in particular will need to
be mitigated through the choice of an appropriate procurement strategy.
6.2
Recurrent and Whole-of-Life Costs, Financial Arrangements
6.2.1
The recurrent net annual operating costs of the Leisure Centre Redevelopment
Project are estimated in the Long Term Financial Plan to be $100,000. In effect,
consistent with current practice, this is the annual operating subsidy provided for in
the Long Term Financial Plan for the operations of the Leisure Centre, excluding
corporate overhead, financing costs and depreciation expense.
6.2.2
We note that preliminary financial forecasts indicate this operating subsidy may not
be required and the financial estimates are therefore considered to be conservative.
However, this will be influenced by the operating model ultimately implemented at
the Leisure Centre.
6.2.3
The components of the redeveloped Leisure Centre will have a useful life ranging
from 15 years (flooring) to 60 years (superstructure), however for the purpose of
establishing a whole of life costing for the Leisure Centre Redevelopment Project
the following assumptions have been used.
BRM Holdich ©
49024
6.2.3.1
The capital budget is estimated to be $24.2 million (exc. GST).
This is comprised of $22.7 million in construction costs, estimated
by quantity surveyors WT Partnership, and design fees of
approximately $1.5 million.
6.2.3.2
The cost of building and grounds maintenance is estimated at 2%
of capital value. We note that local government generally provides
between 1.5% and 2% for building maintenance costs and the
higher provision is expected to cover refurbishment during the
lifecycle of the Project.
6.2.3.3
The average useful life of the Leisure Centre components has
been estimated to be 50 years.
6.2.3.4
Depreciation is calculated in accordance with Australian
Accounting Standards, the base building (by far the largest
component of the cost of the Project) is depreciated at the rate of
2% per annum, based on this depreciation is estimated to be
$484,000 per annum.
6.2.3.5
An imputed finance costs to reflect the opportunity cost associated
with the use of Campbelltown cash flows.
6.2.3.6
The operating subsidy budgeted in the LTFP reflects the net costs
associated with operations.
Notwithstanding the preliminary
financial forecasts indicate an operating subsidy may not be
required.
Page 30
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
6.2.4
The whole of life cost in nominal terms is shown in Table Five.
Table 5: Whole of Life Costs for the Project
Cost
Capital Cost (net of grant funds)
$13,700,000
Maintenance
$24,200,000
Depreciation
$24,200,000
Imputed interest
$7,341,000
Operating subsidy
$5,000,000
Total
6.2.5
Option B
$74,441,000
The financial arrangements for the capital cost of the Project are shown in Table Six.
The contributions towards the capital cost are the Campbelltown contribution,
consistent with the LTFP provision this is estimated to be $14 million, and $10.5
million secured from State and Federal government grant contributions, subject to
finalisation of the associated Funding Deeds.
Table 6: Funding Sources for the Project
Source of Funds
Campbelltown
Amount
$14,000,000
Federal Government
$7,500,000
State Government
$3,000,000
Total
$24,500,000
6.2.6
We note that due to the high levels of cash held by Campbelltown the entire amount
of the Campbelltown contribution will not need to be borrowed thereby minimising
interest costs.
6.2.7
However for competitive neutrality purposes and to reflect the opportunity cost
associated with the use of these funds, we have assumed the Campbelltown
contribution is to be made from loan funds. The annual cost of servicing these loan
funds is $1.423 million per annum, based on a $14 million principal and interest loan
at the prevailing interest rate quoted by the Local Government Finance Authority of
5.8% for a 15 year term, which is the term generally used to finance long term
assets.
6.2.8
Over the term of the loan the total interest payable would be $7.341 million. A 1%
increase in interest rates would add $1.426 million to the total cost of the loan over
the term and a 2% increase in interest rates would add $2.895 million to the total
cost of the loan over the term.
BRM Holdich ©
49024
Page 31
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
6.3
6.2.9
Consistent with internal accounting practice Campbelltown does not apply full cost
attribution to the operations of the Leisure Centre. However, this practice will need
to change to ensure competitive neutrality principles are applied for the operations
of the redeveloped Leisure Centre.
6.2.10
We note that State Swim has indicated a willingness to contribute $1.5 million
towards the development in order to secure the operating rights to the swimming
pools. Based on the prevailing interest rate this would reduce the interest cost to
Campbelltown by $786,000 over 15 years or $52,400 per annum.
6.2.11
We note also that revenue from the aquatic facilities is estimated to be $600,000 per
annum with direct instructor costs estimated by Campbelltown staff to be $180,000.
Even after accounting for the additional staff required to operate the aquatic facilities
(e.g. lifeguards) the aquatic operations are estimated to produce a surplus greater
than the interest cost saving to Campbelltown in accepting the State Swim
contribution.
Financial Viability
6.3.1
Financial viability can be defined as the ability to generate sufficient income to meet
operating expenses, financial obligations and to provide the potential for future
growth.
6.3.2
The preliminary financial forecasts show the Leisure Centre will generate a profit
before interest and depreciation from its first full year of operations and thereafter,
this outcome would be significantly better than current performance and better than
the operating subsidy provided for in the LTFP.
6.3.3
Based on the historical reporting of Leisure Centre financial performance the
operations may have been considered to be financially viable if these operating
profits were achieved, as costs such as depreciation are reported separately.
However, after accounting for depreciation the Leisure Centre would not be
considered to be financially viable as the cots exceed the revenue generated from
operations. To illustrate this, the forecast financial performance for the first five
years is shown below.
6.3.4
BRM Holdich ©
49024
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue
$957,569
$986,296
$1,015,885
$1,046,361
$1,077,752
Expenses
$745,106
$767,459
$790,483
$814,198
$838,624
Operating
Profit
$212,463
$218,836
Depreciation
$448,000
$448,000
$448,000
$448,000
$448,000
Profit / Loss
-$235,537
-$229,164
-$222,598
-$215,836
-$208,871
$225,402
$232,164
$239,129
We note that benchmarked health centres operating in suburban areas report
average net profits before owners salaries of over 20% of total income after
depreciation of 3.14% which is broadly consistent with the forecast Operating Profit.
Page 32
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
6.3.5
It is noted that the financial viability of the Leisure Centre could be enhanced if
Campbelltown was able to manage the aquatic facilities and generate a profit from
these operations of more than the $52,000 per annum associated with the additional
interest cost of accepting the State Swim contribution towards funding the
development of the aquatic facilities.
6.3.6
Based on the Campbelltown in-house management proposal for the Leisure Centre
gross income is estimated at $600,000 per annum from this source with instructor
expenses of $180,000 per annum, the gross profit of $420,000 would seem to
provide sufficient margin to warrant exploring detailed consideration of this option.
6.3.7
The short and long term effect of the Project on Council’s operations is shown
through its impact on the seven key financial targets set by Council that are used to
guide the direction of the LTFP. These targets were most recently adopted by
Council at its 4 March 2014 meeting and are reproduced below.
Description
Target
1. Operating Surplus
Breakeven result by 2015/2016 (Year 2)
2. Operating Surplus Ratio
0% by 2015/2016 (Year 2)
3. Net Financial Liabilities
Council’s level of net financial liabilities are no
greater than 70% of its annual operating income
4. Net Financial Liabilities Ratio
Less than 70%
5. Interest Cover Ratio
Less than 5% of operating income
6. Asset Sustainability Ratio
100% spend as per IAMP on a rolling 5 year basis
7. Asset Consumption Ratio
Greater than 60% but less than 80%
6.3.8
The LTFP has been developed based on the existing levels of service provided to
the Community and rate increases of 4.95% (excluding growth) for the next 5 years
and then revisiting to Local Government Price Index.
6.3.9
The LTFP shows that the Leisure Centre Redevelopment Project can be undertaken
without adversely impacting the financial ratios set by Campbelltown for the life of
the LTFP.
6.3.10
In order to ascertain the sensitivity of the key financial indicators we have
considered the effect of an additional $2.5 million in capital expenditure expended in
2016/2017 (categorised as renewal and replacement assets). We note that
although the Campbelltown LTFP model would require an additional $1.6 million in
borrowings in that year key financial targets would still be met.
6.3.11
We note that if the principles of competitive neutrality are applied the Leisure Centre
would not be financially viable without a significant increase in revenue.
BRM Holdich ©
49024
Page 33
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
7.
PROJECT RISKS AND MITIGATION STRATEGIES
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(h)
7.1
any risks associated with the project, and the steps that can be taken to manage,
reduce or eliminate those risks (including by the provision of periodic reports to the
chief executive officer and to the council);
Risk Management
7.1.1
This report assesses the risk management actions taken or being considered for the
Project. It is not the purpose of the report to prepare a comprehensive risk
management plan, however a level of assessment has been undertaken on the
identified risks and the mitigations that have been developed.
7.1.2
The Campbelltown commitment to a risk management approach to its operations is
reflected in the Risk Management Policy, last reviewed 22 January 2013, this
recognises that risk is inherent in all of its activities and that effective management
of risk is necessary in order to protect its employees, assets, liabilities and
community against potential losses.
7.1.3
The Policy requires Campbelltown to maintain risk management practices and a
Risk Management Framework consistent with the guidelines and principles of risk
management as set out in the Australian Risk Management Standard ISO 31000.
7.1.4
The Leisure Centre Redevelopment Project has been subjected to a high level risk
analysis as described in the Risk Management Policy. In this process 20 risks were
identified and 6 of these were rated as extreme, these were:
•
Shortfall in Federal Government funding;
•
Construction costs exceeding budget;
•
Revenue below projections;
•
General contractual risks arising from the Funding Deed;
•
Agreement terms with sporting bodies were unacceptable; and
•
Lack of Council support.
7.1.5
For each risk appropriate mitigation strategies have been developed.
7.1.6
No operational risks have been given detailed consideration at this stage of the
Project development, however it would now be timely to consider these and in
particular the risks associated with various management models for the future
operations of the Leisure Centre.
7.1.7
Table Seven shows the risk category and initial risk rating before the application of
identified mitigation strategies.
BRM Holdich ©
49024
Page 34
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Table 7: Risk Assessment Category Summary
Risk Level
Extreme
Construction
Financial
7.2
Medium
5
3
8
1
4
3
General
7.1.8
High
1
1
Low
1
Total
3
Legal
2
1
3
Political
1
1
2
Total
6
8
5
1
20
The Leisure Centre Redevelopment Project has been subjected to risk management
practices consistent with Council’s Risk Management Policy which is mindful of the
need to achieve a balance between the costs of managing risk and the anticipated
benefits with a view to maximising opportunities and minimising negative outcomes.
With funding in place for the Project it would now be timely to review and update the
risk register.
Risk Mitigation
7.2.1
Campbelltown should ensure that the mitigation strategies identified for the risks
associated with the Project are implemented and that these are progressively
updated as the Project is implemented.
7.2.2
To support the risk management process the establishment and maintenance of a
risk register, in accordance with Council Policy, should be given a high priority.
7.2.3
Consistent with good project management practice risk management should be a
standing agenda item at any Project Management meetings during the construction
phase of the Project.
7.2.4
Prior to the commencement of construction, reporting protocols should be
established for the Project to ensure the Chief Executive Officer and, where
appropriate, Council are apprised of areas of risk.
7.2.5
Campbelltown, through the Leisure Centre Redevelopment Committee, should
review the Risk Management Plan and Risk Register on a regular basis.
BRM Holdich ©
49024
Page 35
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
8.
PROJECT DELIVERY
Local Government Act, Section 48 (2) The following are prudential issues for the purposes of
subsection (1):
(i) the most appropriate mechanisms or arrangements for carrying out the project.
8.1
Project Procurement Implications
8.1.1
The Leisure Centre Redevelopment Project has a number of procurement
implications for Campbelltown, these include the engagement of:
•
various consultants e.g. architects, engineers, certifiers, project manager
etc.;
•
the construction packages; and
•
potentially selecting an operator.
8.1.2
Procurement in the City of Campbelltown is guided by the Procurement Policy which
was last reviewed by Council on 15 April 2014. This Policy demonstrates Council’s
commitment to procuring goods and services in an open, fair, transparent and
effective manner that ensures the maintenance of appropriate standards of probity
and ethics throughout procurement processes.
8.1.3
Relevant considerations from the Procurement Policy are outlined below.
8.1.4
BRM Holdich ©
49024
•
Council will provide services to the community in the most effective manner
possible utilising an appropriate mixture of contractors and Council
employees.
•
The Council strives to achieve value for money in its procurement activities
by undertaking a comparative analysis of the costs and benefits of each
proposal throughout the whole procurement cycle.
•
Open and effective competition is the central operating principle in pursuit of
the best outcome. The probability of obtaining the best outcome is increased
in a competitive environment.
The following procurement processes are identified:
•
Open, Select and Limited tendering;
•
Staged tendering (i.e. expressions of interest followed by a select tendering
process);
•
Direct negotiation with a preferred supplier or a group of suppliers or
preferred supplier panel;
•
Request for quotes;
•
The use of existing third party contracts;
Page 36
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
8.1.5
•
Joint procurement arrangements with other councils;
•
Direct sourcing; and
•
Panel arrangements (e.g. Local Government Corporate Services, Strategic
Purchasing) or arrangements with pre-qualified suppliers.
In accordance with the Policy staff are charged with the responsibility for selecting a
method of approaching the market which is best suited to the procurement based on
the consideration of a range of issues such as those outlined below.
•
The nature of the procurement.
•
The value of the procurement.
•
The risk associated with the procurement.
•
Whether the market for the procurement is known.
•
What is the most efficient process to achieve the Council’s objectives in a
timely and cost efficient manner.
8.1.6
Under the Policy decision making responsibility for the procurement of services for
works undertaken up to a value of $20,000 is delegated to staff. For procurement
between $20,001 up to $100,000 responsibility is delegated to the Chief Executive
Officer or General Managers within the limit of their delegated authority, and
procurement from $100,001 to $500,000 is delegated to the Chief Executive Officer
within the approved budget.
8.1.7
The engagement of various consultants has been undertaken within these
delegated limits or by resolution of Council.
8.1.8
Decision making responsibility for a procurement process with a value over
$500,000 lies with Council. The following extract from the Procurement Policy
shows the approach to market suggestions and decision making responsibility for
procurement in the range of “Greater than $500,000”.
Extract from City of Campbelltown Procurement Policy
Estimated Value
Range (exc. GST)
Approach
Decision
Greater
$500,000
Use of existing third party contracts
than
to
Market
Suggestions
Panel arrangements / arrangements with
pre-qualified suppliers
Joint procurement
other councils
arrangements
Decision
Responsibility
Making
Council – based
recommendations
staff
on
by
with
Open / Select / Limited Tender
Staged Tender
BRM Holdich ©
49024
Page 37
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
8.1.9
On 21 January 2014 Council resolved to approach the market with a Limited Tender
for the construction works for the Leisure Centre Redevelopment Project.
8.1.10
Table Eight summarises the various procurement methods employed to approach
the market for the major packages of works associated with the Leisure Centre
Redevelopment Project.
Table 8: Procurement Summary
Work to be
undertaken
Engagement of
various consultants
8.2
Approach to Market Used
Direct sourcing / Negotiation
Written quotes from at least
three (3) suppliers
Rationale and Policy Compliance
Value between $1 and $100,000;
Complies with Council Policy
Appointment by Council resolution
Design Consultants
Limited Tender
Value between $100,001 to
$500,000
Complies with Council Policy
Appointment by Council resolution
Construction
Limited Tender
Value greater than $500,000
Complies with Council Policy
On-going Operations
To be determined
8.1.11
The Campbelltown Procurement Policy would appear to have been complied with
for the delivery of the Project to date.
8.1.12
Campbelltown should ensure that any approach to market for the on-going future
operations of the Leisure Centre is undertaken within the framework of the
Procurement Policy.
Construction Options
8.2.1
8.2.2
BRM Holdich ©
49024
Campbelltown identified 4 methods of contractor engagement to undertaken the
building works, these are:
•
Fixed Price Contract;
•
Design and Construct;
•
Managing Contractor; and
•
Construction Management.
Following consideration of the various advantages and drawbacks of these methods
Council resolved on 21 January 2014 to adopt a Fixed Price Contract methodology
as its procurement method through an initial Expression of Interest Process followed
by a short-listed tender for the proposed redevelopment.
Page 38
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
8.2.3
8.3
The Fixed Price Contract method through a limited tender process is an appropriate
method to enable Council to achieve value for money in its procurement activities
and provide open and effective competition consistent with the Procurement Policy.
On-going Operations
8.3.1
The increase in the value of the physical assets, the anticipated increase in
customer visits and the potential increase in turnover associated with the Leisure
Centre Redevelopment Project present management and governance issues which
do not necessarily require a change to the current arrangements.
8.3.2
Notwithstanding this, the redevelopment is likely to result in the creation of long term
commercial arrangements with a number of key sporting clubs or associations who
will have a vested interest in the viability and on-going development of the facility, as
a consequence Campbelltown should consider the merits of establishing a user
forum or Advisory Committee to ensure there is a forum for these users to express
their views and opinions and for these to be heard by Council.
8.3.3
Campbelltown may need to consider the impact of the application of competitive
neutrality principles to the Leisure Centre operations should it continue with current
management arrangements.
8.3.4
If Campbelltown is to continue with current management arrangements
consideration will need to be given to the additional costs of fit-out of the various
areas as these are presently excluded from the Project costs.
8.3.5
In addition to the continued operation of the Leisure Centre by Campbelltown staff,
consideration should also be given to the advantages and disadvantages of
alternative management models, including outsourcing:
•
management responsibility to a private sector service provider. There are a
number of operators in South Australia including Belgravia Leisure, CASA
Leisure and YMCA; or
•
discrete aspects of the operation to the private sector such as the café and
kiosk facilities, the gym and associated fitness classes, the stadium or courts
etc.
8.3.6
Campbelltown should assess whether it wishes to accept the business risk of
operating the redeveloped Leisure Centre and the associated financial return from
these operations or whether it wishes to mitigate this risk and potentially accept a
lower financial return by considering alternative management arrangements.
8.3.7
We note that industry benchmarking of health and fitness centres operating in
suburban areas report net profits of over 20% of income.
BRM Holdich ©
49024
Page 39
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
9.
CONCLUSION
9.1
This report has been prepared to meet the requirements of Section 48 of the Local
Government Act 1999 and to provide Campbelltown City Council with a comprehensive
understanding of the prudential issues relating to the Leisure Centre Redevelopment Project.
9.2
Campbelltown has resolved to redevelop the Campbelltown Leisure Centre with the vision of
providing state of the art community facilities offering sports and recreation opportunities for
over 40,000 visitors per month. Following redevelopment the Leisure Centre will be able to
provide a number of different court configurations for a wider range of sports and activities
than presently offered. It will also have the infrastructure to function as a sport incubator to
support the activities of smaller sporting groups.
9.3
The redevelopment has an estimated cost of $24.2 million. Funding for the Project is being
provided by the Federal government ($7.5 million), the State government ($3.0 million) with
the balance to be contributed by Campbelltown.
9.4
The Leisure Centre Redevelopment Project is consistent with the vision, mission and goals
as outlined in Toward 2020, the Campbelltown Strategic Plan, it will enable Council to deliver
a range of enhanced services and provide additional facilities for the community. The Project
would also contribute towards the achievement of a number of regional, state and national
priorities and targets.
9.5
The Leisure Centre Redevelopment Project has received Development Approval under the
Campbelltown Council Development Plan. However it is noted that due to changes to the
approved form of development, in the form a larger Leisure Centre, a variation to this
consent may be required. If these changes materially impact on car parking or the removal
of regulated or significant trees then a new Development Approval may be required.
9.6
The Project will make a significant positive contribution to local and regional employment and
economic development above and beyond the capital investment.
9.7
The operations of the redeveloped Leisure Centre will impact on competition and the
redeveloped Leisure Centre may be considered to be a significant business with advantages
derived from public ownership. Therefore, Campbelltown must assess whether the
operations of the Leisure Centre constitute a significant business activity under National
Competition Policy and if so whether the competitive neutrality principles should be applied
to the operations of the Leisure Centre in order to ensure the private sector is not unfairly
disadvantaged by the operation of the Leisure Centre business under public ownership.
9.8
The Leisure Centre Redevelopment Project has been the subject of extensive consultation
and communication consistent with the Campbelltown Public Consultation Policy, this
process has also provided the community with the opportunity to influence the final form of
the Project.
9.9
The redeveloped Leisure Centre is forecast to significantly increase revenue compared to
current operations. There is evidence of support for these revenue projections from potential
users of the Leisure Centre, however there is some risk that these projections will not be
achieved. This risk can be mitigated through effective marketing and promotion of the
Leisure Centre.
BRM Holdich ©
49024
Page 40
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
9.10 The Campbelltown Long Term Financial Plan contains a provision of $14 million towards
funding of the Leisure Centre Redevelopment Project, a provision of $100,000 per annum as
an operating subsidy and depreciation allowances for the redeveloped building. This Plan
shows the Project can be undertaken within the key financial targets established by Council
without the need for any additional increases in council rates other than those already
provided for in the Plan.
9.11 Work has been carried out to formalise the risks associated with the project through the
creation of a high level Risk Management Plan. It should be noted that the capital cost
estimates are feasibility estimates based on concept plans, these contain design and
contingency allowances of 3.5% each which are considered to be tight and will need to be
managed through the design and documentation phase.
9.12 Campbelltown should ensure that the appropriate mitigation strategies are implemented for
the risks associated with the Project and that these are progressively updated through a risk
register as the Project is implemented.
9.13 Campbelltown has identified and implemented appropriate arrangements for the
procurement and delivery of the Project consistent with Council’s Policy or has authorised
procurement by Council resolution.
9.14 Campbelltown will need to assess whether it wishes to continue to accept the business risk
of operating the redeveloped Leisure Centre and the associated financial return from these
operations or whether it wishes to mitigate this risk and potentially accept a lower financial
return by considering alternative management arrangements. In evaluating these options the
costs associated with the fit-out of various areas will need to be considered as these are
presently excluded from the Project costs.
BRM Holdich ©
49024
Page 41
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
APPENDIX ONE - COUNCIL RESOLUTIONS
Date
Council Decision / Resolution
1. That the Business Case be endorsed and that it be noted that a further report will be
provided on the ramifications of including a crèche facility.
2 December 2008
3 February 2009
2. That EnvironArc be requested to produce an option for a free standing stadium on
the southern side of the Campbelltown Leisure Centre that would cater for national
Futsal competitions with a view to it being integrated with one of the four options
presented to date.
1. That the concept for the redevelopment of the Campbelltown Leisure Centre as per
drawing EA 1079 SK08 be endorsed for the purposes of community consultation and
that staff prepare a report on the impact of this project on Council’s Long Term
Financial Plan including how Council can offset the cost of the project through user
charges and other related income.
2. That based on the Community Engagement Strategy Option 2 outlined in the report,
staff prepare a further report for this Committee on the draft details involved in fulfilling
this strategy.
19 May 2009
That the report be received and that a further report be prepared on the impact of the
redevelopment of the Leisure Centre on the Long Term Financial Plan once the full
details of the funding through the Regional & Local Community Infrastructure Program
for the Library Redevelopment have been advised and that the Chief Executive Officer
be authorised to submit a joint application with the Bedford Group under the Federal
Government Job Funds Program.
3 November 2009
That Council support the lodging of a submission under the Regional and Local
Community Infrastructure Strategic Projects Program for the redevelopment of the
Campbelltown Leisure Centre and the Chief Executive Officer be authorised to
continue discussions with the State Government seeking their assistance.
2 March 2010
That Council appoint Design Inc as the lead consultants, offering architectural and
interior design services for the Sketch Design and Design Development phases for the
redevelopment of the Campbelltown Leisure Centre and that a Working Party be
formed comprising the Members of the Campbelltown Leisure Centre Steering
Committee to work with the consultants.
1 June 2009
That the Campbelltown Leisure Centre concept plans be endorsed for the purpose of
public consultation.
7 September 2010
That if the revocation of Community Land classification at 68 Stradbroke Road,
Newton is successful and the property is sold for residential purposes, then the net
proceeds be applied towards funding the proposed redevelopment of the
Campbelltown Leisure Centre.
21 September
2010
That seconded that the Chief Executive Officer be authorised to continue investigating
all the options (with the assistance of Elected Members as may be appropriate) in
securing Federal Government funding for the redevelopment of the Campbelltown
Leisure Centre.
BRM Holdich ©
49024
Page 42
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Date
18 January 2011
15 November
2011
17 April 2012
7 August 2012
Council Decision / Resolution
That Council receive the feedback from the community and agrees to proceed with the
revocation of the classification of land at Amos Street, Newton (CT 829/27 Allotment
24 in DP 8101) as Community Land and that staff be instructed to prepare a suitable
report for the consideration and consent of the Minister for State/Local Government
and further that all proceeds from any future sale of the land which shall be for
residential purposes be used to offset the costs of upgrading the Campbelltown
Leisure Centre.
1. Staff prepare an application for funding in the Round 2 of the Regional Development
Australia Fund program.
2. The Chief Executive Officer be authorised to continue exploring opportunities with
Complete Urban or other entities to attract external funding for the project for
consideration by the Committee.
That should Council be unsuccessful in Round 2 of the Regional Development
Australian Fund Program that the redevelopment of the Campbelltown Leisure Centre
be staged in accordance with Option D to maximise the Community benefit with the
funding that is currently available.
That Staff continue to:
• seek funding from the Federal Government to undertake the redevelopment of the
Campbelltown Leisure Centre, and
• explore the Private / Public Partnership model including the introduction of recreation
and sport aligned commercial activities to determine whether this is a feasible long
term alternative.
That Council adopt a Fixed Price Contract methodology as its procurement method
through an initial Expression of Interest Process leading to a maximum of 6 contractors
being short-listed to tender for the proposed redevelopment.
That Council engage Mr Mark Booth of BRM Holdich, to prepare a Prudential Report
for the proposed redevelopment including providing advice on appropriate Centre
management models for Council to consider.
21 January 2014
That Staff investigate the opportunities to sell naming rights for the new Centre and
until this can be achieved the Centre be known by its present name ‘Campbelltown
Leisure Centre’.
4 March 2014
BRM Holdich ©
49024
That Council request Staff to prepare the Terms of Reference for the Campbelltown
Leisure Centre Redevelopment Committee, with appropriate delegations to facilitate
an effective and efficient construction phase of the project.
That an experienced DDA Consultant be engaged to perform a review of the detailed
Campbelltown Leisure Centre plan and the findings be presented to a working group
from the Access and Inclusion Advisory Committee.
Page 43
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
Date
Council Decision / Resolution
1. Council adopt Option B as the preferred concept for the redevelopment of the
Campbelltown Leisure Centre, subject to the presentation of a satisfactory Prudential
Report to Council on the project.
2. Staff in conjunction with the Design Team led by Architects, Design Inc, prepare the
detailed design for the project, utilising Option B and taking into consideration the
suggestions and comments received from the Community during the consultation.
1 April 2014
3. Investigations be undertaken by Staff, in conjunction with the Design Team, to
determine the most appropriate traffic movement and car parking arrangements to
support Option B taking into consideration the following principles:
• minimising the removal of trees
• minimising the impact on Botanic Grove, including exploring entry and exit points
along Lower North East Road
• ensuring easy pedestrian access to the facility
for further consultation with neighbouring residents and ratepayers.
BRM Holdich ©
49024
Page 44
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
APPENDIX TWO - LOCAL GOVERNMENT ACT, 1999 - SECTION 48
Section 48 – Prudential requirements for certain activities
(1)
(2)
BRM Holdich ©
49024
A council must obtain and consider a report that addresses the prudential issues set
out in subsection (2) before the council—
(a)
engages in a commercial project (including through a subsidiary or
participation in a joint venture, trust, partnership or other similar body) where
the expected recurrent or capital expenditure of the project exceeds an
amount set by the council for the purposes of this section; or
(b)
engages in any project (whether commercial or otherwise and including
through a subsidiary or participation in a joint venture, trust, partnership or
other similar body)—
(i)
where the expected expenditure of the council over the ensuing five
years is likely to exceed 20 per cent of the council's average annual
operating expenses over the previous five financial years (as shown
in the council's financial statements); or
(ii)
where the expected capital cost of the project over the ensuing five
years is likely to exceed $4,000,000.
The following are prudential issues for the purposes of subsection (1):
(a)
the relationship between the project and relevant strategic management
plans;
(b)
the objectives of the Development Plan in the area where the project is to
occur;
(c)
the expected contribution of the project to the economic development of the
local area, the impact that the project may have on businesses carried on in
the proximity and, if appropriate, how the project should be established in a
way that ensures fair competition in the market place;
(d)
the level of consultation with the local community, including contact with
persons who may be affected by the project and the representations that
have been made by them, and the means by which the community can
influence or contribute to the project or its outcomes;
(e)
if the project is intended to produce revenue, revenue projections and
potential financial risks;
(f)
the recurrent and whole-of-life costs associated with the project including
any costs arising out of proposed financial arrangements;
(g)
the financial viability of the project, and the short and longer term estimated
net effect of the project on the financial position of the council;
Page 45
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
(3)
(h)
any risks associated with the project, and the steps that can be taken to
manage, reduce or eliminate those risks (including by the provision of
periodic reports to the chief executive officer and to the council);
(i)
the most appropriate mechanisms or arrangements for carrying out the
project.
A report is not required under subsection (1) in relation to—
(a)
road construction or maintenance; or
(b)
drainage works.
(4)
A report under subsection (1) must be prepared by a person whom the council
reasonably believes to be qualified to address the prudential issues set out in
subsection (2).
(5)
A report under subsection (1) must be available for public inspection at the principal
office of the council once the council has made a decision on the relevant project
(and may be available at an earlier time unless the council orders that the report be
kept confidential until that time).
(6)
However, a council may take steps to prevent the disclosure of specific information
in order to protect its commercial value or to avoid disclosing the financial affairs of
a person (other than the council).
(7)
The provisions of this section extend to subsidiaries as if a subsidiary were a council
subject to any modifications, exclusions or additions prescribed by the regulations.
BRM Holdich ©
49024
Page 46
City of Campbelltown
Campbelltown Leisure Centre – Section 48 Report
ATTACHMENT ONE- CAMPBELLTOWN LEISURE CENTRE OPTION B
BRM Holdich ©
49024
Page 47