16 August 2012

 

 

 

 

 

 

 

 

Dear Councillor/Sir/Madam

 

You are invited to attend an BUDGET AND OPERATIONS REVIEW COMMITTEE MEETING of Ashfield Council, to be held on Level 6, Civic Centre, 260 Liverpool Road, Ashfield on TUESDAY  21 AUGUST 2012 at 7:00 PM.

 

 

 

 

 

 

 

 

 

 

 

SEE ATTACHED AGENDA


 

Budget and Operations Review Committee Meeting - 21 August 2012

 

AGENDA

 

1.               Opening

 

2.               Acknowledgement of Local Indigenous Community

 

3.               Apologies/Request for Leave of Absence

                   

4.               Disclosures Of Interest

 

Disclosures to be made by any Councillors who have a pecuniary / non-pecuniary interest in respect of matters that are before the Committee at this meeting.

(21/08/2012)

 

5.               Confirmation of Minutes of Council/Committees

 

Budget and Operations Review Committee Meeting - 17/07/2012

 

6.               Staff Reports

 

6.1        INVESTMENT REPORT JULY 2012

 

6.2        RESPONSIBLE ACCOUNTING OFFICER'S MONTHLY REPORT

 

6.3        LEASING POLICY

 

 

7.               General Business

 

 

 

8.               Close

 

 

 

 

 


Ashfield Council – Report to Budget and Operations Review Committee Meeting held on Tuesday 21 August 2012                                                                                                                          BOR6.1

Subject                            INVESTMENT REPORT JULY 2012

 

File Ref                            Financial Management/Reports/Investment Report

 

Prepared by                   Myooran Vinayagamoorthy - Chief Financial Officer       

 

 

Reasons                          Legislative Requirement

 

Objective                         To report the balance of investments as at 31 July 2012

 

 


Overview of Report
In accordance with the requirements of Clause 212 of the Local Government (General) Regulation 2005, Council is provided with a listing of all investments made pursuant to Section 625 of the Local Government Act 1993 and held as at 31 July 2012.

 

Background

Clause 212 of the Local Government (General) Regulation 2005 requires that a report be presented to Council each month listing all investments with certification from the Responsible Accounting Officer.

 

Investment Balances

Council’s cash at bank and investments as at 31 July 2012 amounted to $16,471,871.64. It should be noted that the amount currently invested represents all of Council’s external and internal restrictions (i.e. grants, section 94 funds, loans, etc) as well as cash flow requirements.

 

The movement of cash and investments during the month of July 2012 is as follows:

 

Cash at Bank and Investments as at 30 June 2012                                           $17,533,331.82

Increase/(Decrease) during the month of July 2012                                        $ (1,061,460.18)

Cash at Bank and Investments as at 31 July 2012                                           $16,471,871.64

                                                                                              

Represented By:

Book Value          of Investments                                                                               $15,222,707.22

Cash at Bank                                                                                                      $  1,249,164.42 

                                                                                                                            $16,471,871.64

 

In July 2012, the cash at bank and call deposits decreased by $1,061,460.18 representing a net cash outflow for maintaining Council’s activities during the month. This was mainly due to Council’s income being lower than average for a non-rating month and expenditure being constant.

 

Return on Investment

The following tables show the return on investment of Council’s funds over a range of periods. Fluctuations in monthly returns occur due to the quarterly receipt of CDO income and the annual adjustment of the fair value of CDO’s.

 



Date

Monthly Return*

Quarterly Return*

Annual Return*

Two Years Return*

Three Years Return*

31/07/2011

3.79%

7.55%

6.22%

5.98%

4.76%

31/08/2011

4.25%

6.60%

6.32%

6.06%

4.73%

30/09/2011

6.24%

4.835

6.17%

6.13%

4.72%

31/10/2011

4.20%

4.91%

6.24%

6.19%

4.67%

30/11/2011

4.29%

4.92%

6.25%

6.21%

4.80%

31/12/2011

6.31%

4.90%

6.07%

6.27%

4.76%

31/01/2012

5.02%

5.16%

5.98%

6.29%

4.83%

29/02/2012

5.75%

5.72%

6.20%

6.33%

4.85%

31/03/2012

5.69%

5.51%

6.01%

6.38%

4.79%

30/04/2012

4.04%

5.21%

5.66%

6.38%

4.78%

31/05/2012

5.13%

4.98%

5.54%

6.40%

4.83%

30/06/2012

7.18%

5.59%

5.21%

5.50%

5.69%

31/07/2012

1.60%

4.69%

4.98%

5.62%

5.66%

* Returns are calculated based on the closing monthly balance of cash & investments.

 

The average yield on the short term portfolio for July 2012 was 5.09% whilst the comparative benchmark yield for 90 days bank swap rates was 3.58%.

 

Interest earned for this financial year to date is  $67,290 compared to the budget amount of $34,600.

 

The market value of Aphex Pacific Capital CDO as at 30 June 2012 as per the reports provided by Australia and New Zealand Group Limited is $40,235.

 

Other Staff Comments

Nil

 

Public Consultation

Nil

 

Conclusion

I certify that the investments have been made in accordance with the Local Government Act 1993 (as amended), the Local Government (General) Regulation 2005 and the Council’s Investment Policy adopted 23/8/2011 at the Budget and Operations Review Committee meeting.

 

ATTACHMENTS

Attachment 1View

Investment Portfolio July 2012

2 Pages

 

Attachment 2View

Investment Graph July 2012

1 Page

 

Attachment 3View

ANZ CDO Report June 2012

10 Pages

 

 

RECOMMENDATION

 

That the investment report be received and noted.

 

Nellette Kettle

Director Corporate & Community Services  


Attachment 1

 

Investment Portfolio July 2012

 



Attachment 2

 

Investment Graph July 2012

 


Attachment 3

 

ANZ CDO Report June 2012

 











Ashfield Council – Report to Budget and Operations Review Committee Meeting held on Tuesday 21 August 2012                                                                                                                          BOR6.2

Subject                            RESPONSIBLE ACCOUNTING OFFICER'S MONTHLY REPORT

 

File Ref                            Financial Reporting

 

Prepared by                   Myooran Vinayagamoorthy - Chief Financial Officer       

 

 

Reasons                          To evidence that Council’s budgetary controls are operating and whether any material differences have been identified

 

 


Overview of Report
This is a standard report containing a certification from the Responsible Accounting Officer that the monthly budget review has occurred and to report any material differences.

 

 

 

 

Background

Clause 202 of the Local Government (General) Regulation 2005 states:

The responsible accounting officer of a council must:

(a) establish and maintain a system of budgetary control that will enable the council’s actual income and expenditure to be monitored each month and to be compared with the estimate of the council’s income and expenditure, and

(b) if any instance arises where the actual income or expenditure of the council is materially different from its estimated income or expenditure, report the instance to the next meeting of the council.

 

Although the Regulations only require a report if a material difference exists, Council’s Chief Financial Officer has suggested that a monthly report certifying that a budgetary review has occurred would provide Council with a higher degree of confidence that the system of budgetary controls are operating effectively.

 

Certification by the Responsible Accounting Officer:

A comparison of Council’s actual income and expenditure with its estimated income and expenditure for the period 1 July to 31 July 2012 has been performed and there were no material differences to report.

 

 

Financial Implications

There are no financial implications from this report.

 

 

Other Staff Comments

Nil


 

Financial Implications

There are no financial implications from this report.

 

 

Other Staff Comments

Nil

 

Public Consultation

Nil

 

Conclusion

The monthly budgetary review has been performed and there are no material differences to report.

 

 

 

 

ATTACHMENTS

There are no supporting documents for this report.

 

RECOMMENDATION

 

That this report be noted.

 

 

 

 

Nellette Kettle

Director Corporate & Community Services

 

 

 

 


Ashfield Council – Report to Budget and Operations Review Committee Meeting held on Tuesday 21 August 2012                                                                                                                          BOR6.3

Subject                            LEASING POLICY

 

File Ref                            Governance

 

Prepared by                   Charles Latimer - Governance Project Officer       

 

 

Reasons                          To seek Council’s approval of the Leasing Policy as attached.

 

Objective                         To ensure a systematic and uniform set of standards for reviewing new or existing leases and/or licences.

 

 


Overview of Report
The leasing policy has been prepared to provide a systematic uniform set of standards for the determination and assessment of applications for the leasing of Council assets, particularly property assets. The policy also addresses matters raised in an Internal Audit Committee report. The Public Exhibition period concluded on 1 August and no comments were received.

 

Background

As noted in the report to the Budget and Operations Review Committee on 19 June 2012, Ashfield Council has a number of valuable assets which have a high community utilisation value and concurrently a variety of different leases with different groups. With higher levels of scrutiny of access to, and the use of, public assets and the need for a proper accountability and transparency, the attached Leasing policy has been prepared

 

Of note, Council’s Internal Audit Committee in Report 1A-3/11-12 dated February 2012 identified the need for a specific leasing policy to be drafted covering various matters including: clearly stipulated criteria for assessing lease applications both commercial and non commercial;  a contract manager to be identified for all leases; compliance monitoring of lessees with lease obligations; and regular reports to Council. The attached policy addresses the matters raised in the internal Audit Committee report.  

 

The leasing policy specifically covers key provisions to be included in leases, retail and commercial lease requirements, not-for-profit/community lease criteria, capital works inclusion in leases, selection of leases and Expressions of Interest, lease management and compliance monitoring and regular reports to Council.

 

Financial Implications

N/A

 

Other Staff Comments

Incorporated in earlier drafts.

 

Public Consultation

Public Exhibition phase undertaken and completed on 1 August 2012. No comments were received.


 

Conclusion

The policy addresses an identified governance need at Ashfield Council and strengthens Council’s processes for the management of key public assets on behalf of the community. The policy establishes a framework and applies processes that are demonstratably equitable, consistent and transparent whilst complying with appropriate legislative requirements to obtain the best value for the Ashfield community.

 

 

 

ATTACHMENTS

Attachment 1View

Leasing Policy

12 Pages

 

 

 

RECOMMENDATION

 

That Council adopt the Leasing Policy.

 

 

 

 

Nellette Kettle

Director Corporate & Community Services

 

 

 

 


Attachment 1

 

Leasing Policy

 

AMC_Logo_landscape_

Yellow line

 

 

Purple block

 

 

 

 

 

Text Box: Leasing Policy		

August 2012

 

 

 

 

 

 

This policy will be reviewed triennially by: Governance

Next review date: August 2015

 

Purple line

 

 


 

Title:

 

 

Leasing Policy

 

Summary:

 

 

The leasing policy provides principles and guidelines when setting terms and negotiating leases for Council property (land and/or buildings) and access to public land under Council management.

 

 

Record Number:

 

 

Xx

 

Date of Issue:

 

 

August 2012

 

Approval:

 

 

Council

 

Version Control:

 

 

Ver 1

 

Contact Officer:

 

 

Manager Corporate Services

 

Relevant References:

 

 

Internal Audit Report, Internal Audit Committee, Ashfield Council. Report IA-3/11-12, February 2012

 

Independent Commission Against Corruption, Guidelines for Managing Risks in Direct Negotiations

 

Division of Local Government, Circular  05/51 Public Private Partnerships Legislation and Guidelines

 

 

Main Legislative or Regulatory References:

 

 

Local Government Act 1993

Crown Lands Act 1989

Retail Leases Act 1994

Government Information (Public Access) Act 2009

 

 

Applicable Delegation of Authority:

 

 

As per delegations schedules and Manager Corporate Services.

 

 

Related Ashfield Council Policy:

 

 

Model Code of Conduct

Statement of Business Ethics

 

Related Ashfield Council Procedure:

 

 

 

 

Policy Background

Ashfield Council owns and/or manages a significant amount of valuable land and physical assets on behalf of the Ashfield community. This policy is to ensure that Council leasing of assets is transparent, consistent, fair and impartial and in accordance with s.8 of the Local Government Act 1993. This section states that a Council’s charter includes:

 

·    to provide directly or on behalf of other levels of government, after due consultation, adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively,

 

·    to bear in mind that it is the custodian and trustee of public assets and to effectively plan for, account for and manage the assets for which it is responsible,

 

·    to raise funds for local purposes by the fair imposition of rates, charges and fees, by income earned from investments and, when appropriate, by borrowings and grants.

Policy Purpose

The purpose of this policy is to ensure that, when considering the leasing or licensing of

Council-controlled land-based assets, including Crown Land, Council explores possible options for the use of the land, applies processes that are demonstrably equitable, consistent and transparent, complies with appropriate legislative requirements and obtains best value results for the Ashfield community.

 

This leasing policy covers all of the Ashfield Council Local Government area and to any property assets or land owned by Ashfield Council or Crown Land controlled and or managed by Ashfield Council on behalf of the Crown or a Trust.

 

This policy does not cover licenses for occasional or short term hire or non-exclusive use of Council property (such as the hire of the Council rooms or halls for a day or the hire of a sports oval for a day). There are separate policies related to the hiring of Council properties and facilities and a schedule of fees and charges applicable is also available for such purposes.

 

For longer terms licences, this policy does apply except where a separate specific policy exists (such as footpath trading and outdoor dining) which will have precedence over this policy.

Policy Objectives

All leasing or licensing of Council-controlled land assets, including Crown Land, will:

 

·    be consistent with Council’s economic, social and environmental objectives,

·    be undertaken in compliance with legislative and other obligations,

·    occur only after consultation with all affected stakeholders and relevant sections of the

community taking into account all relevant comments and representations,

·    be undertaken with the intention of securing an optimum mix of financial and other

benefits for the community,

·    be through a fair and open process and include regular market testing,

·    be in accordance with ICAC guidelines (Managing Risks in Direct Negotiations),

·    be open to public scrutiny while maintaining appropriate levels of commercial

confidentiality, and

·    be conducted in accordance with Council’s procedures covering business ethics and the Model Code of Conduct.


Implementation and access

Lease Definitions

A lease or the purposes for which a lease may be granted include:

·    Retail businesses including food preparation kiosks,

·    Commercial and business ventures (non retail),

·    Not-for-profit sporting or community groups or clubs,

·    Mixed uses, for example commercial activities on land leased to a non-profit organisation.

 

Leasing of community land is available but restricted under the provisions of sections 45 to 47D of the Local Government Act 1993. Leases must be consistent with the core objectives of the category of land, for a use prescribed by the Act or Regulations and expressly authorised under a Plan of Management for this land.

 

The preference throughout this policy is for Council to have a standardisation of format across all leases as appropriate.

 

Licence Definition

A licence is defined as being "an authorization (by the licensor) to use the licensed material (by the licensee)."A license may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties. In particular a license may be issued by authorities, to allow an activity that would otherwise be forbidden. It may require paying a fee and/or proving a capability. It may also be for access to facilities for which a lease would not be appropriate. A licence in a local government setting could be to authorise a seller/provider of goods and services, whereas a lease provides a contractual undertaking to lease premises for a period of time to provide goods, services and community activities.

Lease (or Licence) Provisions

 

1.   Different leases will contain different commercial terms and will have additional provisions that are specific to the premises, permitted use and agreement reached. However the base document will follow a standard format as provided under accepted legal principles. Leases will contain clauses related to the following (as applicable):

 

i.    Identity of lessee. Leases will only be granted to individuals in their own right, corporations, incorporated associations or other legal entities. Leases will not be granted to unincorporated associations nor to committee members on behalf of unincorporated associations.

ii.   Length of Lease: Most leases will be for up to 5 years without an option to renew. The term may be longer, or an option to renew may be included, if the lessee must do a new fit out or if the lessee must do significant capital work to upgrade the premises to a standard suitable for use, so that the term is long enough to enable the lessee’s investment to be worthwhile. (Note: This should be agreed at the commencement of the original lease and is not a ground for a claim from the lessee on the expiration of the original lease).

iii.  Holding over provisions: most leases will allow the tenant to hold over as a monthly tenant.

iv.  Amount of rent: setting out the total amount of rent charged annually.


 

v.   Due dates of payment: For commercial leases, rent is payable monthly in advance. It may be more suitable in other cases for rent to be paid up to quarterly, half yearly or annually in advance.

vi.  Interest payable: on late payments of rent and other amounts.

vii. Rent reviews: Leases will usually provide for annual rent reviews in accordance with changes in the Consumer Price Index (all groups) – Sydney. Leases longer than 5 years or with options to renew, may provide for the rent to be reviewed to market rent as determined by an external valuer.

viii.     Rates, land tax and other lessor’s outgoings (if applicable): are reimbursable by the lessee to the lessor.

ix.  Utilities: The lessee is to pay for the electricity, water, gas and other utilities used by it in the premises. If the premises are not separately metered, the lease will require the lessee to arrange for separate metering. The lessee is to open accounts in its’ own name and pay the amount directly to the utility companies.

x.   Costs: The lessee is to pay the lessor’s legal and other costs and administration fee for the preparation of the lease. The amount of the administration fee is set out in Council’s Schedule of Fees and Charges. This clause does not apply to retail leases.

xi.  Permitted use: the lease will state the permitted use of the premises and other uses which are prohibited.

xii. Any other obligations: relating to use such as the required or permitted times of operation, services which must be provided by the lessee, performance standards, limitations on prices which may be charged.

xiii.     Ancillary Rights: if any are granted to the lessee.

xiv.     Maintenance and Repair: The lessee will be required to maintain the premises and keep them in good repair having regard to their condition at the commencement of the lease. A lessee is not usually responsible for the structural repairs to structures erected by Council unless the structural repairs are needed as a result by the failure by the lessee to maintain the premises in good order and to carry out routine minor repairs.

xv. Actions required of the lessee and prohibited: the lease may include provisions stating what actions are permitted or required by the lessee such as compliance with legislation, not creating a nuisance for neighbours, a prohibition on alterations except with the lessor’s prior consent and such other requirements as may be needed for particular sites or premises.

xvi.     Insurance: lessees will be required to have relevant and current insurance policies including public liability to an amount of $20m and workers’ compensation cover for the duration of their lease agreement. They will be required to submit advices of annual renewal of these policies.  If the lease is of an entire building or property, the lessee will usually be required to insure the contents.

xvii.    Risk: The lessee is to occupy premises at its own risk, to release Council from any claims which may arise and to indemnify Council against any claims which may arise, except for injury and damage arising from Council’s negligence. For Crown Lands, the released and indemnities will also be in favour of the Reserve Trust, the NSW Government, the Minister for Lands (or equivalent portfolio Minister), the Department of Primary Industries (or equivalent portfolio public sector authority) and its officers.

xviii.   Right of access by Council: Council may enter and inspect premises to ensure the lessee is complying with its repair, maintenance and other obligations.


 

xix.     Assignment: the lessee is not allowed to assign or transfer the lease or grant a sub-lease or licence or a mortgage of lease unless it has first obtained the lessor’s written consent (and where applicable, in accordance with the Retail Leases Act 1994). Legal costs for the amendment of leases are to be met by the lessee.

xx. Provisions of abatement of rent or termination of lease: are to be included in the event of damage to or resumption of the premises or in the case  of Crown Land, revocation of the premises from the reserve.

xxi.     Security to be lodged: The lessee should provide preferably a bank guarantee for 3 months rent plus GST but, where determined otherwise, a security deposit.

xxii.    Personal Guarantees: should be provided by the directors when the lessee is a private company. Personal guarantees otherwise are not acceptable.

xxiii.   Crown Land: Provisions that the lease is subject to Crown Lands Act and is conditional on the Minister’s consent to the lease.

xxiv.   Definitions and interpretation: should include service of notices, applicable law, counterparts and similar boilerplate clauses.

 

2.   Once the lease has been issued to the proposed lessee, Council staff will consider a lessee’s reasonable requests for amendments to the lease document. An amendment is not to be made if it materially alters the commercial terms of the lease as accepted by Council or the basis on which tenders or expressions of interest were invited (except by Council resolution).

 

Retail and other commercial leases

 

3.   Commercial leases are leases where the lessee:

·    operates a business, or

·    undertakes commercial activities, or

·    obtains income from the lease and/or there is private gain from the use of the premises.

 

Leases of shops, kiosks, restaurants, offices and other premises used for the operation of a business are commercial leases. Lease of childcare centres to a person or company which operates a for-profit service is a commercial lease. A lease to a lessee which sub-licences the premises for profit is a commercial lease.

 

4.   A lessee may be a non-profit organisation but it may sub-licence or hire part of the premises for a fee or operate, or permit a sub-lessee, licensee, contractor or other person to operate on the lease premises a for-profit business, a commercial activity which provides private gain, profit or income for the sub-licensee, contractor or other business operator and/or which competes with other private businesses. This is also a commercial lease.

 

5.   Market rent will be payable for commercial leases.

 

6.   If there is a direct negotiation with one potential lessee only, the market rent will be determined by an external valuer having regard to the terms of the proposed lease.

 

7.   An assessment of market rent by a registered valuer is an opinion by an expert and should not be taken as an absolute measure of possible market rent reached through a competitive process between two or more interested parties (whether through auction, tender or expressions of interest).


 

8.   With a competitive process the current market rent is the highest rent offered in a complying proposal. This may be outweighed by other factors so long as the public receives value for money from the commercial use of public land.

 

 

 

 

Not-for-Profit, sporting and community organisations

 

9.   Leases for below market rent may be granted to incorporated not-for-profit sporting and community organisations in the Ashfield Local Government Area for non commercial purposes.

 

10. Council has the option of granting a lease rent reduction for varying amounts depending on the circumstances of the organisation. A lease may be granted for 75%, 50%, 25% or other percentage of market rent. The size of the discount from market rent will reflect the community benefit to Ashfield Council from the lease.

 

11. The following factors may be relevant for Council’s assessment of the community benefit from the proposed lease and a decision to grant a lease to a non-profit organisation, to accept less than market rent and if so, the size of the discount from market rent. Various considerations that may be applied include -

 

i.    The identity of the organisation, its’ Constitution and its’ aims and objectives,

ii.    The organisation’s history and experience in its area of activity,

iii.   The length of time the organisation has been based in the Ashfield Local Government Area and/or its connection with the Ashfield community,

iv.  Its’ funding sources and financial viability including appropriate insurance policies,

v.   The services it offers to the community,

vi.  Whether the services offered by the proposed lessee, or the proposed lease at less than market rent, furthers the aims in Council’s Community Strategic Plan or other plans and programs of Ashfield Council,

vii.  Whether there are other organisations in this or nearby local government areas offering the same or similar services and whether there is a shortage of such services,

viii. Whether such services are most efficiently delivered by Council providing subsidised premises to this organisation or to another organisation or alternatively by Council providing the services itself or by making monetary grants to another organisation,

ix.  The members or clients of the organisation particularly if the services or activities are being delivered mostly to the local residents of the Ashfield LGA rather than operating on a sub-regional or regional basis,

x.   Whether the lessee generates income from the premises; and if so whether income generated from the premises is used for the leased premises only or the services to the local community only or if, for example significant amounts are used for office administration or used to subsidise other services by the lessee outside of the Ashfield Local Government Area. As a principle, if the lessee is remitting income earned from the premises to its other services outside of the Ashfield LGA, higher rent will be charged for the subsidised premises,

xi.  The costs and expenses which Council would incur for maintenance and other expenses if it did not lease the premises or land. This should include savings by Council if a lessee undertakes maintenance and repairs instead of Council providing the service and maintaining the premises itself,


 

xii.  Any capital works on the site commissioned by the lessee (see Section following),

xiii. Whether the lessee is competing with other services or businesses and if so, whether the lease at less than market rate provides an unfair advantage to the lessee over its competitors.

 

12. It should not be assumed that a new lease will be automatically granted to the same not-for-profit lessee at the end of a lease term. Council will consider the issue of a community benefit to the Ashfield community on each occasion a new lease is to be entered into. In resolving to grant a new lease Council will consider:

 

i.    The extent of compliance by the lessee with the lease throughout the term, including whether the lessee has properly maintained the premises as required and/or if the lessee has completed any work required in a satisfactory manner,

ii.    Whether demand for the service has increased or decreased,

iii.   Whether demand by other groups for access to these or similar premises has increased or decreased and whether it is equitable for one organisation to have on-going exclusive use,

iv.  Whether the membership of the organisation or clientele of the organisation has increased or decreased,

v.   Whether renewals or leases to the same lessee for less than market rent results over time in effective or perceived privatisation of public land without proper return to the public.

 

13. A not-for-profit organisation requesting a lease, new lease or renewal of a lease of Council premises at less than market rent is expected to provide Council with all the information  sought to enable Council to assess the proposal’s community benefit to the Ashfield community.

 

14. A lease to a non-profit, sporting or community organisation for less than market rent will contain provisions in the lease document to ensure it is and continues to be, in the best interests of the public. These may include those functions that were important in deciding to grant the lease and may include requirements for the services to be offered, clientele to whom the service is to be provided, membership open to all, share use or access by third parties, prices to be charged, hours of operation, and preference to Ashfield local government area residents.

 

15. A reduction from market rent for a lessee is a subsidy from Council to the lessee and to the service or activity which the lessee is providing and must be acknowledged in the lease and by the signage on the premises and in communication (whether electronic or print) by the lessee to its clients and others.

 

Capital Works

 

16. If the lease requires the lessee to undertake capital works or site improvements (whether to premises or land), the lease will state that the works are or become the property of the lessor not the lessee.


 

17. Capital works undertaken by the lessee do not give the lessee any interest or claim in the works or improvements or the premises beyond the elements contained in the lease, nor do capital works give the lessee any claim to the site (premises or land) after the expiration date of the lease. Undertaking capital works during the lease term does not provide or confer any entitlements or residual rights to the lessee or enable the lessee to demand or expect a new lease following the expiry of the lease term.

 

18. Care is to be taken if the rent payable is reduced as a result of capital works to be done by the lessee. All capital works should be fully documented and relevant copies of all records are to be attached to leasing files whether electronic or paper-based.

 

19. Capital works by the lessee may only be a return to the public if, following the expiry of the lease term, the lessor is then able to rent the premises for a high/market rent having regard to the improvements which had been made by the lessee which become the property of the lessor. It is accepted within this policy, that  if the lease term is for longer than 5 years and/or if renewals of leases of premises of any description are continuously granted to the same lessee, capital works may benefit only the lessee or are part of its use of the premises as lessee and do not provide compensation to the public for the use of public land.

Selection of lessees

 

20. Council officers are to consider processes for a new lease approximately 6 to 12 months prior to the expiry date of a current lease and as early as possible before the anticipated commencement of a lease of new premises. Generally lessees will be selected by tender, by expressions of interest or other competitive process.

 

21. Leases of different types of premises for different uses will require different weightings to be applied to each criterion and different assessment criteria to be added. The criteria however on which tenders and Expressions of Interest (EoI) for leases of Council premises will be assessed will include the following:

 

·    The amount of rent offered,

·    Experience in the operation of similar businesses and/or experience in the provision of similar services,

·    Training and qualifications,

·    Accreditation with a professional association (where applicable),

·    Financial resources and stability,

·    Reference and results of reference checking.

·    For retail premises, proposed menu or proposed service to be offered,

·    Proposed hours of operation or use,

·    Proposed prices to be charged,

·    Proposed staffing including numbers, training, supervision, uniforms etc,

·    Proposed plan to enable adherence to Workplace Health and Safety laws,

·    Proposals to minimise waste and environmental impacts and increase sustainability,

·    Any other information given in the Expression of Interest (EoI) which is relevant to the objectives for the lease or which indicates that the proposal is in the best interests of the Ashfield local community,

·    Social and community benefits of the lease.


 

22. In the case of:

 

a)   new or redeveloped premises, and

b)   premises where a current tenant does not seek a new lease on expiry of the term, and

c)   premises where the lessee has been evicted for breach of lease, and

d)   otherwise vacant premises,

 

-     the new lessee will be selected by a competitive tender unless there are exceptional circumstances. Those exceptional circumstances are to be outlined in a report to Council  (if the recommendation is made by Council staff) and/or set out in the Council resolution (if the decision is made by Council not to invite Expressions of Interest). Exceptional circumstances may include, for example, that there is realistically only a single lessee for the site, or if new premises have been acquired or redeveloped for use by one particular lessee.

 

23. Where a lease expires, the lessee for a new lease of the premises will usually be selected by tender or by expressions of interest (EoI) particularly for a commercial lease. However there may be occasions where, and reasons why, it is appropriate for Council to grant a new lease to the sitting tenant for a rent assessed by a valuer and not invite expressions of interest on the open market. Those circumstances and reasons must be outlined in a report to Council.

 

24. It is not uncommon for Council to receive unsolicited enquiries, approaches, proposal or offers from third parties interested in leasing premises during or at the end of a current lease. Such an enquiry will be a factor to be taken into account in deciding whether the lessee for the new lease is to be selected by a competitive process.

 

25. Where there is a tenant who seeks a new lease and/or where third parties have made approaches, the matter must be reported to Council and a resolution made to: invite expressions of interest; or follow another course or action; prior to either of these steps being taken.

 

26. Invitations to lodge tenders or expressions of interest are to be published in a Metropolitan Newspaper in the appropriate Notices section (which will vary depending on the type of business) in Council’s usual weekly page in the local paper and on the Council’s website. Council officers may also advertise in additional ways if they consider this necessary to bring the advertisement to the attention of appropriate persons. This may include the use, for example, of Council’s social media services. Council officers are to give direct notice of the advertisement or invitations to lodge tenders or expressions of interest to any existing tenant of the premises and those who have made enquiries. 

 

Compliance

 

27. Lessees of Council land are expected to comply with the terms of their lease. The obligations are set out in the lease document and are not reduced and should not be because the lessor is a council rather than a private landlord. If a lessee breaches a lease, Council officers may serve a Notice of Breach of Lease requiring rectification of the breach or payment of compensation for the breach. If a lessee does not comply with a Notice to remedy a breach of lease or to pay compensation or if the lessee continues to commit breaches of the lease, the lease can be terminated.


 

28. Council officers are to report to Council and obtain a Council resolution before a lease is terminated early due to the lessee’s default. Where the lease relates to Crown Land, the appropriate Minister should be informed and approval sought.

 

 

Lease Management and control

 

29. All Leases will be managed by a designated staff member of Council who will operate as the Contract Manager and point of contact for inquiries regarding the lease and for all communications involving the lessee.

 

30. Lease documentation will specify the name/title of the Council Contract Manager.

 

31. The Contract manager is to ensure that the lease is managed in accordance:

(i)         with this policy,

(ii)        any applicable legislative requirements,

(iii)       any stipulations required by Council,

(iv)       that all rent adjustments stipulated in the lease contract have occurred,

(v)        that the lessee has delivered on its’ key requirements under the lease

contract. This will include ascertaining that the lessee has paid all of the

rent/lease monies due to Council,

(vi)       with any existing Plan of Management for the site in question,

(vii)      with regular periodic reviews of the lease on an annual basis unless otherwise determined depending on the actual total length of time of the lease.

 

32. Applications from lessees for a rent reduction or rent relief are generally not acceptable and may be granted only in exceptional circumstances which must be outlined in writing to the Contract Manager. A report and recommendation to Council will be required and a Council resolution is needed approving such a rent reduction.

 

Reports

 

33. Reports to Council about a proposed lease are to refer to this policy in reference to criteria used and compliance with these criteria.

 

34. All processes associated with the entering, administering, the ending/expiry and results of a lease is to be reported to Executive Management of Council and to Council itself where decisions are required and/or if matters of concern arise. 

 

35. All leases will be reported to Council and subject to Council approval. This will include new leases, renewal of leases, termination of leases and the periodic review of leases.

 

Public Access to lease documentation

 

36. The provisions of the GIPA Act apply to leases therefore documentation relating to all leases will be available for public access.

 

 

oOo                                oOo                               oOo

 


 

 

CHECKLIST FOR LEASES OR LICENCES

 

1.   Lease or licence ?

 

2.   Council Contract Manager appointed?

 

3.   NEW or EXISTING/RENEWAL

 

3a If a New Lease, a tender or Expression of Interest (EoI) should be called (s21, s26)

3b If an Existing Lease, a review should be conducted 6 to 12 months prior to the expiry.

3c Lease evaluation: leases should be evaluated against criteria set out in s11 and s12 for existing leases and s11 for new leases.

         

4.   Lease/licence file created             Yes             No

 

5.   Documentation attached               Yes             No    

 

6.   Lease prepared:                           

 

6a   Commercial or Non Commercial lease? (s5,6,7,8)

If commercial, provide market valuation.

          6b      Not for profit/Community lease ?

                   Completion of the assessment for non-market rent should be completed (s9,10,11)        

 

7.   Lease document provided to lessee (see S1 for areas to cover)

 

8.   Negotiation with lessee regarding terms and conditions of the lease (s1)

 

8a   Capital Works: are any capital works required/planned ? (see s16-s19)

8b   Special considerations (if applicable) Are any requested by the lessee ?

 

9.   Finalisation of lease details with applicant.

 

10. Report to Council prepared setting out details of lease.