Tuesday, 22 June 2021
Overview
Council has taken and continues to take a number of actions to address its serious financial situation and ensure its ongoing financial sustainability.
Decisive action is needed to address an accumulated debt of $565M, which included accessing restricted reserve funds without the necessary permissions. For the 2020-21 financial, Council is forecasting an operating loss in the order of $115M. This follows a loss of $89M in 2019-20.
Actions in Council’s Financial Recovery Plan include:
- Reduced capital works program – $170M in 2020-21 compared to $242M in 2019-20.
- Reduction of general expenditure on materials and contracts – estimated ongoing savings of $20M from 2021-22.
- Organisational restructure and reduction in staff numbers – staff numbers have been reduced to pre-amalgamation levels (from over 2,500 to under 2,000) to save $30M. The restructure included reducing the number of Executive Directors from nine to five and the number of senior and middle managers from 39 to 26.
- Sale of assets – assets surplus to Council’s needs have been identified and can be sold to generate an estimated $60M.
- Special variation (SV) rates increase of 15 percent – the Independent Pricing and Regulatory Tribunal (IPART) approved the SV rates increase for three years. This temporary one-off increase is inclusive of the rate peg and will provide $22.9M in additional income for the 2021-22 financial year.
- Reduced service levels – some services and projects have been delayed or deleted from Council’s Delivery Program and Operational Plan.
- Review of fees and charges – minimal changes to fees and charges.
- Bank loans – Council has secured two bank loans from major banks – one for $50M and the other for $100M.
- Finding new revenue sources – paid parking at beaches is one option being explored.
More information on the reasons for Council’s financial situation and solutions are outlined in the Administrator’s reports.
Timeline
- 17 May 2021 – Independent Pricing and Regulatory Tribunal (IPART) approved a 15 percent Special Variation (SV) rates increase for the Central Coast for three years.
- 13 May 2021 – Rik Hart commenced as Administrator of Central Coast Council.
- 11 May 2021 – Council resolved to hold a Constitutional Referendum on 4 September 2021 to ask the community if they are in favour of reducing the number of Central Coast Councillors from 15 to nine, resulting in a reduction of Wards from five to three.
- 26 April 2021 – The NSW Government announced a public inquiry into Central Coast Council's financial situation and determined the terms of reference. Administrator, Mr Dick Persson AM welcomes the announcement.
- 15 April 2021 – Administrator releases his final report to the community on outlining a number of recommendations to the Minister for Local Government including to take whatever action is necessary to prevent the return of the currently suspended Councillors, and to delay the September 2021 election to allow for a formal inquiry to determine what is needed to achieve the successful merger of the two previous Councils.
- 12 April 2021 – new CEO, Mr David Farmer commences and Mr Rik Hart (Acting CEO) and Mr Malcolm Ryan (interim COO) step down.
- 15 March 2021– public consultation on the Constitutional Referendum for Council concludes with 78 percent of 613 survey participants wanting to reduce the number of Councillors from 15 to 9, and 55 percent of 465 survey participants wanting to abolish Wards and have all Councillors represent the whole Central Coast.
- 9 March 2021 – Council received the 'Clayton Utz Legal and Financial Forensic Review' and noted it will continue to receive a monthly report to a Council meeting detailing the financial position of Council at month end (being the Investment Report) as required under the Local Government Act 1993.
- 3 March 2021 – Mr David Farmer was appointed the new CEO for Central Coast Council.
- 8 February 2021 – Council resolved to apply to IPART for a 15 percent one-off permanent special rate increase.(Opens in a new window)(Opens in a new window) Council adopted the revised Long-Term Financial Plan (General Fund) as well as the Debt Recovery and Hardship Policy for purpose of public exhibition. Find out more about the application, impacts on ordinary rates and answers to frequently asked questions at yourvoiceourcoast.com
- 3 February 2021 – Council resolved to hold a Constitutional Referendum for the reduction of Councillors (from 15 to 9) in conjunction with the September 2021 Local Government Elections. On 1 March, public consultation commenced to understand the views of the community to inform referendum questions which would be delivered at the next Council election.
- 3 February 2021 – The Administrator issued a 3 Month Progress Report(Opens in a new window)(Opens in a new window) providing an update on the current situation and progress to date on the Business Recovery plan, with FAQs for the community.
- 8 January 2021 to 1 February 2021 – formal consultation on the rate rise options was undertaken. The results of the consultation can be found here – Securing Your Future Consultation Report 4 February 2021.(Opens in a new window)(Opens in a new window)
- 14 December 2020 – Council endorsed community consultation for a further rate option on for a one-off Special Variation of 13 percent in 2021-22 to remain permanently in the rate base as well as the two percent rate peg. This further option, to also undergo community consultation, was in response to further work undertaken in forecasting the reduction in service levels to achieve sustainable long-term financial plans and repay restricted reserves.
- 2 December 2020 – a 30 Day Interim Report(Opens in a new window)(Opens in a new window) was issued by the Administrator Dick Persson which sets out preliminary findings and conclusions about how Council found itself in the current financial situation. It states that Council has failed to understand or practise the basics of sound financial management and that the investigation found no evidence of theft or corruption. However there had been unlawful use of restricted funds.
- 30 November 2020 – it was determined that the former CEO Mr Gary Murphy did not meet required standards of his role particularly regarding the core requirement of sound financial management and his contract was terminated. Recruitment of a new CEO is underway with a planned commencement date of early April 2021.
- 26 November 2020 – Council endorsed the making of an application to the Independent Pricing and Regulatory Tribunal for a one-off Special Variation of eight percent in 2021-22 to remain permanently in the rate base for seven years, which plus the two percent rate peg increase in 2021-22 represents a total rate increase of 10 percent for 2021-22. Council further resolved to undertake community consultation on the application.
- October 30 2020 Minister for Local Government, Shelley Hancock MP suspended the Council and appointed an Administrator, Mr Dick Persson AM. Mr Persson is supported by Mr Rik Hart as Acting CEO to oversee Council’s operational recovery. This suspension has been extended until 29 April 2021.
- 26 October 2020 – Council engaged Clayton Utz and Clayton Utz engaged KPMG to undertake a targeted forensic review of a sample fund to gain understanding of Council’s financial accounting practices and adherence to the Office of Local Government Guidelines.
- 16 October 2020 – Natalia Cowley appointed as Chief Financial Officer and the temporary appointment of Malcolm Ryan as Chief Operating Officer on 30 November 2020 to assist with the implementation of structural change in Council.
- October 6 2020 – Council announced it was in a ‘serious financial situation’ and faced an ‘immediate and serious liquidity’ issue.
- The Office of Local Government was advised, there was an immediate review of Council’s budget and a 100-Day Recovery Plan (now Business Recovery Plan) was developed.
Proactive release of Information to be provided under a formal GIPA
Council has proactively released the following information on 9 March 2021.
| No | Date | Description of record | Download Link |
| 1 | 19/11/2020 | Meeting File Note | 1.Meeting File note 19112019.pdf |
| 2 | 20/3/2020 - 1/4/2020 | Email correspondance between Gary Murphy and Craig Norman | 2.Email correspondence between GM and CN |
| 3 | 23/3/2020 | Email correspondance between Gary Murphy and Craig Norman | 3.Email correspondence between GM and CN-23320 |
| 4 | 27/3/2020 | Email correspondance between Craig Norman and a number of people including Gary Murphy | 4.Email correspondence between CN and a number of people including GM 270320.pdf |
| 5 | 20/4/2020 - 21/4/2020 | Email correspondance between Gary Murphy and Craig Norman and forward email from Carlton Oldfield | 5.Email correspondence between GM and CN and forward email from CO.pdf |
Addressing community concerns
We have been listening to our community and have a strong commitment to answer your questions, respond to concerns and provide transparent and timely information.
During community consultation on the special rate variation, we received a lot of feedback and questions, which is addressed below.
Community concerns
Where did the money go?
Council’s rapid financial decline is in part due to several matters:
- The substantial costs in upgrading IT systems and infrastructure [net of $10m Government grant] is $50m, with $8m ongoing.
- The substantial costs of an industrial dispute concerning 38/35 hour week, unified salary scale and other harmonisation costs [$25.3m, with $3.2m on-going].
- The $39m loss of revenue (compared to 2018/19) from the 2019 IPART pricing determination for water, sewerage, stormwater drainage and trade waste services.
- The increased costs and revenue losses brought about by the bushfires, floods and COVID-19 are estimated at $10.5m.
- Increased employee costs – Council did not find savings that often come with amalgamation, Council embarked on a number of expansive initiatives, some with highly paid staff that resulted in employee costs significantly outstripping projected revenue growth. There are around 250 more people (FTE) employed now than at the time of the amalgamation.
- Overspend on capital works program (services and infrastructure) of around $70M a year.
In 2019/20 the Council embarked upon a $242M capital works program and another $224M was earmarked for this financial year. This is substantially more than Council can afford with its income (should be more like $170M) and much of this was delivered through accessing restricted funds.
The Administrator Minute adopted by Council on 14 December 2020 highlights the 1,383 projects delivered with this $242M spend and the benefits it did deliver to the community.
The Mardi to Warnervale Pipeline project was managed effectively in 2019-20 which meant that aspects of the around $50 million project were brought forward and over $14 million was expended on one of the region’s most significant infrastructure projects. This 9km pipeline will boost water supply to the Central Coast’s rapidly growing norther suburbs and will improve water security for the entire region.
Not all the works undertaken were major projects, significant infrastructure renewal and improvement was undertaken through the year. This included the resurfacing of 107km of road, upgrading 82 bus stops to make them accessible, 4.9km of drainage infrastructure and the upgrade of four wharves to improve access and usability. Work was also undertaken on projects that not only maintain essential services but also enhance the amenity of open spaces on the coast. These included works at Adcock Park, EDSACC at Bateau Bay, Heazlett Park in Avoca, Don Small Oval at Tacoma and Koolewong Foreshore on which a combined total of $7.137 million was spent. Over $6 million was spent on the maintenance and renewal of community assets including seven child care centres, 18 library projects, 11 community halls and 18 community centre projects.
A full list of Council approved projects for any financial year is detailed in the Delivery Program and Operational Plan.
Who is responsible for Council’s financial situation and will they be held accountable?
Under the Local Government Act, the CEO is the ‘accountable officer’, with responsibility for financial management. The CEO did not adequately perform key parts of the role and therefore was a major contributor to the financial decline confronting the Council.
The CEO's required performance was not met and as such his position was terminated on 30 November 2020.
The CFO position was vacant at the time of the appointment of the Administrator. Council would like to reiterate, there is no evidence to support claims of theft or corruption.
If the CEO was terminated in his role for inadequate performance why was he provided with a full pay out?
The Administrator terminated the CEO’s contract on 30 November 2020. In confirming the termination the Administrator advised the following:
It is understandable that the community is angry about the ‘full payout’ given to the former Central Coast Council CEO following his termination.
“Given the provisions of the contract and the laws governing employee legal rights, a full payout of 38 weeks was necessary. This was the quickest way to allow the recruitment of a new CEO (usually 3-4 months) and expediate Council’s move toward financial recovery.
The path to remove a CEO for unsatisfactory performance, which would still have seen 13 weeks’ paid out, would have required a performance review to be conducted and the CEO an opportunity to respond. This would have taken at least eight weeks and would have been difficult given the previous Council determined his performance as “meets expectations” in the two previous CEO performance reviews.
The best of bad options was selected for the long term future of Council, it’s ratepayers and staff.”
If the use of restricted funds was ‘unlawful’ why has it not been referred to ICAC?
There is a difference between unlawful and illegal. A breach of the Local Government Act is not a criminal or corrupt act. ICAC deals with matters of fraud, corruption or malpractice. The “unlawful” use of funds would be of great concern to the Minister for Local Government and would be something the NSW Government considers when deciding the future of the council.
Why are the members of the Executive still in their jobs? Weren’t they responsible too?
The authority of the CEO of a Council is near absolute. Individual Directors are not able to challenge the way the CEO runs the organisation.
In the Administrator’s 3 Month Progress Report he confirms he is satisfied that the former CEO did not create a culture or structure whereby the Executive Team were able to discuss the overall Council finances. The Budget process was poorly controlled and there was little leadership from the CEO or CFO (Chief Financial Officer).
Directors often received financial information about their own areas of responsibility when it was too late to act and concerns had been raised during individual meetings with the CEO.
It is the CFO and CEO who present a budget and Operational Plan for endorsement by Council every financial year and the Council adopts that budget and Plan.
Are Councillors responsible for Council’s financial situation?
Council, in their role as the Governing Body, shares responsibility with the CEO for Council finances. Part of their role is to ensure the financial sustainability of the Council and to monitor a general manager’s performance. For further information on the roles and responsibilities of a Councillor read the Office of Local Government NSW Councillor Handbook, 2017.
The role of Councillors in the current financial situation is outline in the Administrator’s 30 Day Interim Report where he states:
“Some members of the elected body have claimed they were denied information by “council officers”. The elected body has ample powers to obtain any financial information they want. Whether they did not know this, or did not know how to do this, they also failed to perform one of their most important responsibilities.
The Minister for Local Government has limited options for dealing with non-performing councils. The only way a council can be dismissed requires the formation of a formal inquiry. These typically take many months, and then the council must be given an opportunity to respond. In Central Coast Council’s case, the Minister formed the view that there was a need to move quickly given the advice from the council that they could not pay their staff. The Minister has used her powers to suspend the council for 3 months and appoint an Interim Administrator. This measure was able to be put into effect quickly. Under this power the Minister can extend the suspension for a further 3 months, which has occurred recently following the Administrator’s recommendation.”
Subsequently, The NSW Government announced a public inquiry into Central Coast Council's financial situation (26 April 2021) and Rik Hart commenced as Administrator of Central Coast Council (13 May 2021).
Why is a rate rise necessary? Ratepayers should not have to pay for Council’s financial mismanagement?
Council continues to have a serious financial situation.
Council has already commenced a number of measures to manage costs and increase income to address the situation and long-term financial sustainability. These include significant staff reductions ($31M), restrictions on spending ($22M), and the proposed sale of assets ($60M). The spend on infrastructure has also been reduced from $225M to $170M annually. These steps achieve 70% of the $76M annual savings target needed to action the financial recovery. The remaining 30% ($23M excluding rate peg) will need to come from additional income to pay back the restricted funds unlawfully accessed. This income target can only be achieved with a 15% rate peg.
The primary purpose of the Special Variation application is to deliver financial sustainability by reimbursing the unlawfully accessed restricted funds that have been spent on projects and infrastructure brought forward over the past two years, delivering significant benefits to the community. Council have a legal obligation to reimburse the restricted funds.
Council’s revised Long-Term Financial Plan shows that with a 15% variation, Council will be able to repay approximately $100M of the externally restricted funds within 10 years, with the remainder being reimbursed from asset sales and internal restriction write-offs. Council’s revised Long-Term Financial Plan shows that with a one-off 10% variation remaining permanently in the rate base for seven years, Council will be unable to repay the externally restricted funds and will return to a deficit budget in 2026-27. There is a very real risk that should Council not obtain a 15% increase it will impact the status of the bank loans with a potential early call on these loans. A rate increase is the final option being considered as part of Council’s financial recovery. Council has obtained loans, reduced spending and cut staff. Without a rate rise of 15% Council may find itself again in a dire financial situation.
The Coast is already a mess and I don’t get any services now so why should I pay more?
Council has had to take significant steps towards financial recovery, which has included a review of service levels including reduction in staff resources across the whole organisation. Council remains committed to continuing the delivery of essential services for the community.
Council has prioritised mowing work in order of; safety (roadsides), playability (sportsgrounds), usability (parks/playgrounds) and amenity (sports surrounds, reserves, roadsides and centre medians).
Council has prioritised its general funded Road and Drainage Capital Works Program in line with its Business Recovery Plan. All works were prioritised based on current stage of completion, as well as public safety and risk. From there, determinations were made regarding which projects were able to be deferred for completion at a later date when funding resources become available. Council also continues to prioritise Water and Sewer works in a similar way.
Council delivers many free services for the community, and for every rates payment it receives Council invests it back into:
- Roads, footpaths and shared pathways
- Sport, recreation and community facilities
- Waterways and natural environment
- People, arts and culture and leisure
- Libraries and learning
- Planning, building, health and economic development
Council now has an improved online customer service centre for the community, which provides more self-service options when lodging a request. It can also assist customers to find information and tips on how to resolve their issue quickly and easily. Users can submit customer service enquiries, provide feedback or report any issues that you would like Council to action. Once registered, users can also track and view any updates to their service requests.
Council has overspent on programs in both capital works and general operations, which has actually seen more infrastructure built for the community and more services delivered. Council embarked upon a $242m capital works program which is $69m more than the average capital spend over the previous two financial years, based on the incorrect assumption the capital works program could be paid for from Restricted Reserves. A number of these projects exceeded their budget – for example the Water Fund exceeded its capital budget allocation for 2019/20 financial year by $12m, while the Sewer Fund exceeded by $2.6m and Drainage Fund exceeded by $1.2m.
What if I don’t pay my rates or can’t pay my rates? What will Council do?
Council understands that a rate rise will hit sections of the community harder than others. Council provides rebates and hardship assistance for those having trouble paying their rates and encourage the community to refer to Council's Debt Recovery and Hardship Policy which includes pensioner rebates as well as personalised payment plans. This Policy is currently on public exhibition and the community are encouraged to have their say.
Under the Policy, Council is committed to engaging with our customers to limit the unreasonable use of legal action in recovering any arrears in rates and look at each individual case of genuine financial hardship. Council is required to conform with regulations 133 and 213 of the Local Government Act which deals with procedures for the sale of land to recover overdue rates and charges and writing off debts to Council. Where any rate or charge is overdue and remains unpaid for more than 1 year in respect to vacant land or 5 years in respect to any other land, from the date it became payable, Council may proceed to sell the land, as a last resort. Under the Policy, Council will not reduce rates or annual charges, but will consider alternative available approaches to dealing with cases of financial hardship.
What assurance are there that finances will be managed effectively in the future, so this won’t happen again?
This is addressed in the Administrator’s Progress Report where he states "Acting CEO Rik Hart, along with our new CFO, Natalia Cowley, and our new Chief Operating Officer, Mr Ryan, are well advanced with the development of new financial reporting systems which will play a major role in ensuring this does not occur again. They will provide the community with online access to Council's financial position at the end of each month. This information will show how well council is adhering to its budget and how the cash reserves are being used.
The Administrator will be recommending that Mr Hart then be appointed by the Minister as Financial Controller once the new CEO takes office. A Financial Controller has powers that override the Councillors (should they return) regarding all financial matters."
Council Asset Sales
Updated 5 May 2021
Council is continuing on the path to financial recovery and sustainability with further actions implemented from the adopted Business Recovery Plan.
Part of the significant steps being undertaken include the sale of Council assets which are underperforming or surplus to Council’s current and future needs. This process is crucial to deliver a much-needed boost to Council’s financial position and provide confidence to our lenders that Council operations can continue sustainably, and loans serviced.
The review and sale of Council assets will be an ongoing process, undertaken in a strategic and well-considered manner for both the immediate and future prosperity of the coast.
The properties will be sold through a competitive sales and marketing campaign to achieve the best sale’s price for no less than the market value.
Tranche 1
Council resolved 30 November 2020 to progress with the sale of the following assets:
- 1A Lucca Road, Wyong.
- Warner Industrial Park (located at 671, 689, 701, 725 (3), 749, 781, 791, 811 Hue Hue Road & 225 Sparks Rd, Jiliby)
- Spring Creek Business Park, Doyalson (four lots)
- 49-75 Mann St & 126 Georgiana Terrace, Gosford (8 x lots Council Buildings)
- 15-23 Hely Street (five lots, known as Oasis Site), Wyong
- 140 Sparks Road, Warnervale.*
- 4 & 10 Warren Road, Warnervale (two lots known as former Chappie Pie). *
*withdrawn from asset sales – further information below in status.
Tranche 1 status:
As of 5 May 2021, the following represents the status of these properties:
- Valuations have been received against all of the properties in Tranche 1
- Real estate agents have been appointed: Knight Frank are managing the sale of 1A Lucca Road, Wyong and Spring Creek Business Park, Doyalson;
- Savills are managing the sale of Warner Industrial Park
- CBRE are managing the sale of 49-75 Mann St & 126 Georgiana Terrace, Gosford.
- Contracts are currently being prepared
- To date there has been a high level of interest in these properties.
- Discussions are also being held with Government agencies who may purchase sites of strategic interest directly from Council.
- 15-23 Hely Street (five lots, known as Oasis Site), Wyong. A recommendation for a direct sale to the Salvation Army was proposed in a Council report on 27 April 2021. However, Council resolved to include this property in the 21-day community consultation process.
- 140 Sparks Road, Warnervale. Council resolved on 13 April 2021 to remove this site to allow for the development of a draft Central Coast Airport plan.
- 4 & 10 Warren Road, Warnervale (two lots known as former Chappie Pie). Council resolved on 13 April 2021 to remove this site to allow for the development of a draft Central Coast Airport plan.
Tranche 2
A group of 16 properties were resolved to be sold previously by the former Wyong Council so a further resolution is not required. The majority of the sites are vacant, free of trees and are residential lots, a few have existing residential dwellings which are not currently leased.
As of 5 May 2021, the following represents the status of these properties:
- Real Estate agent has been appointed with contracts exchanged on 7 of the properties, and 1 withdrawn from sale
- There are a further 8 properties which are being prepared for sale and will go to market shortly.
- Valuations have been received on these properties:
- 6A Brennon Rd, Gorokan- sold awaiting settlement
- 7 Dalnott Rd, Gorokan- withdrawn from sale
- 18W Dunvegan St, Mannering Park sold awaiting settlement
- 6 Wyndora Ave, San Remo sold awaiting settlement
- 44 Springall Ave, Wyongah sold awaiting settlement
- 2 Budgewoi Rd, Noraville sold awaiting settlement
- 165 Main Rd, Toukley sold awaiting settlement
- 9 Thompson St, Long Jetty sold awaiting settlement
The below sites require easements and other restrictions placed on title prior to be put on market for sale, these works are underway.
- 32 Murrumbong Rd, Summerland Point (Lot 331 DP214998)
- 43A Ulana Ave, Halekulani (Lot 2 DP218406)
- 9A Greenwood Ave, Berkeley Vale (Lot 19 DP262327)
- 5 Sunnyhills Tce, Berkeley Vale (Lot 12 DP730803)
- 2W Stornaway Cr, Berkeley Vale (Lot 17 DP262327)
- 24 Kauri Court, Ourimbah (Lot 68 DP793613)
- 13A Bellwood Cl, Tuggerah (Lot 3042 DP852260)
- 10A Cynthia St, Bateau Bay (Lot 900 DP786123)
Tranche 3
Council resolved 27 April 2021 to seek community feedback about the next stage (Tranche 3) of the asset sales program.
Properties that have been identified in this next stage for sale have been grouped into categories due to the different legislative and disposal processes involved. These groupings of the properties are:
- Operational classified and appropriately zoned land;
- Operational classified land which requires rezoning;
- Land parcels where Council is seeking reclassification from community to operational land, and requiring Council to prepare a planning proposal to rezone the land prior to sale;
- Land parcels where Council is seeking reclassification from community to operational prior to sale.
Our community is invited to view the frequently asked questions, find out more by viewing our interactive map and submit feedback by completing the online feedback form.
Consultation was open from Friday 30 April to Friday 28 May 2021.
Visit Your Voice Our Coast for more information.
Further asset sale information
Further asset sale information
Why is Council selling assets?
The sale of Council assets is crucial to deliver much needed capital to improve Council’s financial position, provide assurance to our lenders and to support the ongoing sustainability of Council and the services we provide to the community.
Where are the properties located?
Properties are located across the Coast in various locations.
How do you decide what to sell?
Property being considered for sale is assessed against Council’s Community Strategic Plan, strategic planning issues as well as whether the property could be better utilised or its potential better realised by the private sector. For instance, some of the asset sales are also expected to provide additional benefits for our region and the community, such as local jobs and a boost to the economy, due to the planned land use and zoning. Due diligence and a sound strategic approach have been undertaken in the asset sale program to ensure the best short and longer term outcomes are achieved for Council, the region and the community.
How much land is Council selling overall?
Council manages approximately 7,000 parcels of land; noting though, that any one park or reserve could be made up of several individual land parcels. However, it must be stressed that Council is only considering selling 1% of its property portfolio.
What is the process for selling the sites? Does each sale have to come back to Council to be endorsed?
Once Council has resolved to sell any property, the Chief Executive Officer (CEO) is authorised to finalise the terms of the sale in accordance with the Land Transaction Policy adopted by Council. The properties will either require an independent valuation or to be sold for not less than Council previously paid for the sites. The properties will be listed with agents and competitively marketed for the highest market price. The terms of the sales do not need any further Council resolution as long as they sell for more than the independent valuation or sell for more than Council previously paid for the sites.
Is the process independent?
The evaluation process has included the review of proposed sites against Council resolutions and historical records; ensuring that Council retains ownership of land that is needed for its current and future service delivery, that any sale would not contravene legislative requirements, consultation with internal and external stakeholders affected by the disposal of these assets, and consultation and discussion with the an independent Property Advisory Committee.
What is an independent Property Advisory Committee and their function in the process?
Council has engaged with independent property development experts Michael Filo and Steve Rowe to execute the functions of the independent Property Advisory Committee. Their function is to provide an independent panel to review asset sales program prior to going to Council, review and advise on conditional sales for commercial and industrial sales and to review opportunities and advise Council on potential highest and best use analysis to ensure Council is receiving value for the sale. They have also ensured that adequate probity measures around any direct sale are considered in evaluating the terms of the sale.
How is the value of the properties being determined?
Properties are either being sold through a competitive sales and marketing campaign to ensure the best sale price or in the case of direct sales with a proposed buyer, properties are sold for no less than the market value, which will determined by an independent valuer.
How much does Council expect to get from these asset sales?
These properties have been identified as they are likely to attract interest and a positive financial return for Council. While it is hard to estimate final sale’s price on the complete tranche at this time, Council will only be selling for market value and with that expectation it is expected to improve Council’s financial position by at least $50M.
Does Council own land like any other person or private entity?
Central Coast Council is responsible for the care, control and management of land and facilities for a variety of purposes relevant to the current and future needs of the community it serves. Much of this land Council manages on behalf of the NSW Government (Crown Lands) for the benefit of the Central Coast community. The majority of Council’s land holdings are classified as community land, including our beaches, parks and reserves. Council is also responsible for operational classified land which includes its administration buildings, depots, and commercial holdings. How Council land is acquired and classified is undertaken pursuant to the Local Government Act 1993 and other relevant land legislation.
What would be the process for Council to sell any of its land?
In undertaking this review of surplus land, Central Coast Council will take into consideration the social, environmental and operational purposes for which Council held this land and which land needs to be retained for the exercise of the functions of Council.
As part of this review process for each nominated group of properties, Council also:
- undertakes a review of the sites against Council resolutions and historical records
- ensures the retention of ownership of land that is needed for its current and future service delivery
- ensures that any sale would not contravene legislative requirements, such as land that had been dedicated to Council
- consults with internal and external stakeholders affected by the sale of the assets.
The properties that progress to be sold are ones that are not serving the community any purpose in their current use but will provide an enormous benefit by helping Council to gain a better financial position.
Any land assessed as being surplus to Council’s needs requires a Council resolution to approve the sale. Noting that some properties have already undertaken this process, as was the case with the former Wyong Shire LGA properties in Tranche 2 sale listings.
Prior to going to Council the Independent Advisory Group reviews the asset sales program.
Once a resolution has been made, Council would then go through a competitive sales process in an open market tender to achieve the best possible return on any transaction.
What happens if no one wants to buy some or all the sites and we waste more money trying to sell them?
The majority of the costs associated with the sale of commercial land is payable upon settlement, so the risk for additional costs in this process is negligible. Council is already receiving strong inquiry from the private sector and is confident of a positive outcome with a lot of these sites put forward for sale.
With the proposed sale of all lands associated with the Cultural Precinct proposal does this mean that Council has now abandoned any plans for a Regional Performing Arts Centre in Gosford?
On 25 September 2019 Council resolved to withdraw from any further work on the Gosford Cultural Precinct and proceed with a stand-alone Regional Library. Council is reviewing plans for a Regional Performing Arts Centre (RPACC). The sale of the lands in the Gosford CBD does not mean that the RPACC will not proceed, but rather that the RPACC will not be developed on any of the land previously identified for the Cultural Precinct. Other locations will now need to be considered.
Is the Regional Library going ahead?
Yes the Regional Library is going ahead. No properties identified in the land sale are associated with that project. Find out more information on the Regional Library.
Council is proposing to sell land that contains demountable rooms which the Conservatorium currently lease from Council.
Is the Gosford Administration Building heritage listed? Will it need to be protected?
The Gosford Administration Building has a local heritage listing. The heritage listing would need to be considered as part of any future development proposal on the site.
What does the sale of the Gosford Administration Building mean for Council staff and the community? Will Council have a presence in Gosford after this sale?
The Gosford Regional Library is proceeding and it has always been part of the plans to relocate Council’s Customer Service to the new Library. So the community will be able to access Council services at the Regional Library when it is complete. In relation to staff, the sale has been considered due to the 95% reduction in occupancy rates from pre-COVID levels attributed to remote and flexible working arrangements. The yet to be adopted draft Accommodation Strategy, also considered the sale of the Gosford Administration building due to these reduced occupancy rates as well as the forecast that post-COVID occupancy may be reduced to 50% of pre-COVID levels.
Restricted funds
What are the different types of assets held by Councils?
As trustees of public monies, NSW local Councils are regulated on the ways in which they can invest and use their funds, as well as how they report their finances. This is governed by the Local Government Code of Accounting Practice and Financial Reporting and Local Government Act 1993.
Not all funds can be used for day to day operations. Certain types of funds, known as restricted assets or funds, can only be used by Councils for specific purposes.
Funds that are held by local Councils in NSW fall into three categories:
- internal restricted assets,
- external restricted assets and
- unrestricted assets.
The category that funds or assets fall into will determine how they can be used by a Council.
What are restricted assets?
Restricted assets refer to funds that are kept restricted as they are either subject to some form of external legal or contractual obligation or are kept to cover Council commitments that are expected to arise in the future. This means that they cannot be used for general purpose.
Restricted assets may have conditions attached to them, meaning that Councils can only use those assets for a specific purpose.
There are two types of restricted assets - internal restricted assets and external restricted assets.
External restricted assets
External restricted assets are assets affected by legislation or other external requirements, such as contracts.
External restricted assets can include:
- Specific purpose grants
- Development contributions
- Water Supply Fund
- Sewerage Fund
- Domestic Waste Management
- Stormwater Funds
Internal restricted assets
Internal restricted assets are assets which have been restricted for a specific purpose by a resolution of Council.
Internal restricted assets can include but is not limited to:
- Employee leave entitlements
- Plant replacement reserve
- Carry over works for uncompleted projects
- Building and infrastructure reserves
- Bonds and retentions
- Gravel pit and rubbish tip restoration reserves
What are unrestricted assets?
Unrestricted assets are all other assets held by Council. These are funds that Councils can use at their discretion in order to meet daily business liquidity requirements.
Councils are expected to have a suitable quantity of cash on hand to operate efficiently by covering non-budgeted expenditure and short-term cash flow requirements to fund capital works projects.
To meet operational needs, Councils with low unrestricted funds may need to:
- borrow funds
- seek approval to use externally restricted funds
- look at ways to reduce expenditure or seek revenue from other sources.
Can a Council use restricted assets for purposes outside the prescribed purpose?
If a Council would like to use external restricted assets for a reason other than their prescribed purpose, the Council must seek approval from the Minister for Local Government. This is a requirement under the Local Government Act 1993.
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