MITCHELL SHIRE COUNCIL

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1 ORDINARY COUNCIL MEETING AGENDA 28 JULY 2014 ASSET DISPOSAL POLICY (CONT.) MITCHELL SHIRE COUNCIL Council Meeting Attachment ENGINEERING AND INFRASTRUCTURE 28 JULY ASSET DISPOSAL POLICY Attachment No: 1 Asset Disposal Policy.pdf MITCHELL SHIRE COUNCIL Page 182

2 Asset Disposal Policy Policy Owner Manager Parks & Assets Engineering and Infrastructure Creation Date 14/07/2014 Effective Date (date adopted) Revision Date Review Date April 2018 Availability Staff Organisation Wide Public Internet (Website) Intranet (InfoExchange) Please check Council s Intranet to ensure this is the latest Revision

3 Table of Contents 1. INTRODUCTION PURPOSE SCOPE RELATED DOCUMENTS POLICY PRINCIPLES DEFINITIONS CONSIDERATIONS PRIOR TO DECISION TO DISPOSE DISPOSAL METHODS CONSULTATION DELEGATIONS SALE OF LAND AND PROPERTY PREPARING ASSETS FOR DISPOSAL/SALE BUYER S RISK TIFYING DISPOSAL OF ASSETS RECORDS EXEMPTIONS FROM THIS POLICY POLICY IMPLEMENTATION ASSET TYPES, RESPONSIBLE MANAGER AND ASSET REGISTER MATRIX Flow Chart Attachment Asset Disposal Policy 14 Mar 14 2

4 1. INTRODUCTION This policy gives direction for the decommissioning and disposal of Council owned assets. It covers Council s requirements and obligations in the disposal process and will inform the Asset Manager of their responsibilities in the disposal process. The Asset Manager is defined as the Manager responsible for the asset. 1.2 This policy: Defines the methods by which assets are disposed of; Demonstrates Council s accountability and responsibility to ratepayers; Seeks to be fair and equitable to all parties involved; Enables all processes to be monitored and recorded; Seeks to ensure probity, accountability and transparency in all disposal processes; Seeks to ensure that the best outcome is achieved for Council; and Applies to all Council officers and Councillors. 2. PURPOSE To provide a systematic, transparent and accountable method for the disposal of Council owned assets in accordance with Council s Code of Conduct, Council Polices and all appropriate legislation and accounting standards. 3. SCOPE This policy covers assets which are registered on either the financial or assets registers. It is incumbent on the Officer arranging the disposal to identify which register the asset has been lodged. This policy excludes: Disposal of goods which are not owned by the Council, such as abandoned vehicles; and Disposal via sale of any item that poses a threat of physical or environmental harm. Asset Disposal Policy 14 Mar 14 3

5 4. RELATED DOCUMENTS Mitchell Shire Code of Conduct; Local Government Act 1989; Motor Vehicle Policy; Mitchell Shire Tendering Policy; Community Engagement Policy; Utilisation of Funds from Sale of Council Property; Disposal of Council Land Procedure; and Relevant Australian Accounting Board Standards (AASB). 5. POLICY PRINCIPLES Council must have regard to the following principles in its disposal of assets: Open and effective competition Obtaining best value in the management of public money. This is not restricted to price alone. An assessment of value for money must include consideration of (where applicable): o The contribution to Council s long term financial plan and strategic management plans; o Any relevant direct and indirect benefits to Council, both tangible and intangible; o Efficiency and effectiveness; o The costs of various disposal methods; o Internal administration costs; o Risk exposure; and o Value of any associated environmental benefits. Council is to behave with impartiality, fairness, independence, openness and integrity in all discussions and negotiations. Asset Disposal Policy 14 Mar 14 4

6 6. DEFINITIONS In this Policy, unless the contrary intention appears, these words have the following meanings: Asset means any physical item that the Council owns and that has at any time been treated pursuant to the Australian Accounting Standards as an asset, and includes Major Plant and Equipment and Minor Plant and Equipment. It does not include financial investments or finance related activities. Major Plant and Equipment includes all major machinery and equipment owned by the Council. It includes all trucks, graders, other operating machinery and major plant items. Major plant and equipment is denoted as $1,001 or greater. Minor Plant and Equipment includes all minor plant and equipment owned by Council. It includes all loose tools, store items, second hand items removed from Major Plant and Equipment. Minor plant and equipment is denoted as $1,000 or less. Motor Vehicles are vehicles where their primary use is to transport people or goods. Land refers to freehold land owned by Council. Buildings refers to buildings on freehold land owned by Council. 7. CONSIDERATIONS PRIOR TO DECISION TO DISPOSE Before any asset is disposed of, the relevant Asset Manager should ensure that disposal is appropriate and must consider (where applicable) the following: the usefulness of the asset; the current market value of the asset; the annual cost of maintenance; any alternative use of the asset; any duplication of the asset or the service provided by the asset; any impact the disposal of the asset may have on the community; any cultural or historical significance of the asset; the positive and negative impacts the disposal of the asset may have on Council s operations; Council s long term plans and strategic direction; the remaining useful life of an asset; Asset Disposal Policy 14 Mar 14 5

7 compliance with Mitchell Shire Tendering policy where applicable; donating or gifting of assets should be considered only when redeployment or the financial realisation of the asset has been considered; donation of low financial value items to community groups/charities is permitted with Executive Leadership Team (ELT) approval; a benefit and risk analysis of the proposed disposal; the results of any community consultation; any restrictions on the proposed disposal; any other relevant Council policies including: any associated Service Level Policies; and Internal Financial Controls and Prudential Management. 8. DISPOSAL METHODS Council officers will, where appropriate, dispose of assets through one of the following methods: Trade-in trading in equipment to suppliers; Expressions of interest seeking expressions of interest from buyers; Open tender openly seeking bids through tenders; Public auction advertisement for auction through the local paper and, where appropriate, a paper circulating in the State, or procuring the services of an auctioneer (following compliance with Council s Procurement Policy). Destroy and dump Sale via Mitchell Shire Transfer Station Tip Shop or library books via libraries. Charity/Gifting Donation of Council owned assets to a non-profit organisation. The disposal of assets will be the responsibility of the Asset Manager responsible for those assets (refer Disposal Flow Chart Attachment 1). Councils Parks and Assets Department will be responsible for developing asset disposal procedures for each of the above disposal methods. This will be undertaken in conjunction with other departments as appropriate. Asset Disposal Policy 14 Mar 14 6

8 Selection of a suitable method will include consideration of (where appropriate): The public demand and interest in the asset; The method most likely to return the highest revenue; The value of the asset and whether it is Major Plant and Equipment or Minor Plant and Equipment; The costs of the disposal method compared to the expected returns; and Compliance with statutory and other obligations. Elected Members and Council employees will not be permitted to purchase assets unless the purchase is via one of the following: Open tender process or; Public auction, the highest bid should be taken or alternately; Purchase may be via the Tip Shop at the advertised price. Purchasers or donation/charity recipients of assets must be required to agree in writing that before purchasing or receipt of any asset that no warranty is given or implied by the Council in respect of the suitability and condition of the asset for the purchaser or recipient and that Council will not be responsible for the asset in any respect following the sale. Donations of surplus or redundant assets may only be made with the authority of the Executive Leadership Team (ELT) or a Council resolution (refer Section 10 responsibility and authorisation matrix) and only after exploring all avenues for recouping a fair value for the Council or any alternate use within Council. Council staff should only consider donations in response to a formal written submission. In considering any request, officers should keep in mind the following: Community groups should receive equitable treatment to avoid possible claims of bias; A check should be made to ensure the group is not a disguised business operation providing funds or remuneration to the principals; A check should be made to ensure the group is non-profit and that the intended use of the asset is non-commercial (i.e. non-profit); Where the donation is seen as appropriate but there is a potential claim of bias, the matter should be referred to the Director of the Asset Manager; and The charity/community group must remove the asset themselves and at no cost to the Council. Asset Disposal Policy 14 Mar 14 7

9 9. CONSULTATION Council must undertake public consultation in respect of its proposed disposals in accordance with the Local Government Act 1989 (Land) and its Community Engagement Policy at all times. 10. DELEGATIONS Authority to dispose of Council owned assets is as follows: Manager (Asset Manager) Director CEO / Council RESPONSIBILITY AND AUTHORISATION MATRIX Disposal Type $1-1,000 $1-20,000 Public Auction Tender Trade-in Destroy and Dump Sale via Transfer Station Tip Shop / Libraries Charity/Gifting ELT Asset Managers Asset Managers Asset Managers Not Permitted ELT $20, ,000 Asset Manager s Director $100,000> CEO/Council Resolution Not Permitted Not Permitted Council Resolution Council Resolution 11. SALE OF LAND AND PROPERTY Sale of land and property (including structures) is to be by Council report seeking authority by Council resolution under the Disposal of Council Land Procedure. The Local Government Act 1989 s189 outlines Council s obligations. Asset Disposal Policy 14 Mar 14 8

10 12. PREPARING ASSETS FOR DISPOSAL/SALE A check must be carried out to ensure assets do not contain: Additional items not intended for sale; Confidential documents (records, files, papers); Documents on Council letterhead or which may be used for fraudulent purposes; Hard drives which have contained council operated software (which could lead to a breach of licenses or contain confidential data) are to be physically destroyed; and Hazardous materials. As much as is practical, any Mitchell Shire Council identifying mark or logo should be removed or obliterated prior to disposal. Spare parts held for a particular item should be disposed of in one parcel with the asset. 13. BUYER S RISK Irrespective of the disposal method applied, all prospective buyers must be advised in writing that items are disposed of, with any faults, at the buyer s risk ( as is where is ). Buyers are to rely on their own investigations regarding the condition and function of the items and Council will not be responsible for any repairs or maintenance of the asset. 14. TIFYING DISPOSAL OF ASSETS Following the disposal of an asset, it is the responsibility of the relevant Asset Manager, or their delegate, to notify the Manager Finance or the Manager Parks and Assets of the disposal to ensure the Financial or Infrastructure Asset Registers are updated within three working days of the disposal. Council currently maintains two asset registers: the Financial Asset Register and the Council Asset Register. The Financial Asset Register is maintained by Council s Finance Department and contains fleet, plant and equipment, and land, along with the smaller value assets associated with service delivery such as library books, tables, chairs, gym equipment, computer system etc. The Council Asset Register contains Council s infrastructure assets, and is maintained by the Parks and Assets Department. These assets are the more tangible assets required to deliver Council services which include buildings, footpaths, play equipment etc. These registers need to be maintained in an up to date manner to reflect Council s asset holdings and financial status. This is required by the Australian Accounting Standards Board (AASB) and the Victorian Auditor General Office. Asset Disposal Policy 14 Mar 14 9

11 15. RECORDS Council must record reasons for utilising a specific disposal method and where it uses a disposal method other than a tendering process. 16. EXEMPTIONS FROM THIS POLICY This Policy contains general guidelines to be followed by Council in its disposal activities. There may be emergencies, or disposals in which a tender process will not necessarily deliver best outcome for Council, and other market approaches may be more appropriate. In certain circumstances where an approved disposal method is not required to go to Council, Council officers may, after approval from the Chief Executive Officer (CEO), waive application of this Policy and pursue a method which will deliver a better outcome for Council. When seeking exemption, Officers must prepare a written business case that clearly records the reasons for seeking exemption from this policy and submit to the CEO for approval. This justification will then be recorded. 17. POLICY IMPLEMENTATION The policy will be implemented and reviewed every four years by the Manager Parks and Assets. This policy will be communicated to key internal stakeholders with service provision responsibilities. 18. ASSET TYPES, RESPONSIBLE MANAGER AND ASSET REGISTER MATRIX ASSET TYPE ASSET REGISTER ASSET MANAGER Road Infrastructure Assets Register Manager Engineering Services Drainage Infrastructure Assets Register Manager Engineering Services Bridge Infrastructure Assets Register Manager Engineering Services Buildings Assets Register Manager Operations Desks/Office Furniture Financial Register Manager Operations IT Equipment Financial Register Manager Business Transformation Fleet, Plant & Equipment Financial Register Manager Operations Open Space Infrastructure Assets Register Asset Disposal Policy 14 Mar 14 10

12 Recreational Infrastructure Gym Equipment Sporting Equipment Library Books Arts (Paintings, Statues etc. in and outdoors). Culture & Heritage items (Photos, Documents & Furniture of Culture or Heritage significance) Assets Register Financial Register Financial Register Financial Register Financial Register Financial Register Asset Disposal Policy 14 Mar 14 11

13 Attachment 1 ASSET DISPOSAL FLOWCHART Does the asset still provide a service? Determine disposal method Can the asset be redeployed within MSC? Is the asset to be gifted? ELT authorisation Transfer ownership to new Service Manager Is the asset to be auctioned? Is the asset to sold by tender? Advise caveat emptor Is the asset to be sold in the tip shop? Asset to be destroyed Remove all references and insignias Advise Finance Manager or P&A Manager Update Asset Registers Asset Disposal Policy 14 Mar 14 12