Business Plan For a proposed Major Land Transaction

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1 Page 1 of 7 Business Plan For a proposed Major Land Transaction Portion of Lot 9000,(99) Johnston St, Boulder

2 Page 2 of 7 1. Introduction The Local Government Act 1995 (the Act), and accompanying legislation places great emphasis upon the accountability of local government. Section 3.59 of the Act requires local governments that enter into a major land transaction either by means of disposal of land by lease or sale to prepare a business plan. The business plan is to include an overall assessment of the major land transaction and is to include details of (a) its expected effect on the provision of facilities and services by the local government; (b) its expected effect on other persons providing facilities and services in the district; (c) its expected financial effect on the local government; (d) its expected effect on matters referred to in the local government s current plan for the future; and (e) the ability of the local government to manage the undertaking or the performance of the transaction. The local government is to (a) give Statewide public notice stating that (i) the local government proposes to commence the major land transaction described in the notice or into a land transaction that is preparatory to that major land transaction; (ii) a copy of the business plan may be inspected or obtained at any place specified in the notice; and (iii) submissions about the proposed undertaking or transaction may be made to the local government before a day to be specified in the notice, being a day that is not less than 6 weeks after the notice is given; and (b) make a copy of the business plan available for public inspection in accordance with the notice. After the last day for submissions, the local government is to consider any submissions made and may decide to proceed as proposed or so that it is not significantly different from what was proposed. This Business Plan addresses the proposal to develop a workers accommodation village within the current area of land described as portion of Lot 9000, facing Gateacre Drive on Deposited Plan 32844, portion hectares vacant land and is designed to ensure the City of Kalgoorlie Boulder adequately addresses these requirements.

3 Page 3 of 7 2. Background Council has requested that a Business Plan be prepared which deals with the proposed development of part Lot At an Ordinary Council meeting held on 28 October 2013, Council resolved as follows:- That Council advertise for EOI for the development of Lot 9000 (99) Johnston Street for use as a workers accommodation village, with the EOI to address the commercial aspects of the proposal (Lease or purchase of the site), size of the village, amenity and design, interface with adjoining properties, traffic flows and long term possible use if it was not used as a workers village. The EOI was advertised on 20 November 2013 and closed on 5 December 2013, one EOI was received from Ausco Modular Pty Ltd. The EOI was tabled at an Ordinary Council meeting held on 16 December, Council resolved the following:- That Council:- 1. Accept the Expression of Interest (EOI) from Ausco Modular Pty Ltd and appoint them as the preferred tenderer and request a formal Tender process to commence. 2. Prepare a for this site based on this EOI. As per Council s resolution, Ausco was invited to tender on 9 April 2014 with tenders closing on 8 May. A formal tender has now been received from Ausco. 3. Land Description Portion of Lot 9000 (99) Johnston Street, facing Gatacre Drvie, on Deposited Plan 32844, portion hectares vacant land. Freehold land. 4. Zoning Currently Parks and Recreation, Item going to Council on 26 May 2014 to change Zoning to Tourism.

4 Page 4 of 7 5. Proposal Ausco Modular Pty Ltd, have proposed the following:- Area of Land:- 35,000m2 being the selected portion of the western part of Lot 9000 Johnston St Option to Lease $36,000 (maximum), payable at $1,000 per month for the Option Term of three (3) years Option Commencement 1 July 2014 Lease Term Option Terms Annual Rent Rent Reviews Lease Commencement 5 years 2 x 5 years 6.00/m2, $210,000 per annum Market reviews at exercise of Option/s Annual CPI reviews during the lease term & any extended period Full annual rental to commence upon completion of the first stage of the development.

5 Page 5 of 7 6. Analysis of Proposal The total land area in relation to the proposal is approx $35,000m2, being the selected portion of Lot 9000 Johnston Street. The Valuation Report has valued the market rental of the vacant land at $210,000pa. This shows $6/m2/pa and is exclusive of GST and outgoings. Potential profit margin for developing the residential portion Revenue Option to lease for the first 3 years $ 36,000 Rental for 15 years $ 3,150,000 CPI Increases over 15 year rental (based on 3%) $ 117, Recommendation for Revenue 8. Issues It is recommended that all revenue derived from the lease of Lot 9000 Johnston Street be transferred into a Reserve Fund for future Asset maintenance and renewal. The Local Government Act indicates those matters the Council should concern itself about in relation to services and facilities. What is the expected effect of the proposal on the provision of services and facilities provided by the City? The proposal will not have any effect on the provision of services and facilities by the City. What is the expected effect of the proposal on other persons providing services and facilities in the City? If the development goes ahead after Ausco have carried out all their due diligence, the accommodation village will be in direct completion with other accommodation providers within the City. The accommodation village would also increase business for the local IGA. What is the expected financial effect on the City? A financial analysis has been included within this business plan.

6 Page 6 of 7 Has the City the ability to manage the services and facilities? The City will not be required to manage any services or facilities in relation to this proposal. 9. Risk Analysis Generates up front income from Option to lease term for a period of 3 years Generates annual rent up to 15 years if the lease is entered into and options are taken up After the lease has ceased, Ausco will relocate the accommodation village and leave all services in place and capped. Council retains planning controls. The financial analysis, based on an independent valuation report, indicates that the proposal will provide a financial benefit to the City. 10. Performance Measures The following performance measures have been identified and need to be completed for the proposal to be successfully completed: Commercial Component Lease/ Contract drawn up as per the successful tender and Council s resolution

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