HOSPITALITY DEVELOPMENT AT WEMBLEY GOLF COURSE BUSINESS PLAN FOR MAJOR LAND TRANSACTION

HOSPITALITY DEVELOPMENT AT WEMBLEY GOLF COURSE BUSINESS PLAN FOR MAJOR LAND TRANSACTION

1. Background The Town of Cambridge proposes to undertake further development of Wembley Golf Course with improved hospitality offerings and leisure facilities to match recent investments in improved pro-shop & course facilities and "The Swing" driving range. As part of this project, a purpose built facility comprising function rooms, restaurant, bar, change rooms and toilets and 'back of house' storage, office and loading dock will be leased to a Hospitality Provider. The facility will also include commercial office space to be leased to tenants. Council cannot undertake any agreement regarding this proposed lease until the requirements of Section 3.59 of the Local Government Act 1995 (the Act) are complied with. This Business Plan will outline how this agreement with the Lessees will be undertaken and to seek comment from the community in relation to this major land transaction undertaking in accordance with Section 3.59 of the Act. Appendix 1 details outline plans of the project area and artist's impressions of the buildings proposed. 2. Legislative Requirements This Business Plan complies with the requirements of Section 3.59 "Commercial Enterprises by Local Government" in relation to Major Land Transaction of the Act. A "major land transaction" means a land transaction other than an exempt land transaction if the total value of a) the consideration under the transaction; and b) anything done by the local government for achieving the purpose of the transaction, is more, or is worth more, than the amount prescribed for the purposes of this definition (currently the lesser of $10,000,000 or 10% of the Council's operating expenditure). Within the adopted 2013/2014 Budget 10% of the Council's operating expenditure is forecast to be in the order of $3.9 million. Before entering into a major land transaction Council is required to prepare a Business Plan which is to include:- an overall assessment of the transaction; its expected effect on the provision of services and facilities by the Town; its expected effect on other persons providing services and facilities in the district; its expected financial effect on the Town; its expected effect on the Town's Plan for the Future; the ability of the Town to manage the performance of this transaction; and details of joint venture transactions. Hospitality Development at Wembley Golf Course - Business Plan for Major Land Transaction - Page 1

3. Public Notice State wide and local public notice of this Business Plan is provided as follows: West Australian Newspaper 7 June 2014 Post Newspaper 6 June 2014 Western Suburbs Weekly 10 June 2014 Notices will be placed on the notice boards at various Council facilities including the Administration/Civic Centre, Cambridge Library, Wembley Community Centre and Bold Park Aquatic Centre. A notice will be published on the Town's website www.cambridge.wa.gov.au together with a copy of this document. Council will consider all submissions received prior to deciding whether to proceed with the proposed major land transaction that is the subject of this Business Plan. 4. Assessment of Major Land Transaction Background The Town intends to undertake construction of two distinct buildings at Wembley Golf Course on land owned Freehold by the Town. The land upon which these buildings will be built is zoned as MRS Parks & Recreation. Building 1 comprises the function rooms, restaurant, bar, commercial office space and back of house space in a basement, Building 2 comprises change rooms, toilets and plant rooms. These change rooms and toilets will be leased to the hospitality provider to provide amenity for golfing and nongolfing visitors to Wembley Golf Course. The details of these buildings are as follows: Building A - 1,300 m 2 internal area and 400 m 2 of al fresco space (approximate) Building B - 260 m 2 of internal area (approximate) Two existing enclosed areas within "The Swing" driving range (of 300m 2 and 130 m 2 approximately) are also proposed to be leased to the Operator for the purposes of function room space. The Town is in the process of seeking Expressions of Interest from potential Operators which will lead to further commercial negotiations and a preferred Operator identified. Once commercial negotiations are completed, the finalised rental returns will become known. For the purposes of this Business Plan, financial modelling is based on market advice provided to the Town by specialist Hospitality and Leasing consultants, design works undertaken by Architects and Cost Estimates provided by Quantity Surveyors. One of the key Business drivers for this project is to satisfy a known deficiency in the market for adequate facilities for Corporate Golf events. Wembley Golf Course has the capacity within its golf operations (course availability, golf carts, event management) to increase its market share however has been limited by the lack of suitable function room space to host post game events. Undertaking this project will provide the Town with two distinct revenue streams, the first being rental payments linked to the lease of the new Hospitality Development at Wembley Golf Course - Business Plan for Major Land Transaction - Page 2

facilities and the second being the uplift in green fees from increased corporate golf events. Terms of Agreement The Town of Cambridge and the Hospitality Operators would enter into a lease agreement within the following parameters: The Town would build the 'shell and core' of Building A and the operator would undertake the fitout to an approved standard. The Town would build and fully fit out Building B for lease to the operator. Rent would increase annually based on an agreed % rate with market rent reviews at regular intervals Duration of the lease would be between 10 and 20 years (for initial term plus potential option periods). At this time, subject to commercial negotiations, the initial term and further term periods have not been finalised. The Town of Cambridge and the Commercial office space tenants would enter into a lease agreement within the following parameters: The Town would build the 'shell and core' of Building A and the operator would undertake the fitout to an approved standard. Rent would increase annually based on an agreed % rate with market rent reviews at regular intervals Duration of the lease would be 10 years (for initial term plus potential option periods). At this time, subject to commercial negotiations, the initial term and further term periods have not been finalised. 5. Effect on the Provision of Facilities and Services The proposed arrangements for construction and operation of these facilities are not anticipated to have any adverse effects upon the capability or levels of services currently provided by the Town. It is believed that the revenues provided to the Town from this proposal will allow the Town repay the capital cost of the construction of the facilities and contribute significant net revenue to the Town. 6. Effect on the Other Persons Providing Facilities and Services The Town currently outsources the hospitality offering at Wembley Golf Course to "The Tavern", a facility managed under a management agreement with an external party. As this area will be demolished to allow construction of the new facilities, the management agreement is in a rolling holdover phase and will be terminated upon a determination to commence construction of the new works. The current operator has indicated to the Town that they wish to be considered as the Operator of the new Facilities and acknowledge that the Town will be using competitive selection process to award a new lease. This proposal provides restaurant and bar facilities available to the general public. It is believed, based on consultant advice, that the market can support additional facilities and that this proposal does not have any other significant impact on other persons providing facilities and services within the Town. Hospitality Development at Wembley Golf Course - Business Plan for Major Land Transaction - Page 3

7. Financial Impact on the Town Professional advice has been received to forecast the anticipated revenues from the commercial buildings. Initial modelling suggests that the Town may earn approximately $555,000 pa from this proposal in lease payments (prior to any indexation or rent reviews) from the hospitality operator. The commercial office space is expected to return $65,000 pa (prior to indexation or rent review) in rental payment. The Town also anticipates an uplift of $450,000 pa from increased green fees from Corporate Golf as a return from improved hospitality facilities. The Town is seeking offers from Operators of the new facilities, and finalising construction budgets. It is anticipated that these final numbers will be similar to forecast in the following table The table below summarises the anticipated revenue and expenses for this project: TOC Costs & Revenue Estimated Town cost to construct $9,800,000 Estimated Annual Rents, prior to indexation and rent reviews Estimated Annual uplift in Green Fees related to Corporate Golf, prior to indexation $620,000 $350,000 Total Annual Revenue $970,000 Estimated Annual cost of construction of commercial buildings* $925,000 Estimated net Annual surplus $45,000 *The estimated annual cost of construction is based on the annual financing cost of the principal and interest payment of 7% pa over a 20 year period. Current interest rates are around 4% pa however 7% is used as a benchmark for the 20 year period. It is to be noted that the Capital construction costs include the buildings as described, additional car parking, external landscaping; improvements to outdoor seating areas and provision of playground space, all of which are seen as complementary to the success of the hospitality facility. This capital budget excludes the construction of the proposed miniature golf facility, which is not subject to this Business Plan. Hospitality Development at Wembley Golf Course - Business Plan for Major Land Transaction - Page 4

8. Effect on Matters Referred to in the Plan for the Future The Local Government Act 1995 requires details to be provided in relation to major land transactions and expected effect on matters referred to in Council's plan for the district. The Council has adopted its 2013-2023 Strategic Community Plan in accordance with the requirements of the Local Government Act. This major land transaction proposed is consistent with a number of key goals and strategies contained with the 2013-2023 Strategic Community Plan and the Town's 2013-2018 Corporate Business Plan, namely: Target Area Goal Strategy Project Our Council A strong performing local government Invest wisely so that current and future generations benefit Hospitality Development at Wembley Golf Course 9. Ability of the Town to Manage a Major Land Transaction This proposal will be supported by professional legal and valuation advice in developing the proposed terms of the leases. The Town has sufficient resources to manage the process. 10. Joint Venture Transactions This proposal is not being undertaken as a joint venture transaction. 11. Plans Indicative plans of the proposed works are attached to this Business Plan. 12. Submissions Submissions will be received from the public for a minimum period of six weeks from publication of the state wide notice. All submissions must be received by 5.00pm on Tuesday 22 July 2014 addressed to:- "Submission for Business Plan - Hospitality Development at Wembley Golf Course" Chief Executive Officer Town of Cambridge 1 Bold Park Drive FLOREAT WA 6014 All enquiries concerning this Business Plan should be directed to Mr Brett Jackson, Director Projects on 93 6095. Hospitality Development at Wembley Golf Course - Business Plan for Major Land Transaction - Page 5

APPENDIX 1 - PLANS AND ELEVATIONS

Wembley Golf Course Hospitality Development Development Approval Front Entry Perspective job number: 1115 issue date: 17/04/14 revision: A drawing number: - scale: -

Wembley Golf Course Hospitality Development Development Approval View from Course - North West job number: 1115 issue date: 21/04/14 revision: A drawing number: - scale: -

Wembley Golf Course Hospitality Development Development Approval View from Course - North East job number: 1115 issue date: 17/04/14 revision: A drawing number: - scale: -

Wembley Golf Course Hospitality Development Development Approval Aerial from South West job number: 1115 issue date: 17/04/14 revision: A drawing number: - scale: -

48 48 48 40 41 PROPOSED STAFF CAR PARK EXTENSION (REFER TO INSET BELOW) EXISTING LAKE EXISTING GOLF COURSE 43 44 45 EXISTING PUMP STATION 42 40 EXISTING DRIVING RANGE PROPOSED SEWER PUMP STATION 41 PROPOSED GREASE ARRESTOR LOCATION OF PROPOSED MINI GOLF BY SEPERATE CONTRACT LOCATION OF PROPOSED MINI GOLF BY SEPERATE CONTRACT PROPOSED CAR PARK EXTENSION OPTION 1 (PART A) EXISTING CAR PARK 85 BAYS + 2 DISABLED LOCATION OF PROPOSED PLAYGROUND 42 44 43 HYD 45 PROPOSED HOSPITALITY BUILDING EXISTING DRIVEWAY EXISTING CANOPY EXISTING PRO SHOP PROPOSED CANOPY EXISTING CART SHED NEW DROP OFF/PICK UP PROPOSED CHANGEROOMS HYD WATER PUMPS FIRE BOOSTER EXISTING GOLF COURSE 48 FH STAFF CARPARK EXTENSION OPTION PROPOSED CAR PARK EXTENSION PROPOSED CAR PARK EXTENSION OPTION 2 EXISTING CAR PARK EXISTING GOLF COURSE EXISTING CAR PARK PROPOSED OVERFLOW CARPARKING. REFER TO CIVIL ENGINEERS DRAWINGS EXISTING DRIVING RANGE Wembley Golf Course Redevelopment LOCATION PLAN job number: issue date: 1115 22.04.14 Development Application revision: drawing number: A DA100 scale @ A1: 1 : 500

48 EXISTING GOLF COURSE 41 PROPOSED SEWER PUMP STATION EXISTING WALKWAY PROPOSED MINI GOLF BY SEPARATE CONTRACT PROPOSED GREASE ARRESTOR PROPOSED PLAYGROUND EXISTING LOWER CARPARK MODIFIED EXISTING WALKWAY 42 NEW DRIVEWAY TO BASEMENT TIMBER DECKING 43 NEW IN SITU CONCRETE RETAINING WALL PROPOSED STAIRS EXISTING LIMESTONE WALL 44 HYD EXISTING RETAINING WALL 45 NEW IN SITU CONCRETE RETAINING WALL PROPOSED HOSPITALITY BUILDING RL:.350 EXISTING DRIVEWAY LINE OF EAVE OVER LINE OF OLD/ NEW PAVING EXISTING CANOPY EXISTING PAVING RL:.300 EXISTING PRO SHOP PICK UP/DROP OFF ZONE ENTRY COLONADE NEW PAVING RL:.300 LINE OF EAVE OVER LINE OF EAVE OVER 8 EXISTING CARPARK NEW DROP OFF/ PICK UP NEW LANDSCAPING HYD REFER TO LANDSCAPE ARCHITECT PLANS FOR LANDSCAPING TREATMENT LINE OF PROPOSED CANOPY ABOVE PROPOSED CHANGEROOMS RL:.350 EXISTING LIMESTONE RETAINING WALL EXISTING COLUMNS TO BE RETAINED LINE OF EXISTING CANOPY TO BE RETAINED ABOVE LINE OF EAVE OVER 48 NEW LANDSCAPING 2 x HYDRAULIC WATER PUMPS NEW BARRIER WALL EXISTING GOLF COURSE EXISTING FIRE BOOSTER Wembley Golf Course Redevelopment SITE PLAN Development Application job number: issue date: revision: drawing number: scale @ A1: 1115 22.04.14 A DA101 1 : 200