Administration and Finance Committee Meeting

 

Supplementary BUSINESS PAPER

 

 

 

 

 

LATE GENERAL MANAGER’S REPORTS

 

 

 

 

 

 

Tuesday 8 May 2012

 

 

 

 

 

 

 

 

 

Administrative Centre 30 Frances Street Randwick 2031

Telephone: 02 9399 0999 or

1300 722 542 (for Sydney metropolitan area)

Fax:02 9319 1510

general.manager@randwick.nsw.gov.au

www.randwick.nsw.gov.au


 

 

 

 

 

 

 

 

 

 

 

 


Administration and Finance Committee                                                                        8 May 2012

 

 

 

 

 

 

 

 

 

 

 

 

 


Administration and Finance Committee Meeting

 

Notice is hereby given that a Administration and Finance Committee Meeting of the Council of the City of Randwick will be held in the Council Chamber, Town Hall, 90 Avoca Street, Randwick, on Tuesday, 8 May 2012 at 6pm.

 

 

 

Late General Manager’s Reports

 

A3/12       Ongoing Management of Wylies Baths - Response to Media Reports

A4/12       One Association - Urgent - List of delegates and addresses for voting

 

Finance Report

F10/12      Investment Report - April 2012 – Additional Information      

 

 

 

 

 

…………………………………………………….

Ray Brownlee

General Manager


Administration and Finance Committee                                                                        8 May 2012

 

 

Late General Manager’s Report No. A3/12

 

 

Subject:                  Ongoing Management of Wylies Baths - Response to Media Reports

Folder No:                   F2004/06336

Author:                   David Kelly, Manager Administrative Services     

 

Introduction

 

As Councillors would be well aware, an article appeared in the Sydney Morning Herald on the 28th April, 2012 asserting that Wylies Baths was going to be turned into commercial Bondi Icebergs type establishment at the expense of the charm and character of the existing Baths.  The purpose of this report is to advise Council of the current situation at Wylies Baths.

 

Issues

 

The heritage listed Wylies Baths was established in 1907 and is situated on Crown land, with the Head Lease held by Council. The Baths have been sub leased to the Wylies Baths Trust since 1996 with the current lease in operation until 2018.

 

As part of our due diligence, to ensure the continued viability of the Baths, Council undertook a thorough governance review in 2010/11 and identified a range of issues for the Trust to address. Of these issues, two in particular concerned the provision of catering services and the current operating practices in the kiosk.  The Wylies Baths Trust actions and considerations to Council’s ‘due diligence’ recommendations as at May 2012 is attached.

 

The previous arrangement of lifeguards assisting in the kiosk at the expense of performing their designated duties was considered unacceptable, meaning the operation of the kiosk needs to be reviewed.  Council also recommended, as part of this due diligence review, that the Trust review the catering agreement with the sole existing caterer, which is due to expire in June 2012, in order to achieve the best value for money for this service.  Accordingly the Trust resolved to undertake Expressions of Interest for Kiosk and Function Catering.  An expression of interest was duly called and one of the respondents was the owner of the café at the Bondi Icebergs.

 

At this point in time the Executive of the Trust have simply sought permission from the Trust to hold further discussions with this particular operator as their submission was the most promising. No decision on this matter has been made as yet by the Trust and it should be pointed out that they are simply following the recommendations of Council contained in the due diligence report.

 

At no point in time has any member of the Trust resolved or even discussed the option of turning Wylies Baths into a Bondi Icebergs type establishment. Again the Trust is simply exercising due diligence in response to Council’s recommendations as part of our due diligence review.

 

A “Meet the Trust” meeting was held on Friday 4th May, 2012 at the Baths with over one hundred people in attendance. At this meeting the Trust was very forthcoming with what they have done with the Baths over the last two years and what they intended to do over the next twelve months. The Trust then answered questions from those in attendance for approximately forty minutes.  Those in attendance seemed satisfied with the direction the Trust is taking Wylies Baths.

 

The Mayor is currently the Chairperson of the Wylies Baths Trust and the General Manager attends meetings as an observer. Accordingly, Council is fully satisfied with, and has full confidence in, how the current Trustees of the Wylies Baths Trust are managing the Baths.

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome 2:       A Vibrant & Diverse Community.

Direction 2c:      Strong partnerships between the Council, community groups and government agencies.

 

Financial impact statement

 

There is no direct financial impact for this matter at this time as it involves the activities of the Trust.  It should be noted that the kiosk operations at Wylies Baths are operating at a loss.

 

Conclusion

 

The inference made in the recent article that the Trust intends to turn the Baths into a Bondi Icebergs type establishment is not correct. Both the Council and the Trust are not looking to change the charm or character of the Baths, but it needs to be run as a profitable concern to ensure that all of its assets are maintained to a satisfactory level for the benefit of our local community.

 

Council is supportive of all the governance measures undertaken thus far by the Baths as it is imperative that the operation of the Baths is based on good governance principles to ensure its ongoing viability.

 

 

Recommendation

 

That the report on the ongoing operation of Wylies Baths be received and noted.

 

 

Attachment/s:

 

1.View

Wylies Baths Trust actions to Randwick City Counci's 'due diligence' recommendations as at May 2012.

 

 

 

 


Wylies Baths Trust actions to Randwick City Counci's 'due diligence' recommendations as at May 2012.

Attachment 1

 

 

Summary of Recommendations following the RCC Due Diligence Review of Operations – Wylie’s Baths           May 2012

 

 

Recommendation

Current Action

Completed

1

Dedicated Kiosk staff be employed during busy periods to ensure the water areas are supervised by lifeguards at all times

Draft release of food handling, daily kiosk duties, employee allowance address employee access to kiosk areas. Proposal now to secure lifeguard stand (in conj. with CSLS- Dave Winkle), to place in a secure area pool level, to primarily locate lifeguard personnel away from kiosk level and increase visibility by patrons.

Lifeguards not to work in the kiosk – sole responsibility is to provide lifeguard services to baths

Mgr advised and actioned 16/12/10

2

Consideration of reclassification of Wylies Baths as a Category 3 facility

Classification to be determined as part of Risk Assessment process facilitated by Royal Life Saving Society and documented in Operations Manual (currently in draft form).

 

3

Introduce a stock management system and review stock profit margins

Current review of combinability of POS & Access Control automation. Requires overall strategic review covering linked areas of:

Future kiosk lease

Café situation

Physical access options (ramp/elevator, automated gates)

Storage

Heritage considerations

Linked to point 12.

Manager has implemented in house procurement, stockroom storage & control, with price increases more in line with retail levels – subject to ongoing review

4

Review the catering agreement with Grinners catering

To be revisited at contract end June 2012 – refer Action (3). Trust resolved to approve a number of Caterers, including Grinners in preference to an exclusive arrangement. New arrangements to be in place for 2012/13 season bookings.

EOI closed 24 October 2011 – 10 submissions received,

5

Review arrangements with service providers – yoga and massage

Manager to undertake a tender planning process for new commercial agreements for end of current tenures. Consider future options for revenue generation functions such as some gymnasium type equipment.

 

New Contracts signed with Yoga and Massage incumbents October 2011.

6

Review accounting practices and procedures including the accounting for future provisions and cash management

Current Accountants Meagher, Howard & Wright retained to produce 2010/11 Financial Reports / Audit. Advice furnished in relation to RCC Review matters. MHW appointed to Audit 2011/12 accounts.

MHW advise Wylie’s Baths Inc is an Incorporated Association presenting special purpose financial accounts. The application of Accounting Standard AASB137 is debateable, however there is a sound basis for inclusion of the “Seawall Provision” in the Balance Sheet given the understanding that it will need to be replaced at some stage in future.

12/7/11

 

 

7

Prepare an investment strategy

Investment strategy discussed. Bank Term Deposits to continue pending review and advised as renewed.

Resolved that the Trust Investment Strategy would consist of renewal of a number of secure Term Deposits with a first tier Australian Bank delivering the highest available interest rate. 15/7/11

8

Introduce a more formal auditing approach that provides audit management letters

Audit approach discussed with Meagher, Howard & Wright (MHW). Audit function to be reassessed once accounting arrangements finalised – refer Action (6).

Audit Management Letters are not issued by MHW on basis all matters consistently discussed are well understood and not required in preparing the special purpose financial accounts. 15/7/11

9

Conduct water quality testing at least biannually or more regularly

Procedure to be included in Operations Manual being developed as part of Risk Assessment process. Various options for testing being considered.

 

10

Complete a fully documented facility Risk Assessment for Wylie’s Baths

Royal Life Saving Society quote accepted by Trust 3/5/11. Risk Assessment process commenced 20/5/11, with on site meeting including representation from RCC, Coogee SLSC, Baths Management, Lifeguards and Trust. First draft RMP currently under review. Refer Action (2).

 

11

Review after-hours access and give consideration to extending opening hours – 6am opening with staff commencing 5.30am

Change in Staff hours and Lifeguard coverage to be considered as part of Risk Assessment by new Manager with subsequent recommendation to Trust. Refer Action (10) above.

 

12

Review disabled access to the facility

Noted at point 3 as overall strategic review covering access and other automation.

Further discussion required at Trust level – current thinking that it may be a project / study to refer back to RCC, who have offered to assist.

 

 

 

 

 

 

13

Document operating procedures and checklists to ensure consistency between shifts and different staff

Full range of sample documentation for use as possible templates provided by DRAC. Wylies’ specific Procedures to be included in Operations Manual being developed as part of Risk Assessment process currently underway. Refer Action (10) Discussion Food Safety Procedure circulated December 2011

Policies & Procedures Manual completed,  includes; Opening, closing, cleaning duties (Kiosk), Staff Allowance, Lifeguard Duties, Food Safety (separate manual), Function Preparation, Banking & Financial, Stock Control

14

Implement a formal OHS system immediately to comply with all regulations

DRAC sample documentation provided. Wylies’ specific OHS&E System to be incorporated in Operations Manual being developed (currently in first draft) as part of Risk Assessment process, now underway as per Action (13).

 

15

Introduce a money security pick up service once per week in winter and twice weekly in summer

Currently banking twice weekly. Eftpos facility introduced with excellent take up, significantly reducing cash exposure on site. 30 swim passes have also assisted. Ongoing review over peak season.

Requirement reviewed by Manager and deemed still satisfactory to make twice-weekly banking and more frequent during high season – closed May 12.

 

16

Review after hours security arrangement including the introduction of an on site alarm system

Back to Base alarm installed and operating. Caretaker advised not to intervene with break ins but to call police / security. This to be included in SOP’s.

Completed February 11

17

Remove asbestos from the ceiling space of the caretakers residence as soon as possible

 

Completed 21 September 2011, including new roof and facia.

18

Conduct regular annual inspections of other material containing asbestos to ensure it remains in good condition

Trust have accepted Council recommendation and this should be minuted to close out the action item.

RCC to undertake regular annual inspections as per Council’s Asbestos Identification and Removal program 3/5/11

 

 

 

 

 

 

19

Structural engineering to inspect the structural posts urgently to determine how many posts will require replacement

Further review of RCC recommendations undertaken Dec11 by Ross and Chuck, with further response from Chuck to Stephen Audet sent 19 Jan 12

RCC engaged Opus International Consultants to conduct inspection in conjunction with Forests NSW and Jeffrey & Katauskas June 2011.

Chuck Hahn Preliminary Report tabled 26/10/11, currently being revised by Council after further on site inspection of foundation & post footings.

Community Building Partnership Program (CBPP) Grant application pending.

Timber Deck Assessment Report received and discussed with Council engineers 13/7/11. Repair work pending results of Geotechnical study.

 

 

20

Introduce a formal asset maintenance program which includes determining priorities based on service and risk criteria

Pending further discussion and consideration of Opus Report Action (19). Chuck Hahn and Steve Levett liaising with Manager

Manager currently compiling list of “maintenance Items, histories, past works and schedules for inclusion. Current Maintenance items completed for Manager’s handover.

 

21

Randwick Council and the Trust work together in completing the Asset Management Plan

As per Action (20) above.

 

 

 


Administration and Finance Committee                                                                        8 May 2012

 

 

Late General Manager’s Report No.

A4/12

 

 

Subject:                  One Association - Urgent - List of delegates and addresses for voting

Folder No:                   F2004/07778

Author:                   Julie Hartshorn, Senior Administrative Coordinator     

 

Introduction

 

The formation of One Association to represent Local Government in NSW was first reported to Council in July 2010, where it was resolved (in part):

 

‘(Notley-Smith/Andrews) that Council notes the importance of forming One Association to provide a uniform voice for Local Government in NSW.’

 

The formation of One Association to represent Local Government in NSW has been reported to Council on a number of occasions since that time, with the most recent progress report being submitted to the April Council Meeting, where it was resolved:

 

‘(Woodsmith/Matson) that this matter be deferred to allow Councillors to further consider all the relevant information.’

 

Issues

 

The President of the Local Government Association of NSW (LGA) has written to Councils again, indicating that both Associations have now resolved to have the proposal (to form One Association) submitted to a secret postal ballot of delegates of the members of each Association. Subject to approval from Fair Work Australia, the conduct of the ballot will be handed over to the Australian Electoral Commission to manage the voting process.

 

Member Councils are required to supply an up to date list of their voting delegates for this ballot by 31 May 2012. The details required to be supplied are:

 

1.     The full name of the voting delegates; and

2.     The private mailing address of the delegates.

 

Randwick City Council is entitled to five (5) voting delegates in the ballot.

 

The LGA’s ‘Update and Status Report – May 2012’ is attached for Councillors’ information. This report addresses the question of equity between the LGA and the Shires Association after the merger, which was a topic of discussion at last month’s Council Meeting.

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome 1:       Leadership in sustainability.

Direction 1b.2:   Contribute to protecting the Council’s reputation and enhancing its positive public image.

 

 

Financial impact statement

 

There is no direct financial impact for this matter.

 

Conclusion

 

The Executives of both Associations have also decided that it would be preferable for the formal process for the creation of the new association to be finalised before the forthcoming Local Government elections on 8 September 2012.

 

Council is required to supply a list of its voting delegates to the LGA by 31 May 2012.

 

 

Recommendation

 

That Council nominate five (5) voting delegates to take part in the forthcoming secret postal ballot to deal with the matter of One Association to represent Local Government in NSW and that their names and personal postal addresses be forwarded to the Associations to form the Roll of Voters.

 

 

Attachment/s:

 

1.View

Local Government Association ‘Update and Status Report – May 2012’

 

 

 

 


Local Government Association ‘Update and Status Report – May 2012’

Attachment 1

 

 






 


Administration and Finance Committee                                                                        8 May 2012

 

 

Finance Report No. F10/12

 

 

Subject:                  Investment Report - April 2012 – Additional Information.

Folder No:                   F2004/06527

Author:                   Greg Byrne, Manager Financial Operations     

 

Introduction

 

The Local Government (General) Regulation requires a written report to be provided to the ordinary meeting of the Council giving details of all monies invested and a certificate as to whether or not the investments have been made in accordance with the Act, the regulations and Council’s Investment Policy.

 

Issues

 

Council is authorised by s625 of the Local Government Act to invest its surplus funds. Funds may only be invested in the form of investment notified by Order of the Minister dated 12 January 2011. The Local Government (General) Regulation prescribes the records that must be maintained in relation to Council’s investments.

                         

The table in this report titled “Investment Register – April 2012” outlines the investment portfolio held by Council as at the end of April 2012. All investments have been made in accordance with the Act, Regulations and Council's Investment Policy.

 

Investment Commentary

 

The size of the investment portfolio may vary significantly from month to month as a result of cash flows for the period. Cash outflows (expenditure) are typically relatively stable from one month to another. Cash inflows (income) are cyclical and are largely dependent on the rates instalment due dates and the timing of grant payments including receipt of the Financial Assistance Grant.

 

Expenditure during the period was incurred for capital works, payroll and miscellaneous expenses. Main income sources were rates income, grants and miscellaneous fees and charges.

 

The investment portfolio decreased by $4.769 million during April 2012. The decrease is representative of negative cash flow for the month as expenditure exceeded income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above graph illustrates the movement in the investment portfolio from April 2006 to April 2012. Peaks are representative of the rates instalment periods.

 

 

 

 

The above graph illustrates the movement in the investment portfolio for the past twelve months.

 

The investment portfolio is diversified across a number of investment types and is spread across a number of financial institutions. The various investment types may include managed funds, term deposits, rolling rate investments, floating rate notes and on‑call accounts.

 

The following graph indicates the allocation of investment types held at the end of April 2012.

 

The investment portfolio is regularly reviewed in order to maximise investment performance and minimise risk. Comparisons are made between existing investments with available products that are not part of Council's portfolio. Independent advice is sought on new investment opportunities.

 

The following graph shows the investment returns achieved against the UBS Bank Bill Index and the official Reserve Bank of Australia (RBA) cash interest rate for the period April 2006 to April 2012.

 

 

The following graph shows the investment returns achieved against the UBS Bank Bill Index and the official Reserve Bank of Australia (RBA) cash interest rate for the previous twelve months.

 

 

Investment performance for the financial year to date is above the industry benchmark UBS Australian Bank Bill Index with an average return after fees of 5.77%, compared with the benchmark index of 4.57%.

The official Reserve Bank of Australia (RBA) cash interest rate is currently 4.25%.

 

Ministerial Investment Order

 

In late 2007, the NSW Government commissioned a review of NSW local government investments. The review, known as the Cole Report included eight recommendations that were all adopted by the NSW Government and incorporated into the Ministerial Investment Order dated 31 July 2008. This Ministerial Investment Order included transitional arrangements that allow councils to continue to hold investments that were made in compliance with the previous Ministerial Order dated 15 July 2005. Council’s investment portfolio contains a number of investments that fall into this category including both Managed Funds and Structured Products.

 

A revised Investment Order was issued on the 12 January 2011, which replaces the Order dated 31 July 2008 and includes changes that:

 

Ÿ      remove the ability to invest in the mortgage of land;

Ÿ      remove the ability to make a deposit with the Local Government Financial Services Pty      Ltd;

Ÿ      and includes the addition of “Key Considerations”, with a comment that a council’s General Manager, or any other staff, with delegated authority by a council to invest in funds on behalf of the council must do so in accordance with the council’s adopted investment policy.

 

 

 

 

Managed Funds

 

Investment

Product Type

Credit

Rating

Par Value

Market Value

Blackrock

Care & Maintenance Fund

Collective Investment

Not Rated

1,929,600

1,923,162

 

 

The majority of investments held in managed funds were matured back in 2007 during the start of the Global Financial Crisis. Funds are still held in the Blackrock Care & Maintenance Fund that was created following the closure of the Blackrock Diversified Credit Fund. This new fund is referred to as a “Collective Investment” and is closed to any new deposits or withdrawals. Proceeds of the fund are distributed to investors as the underlying investments reach maturity or the fund manager considers it an opportune time to sell the investments at current market rates.  The purpose of the fund is to limit the financial losses that would have occurred if the underlying assets were sold at market prices at the time that the original fund was wound up. 

 

The fund is held by a custodian (UBS Wealth Management Aust) in an account in Council’s name. The fund manager issued the following comment in May 2011 concerning the maturity duration of the fund:

 

  “In regards to the securities held within the Care & Maintenance Fund the longer dated maturities in the fund tend to be either subordinated bank debt with callable dates well before their stated maturity . . . At this stage adopting a conservative approach we can expect the fund to run maybe a further 5 years.”

 

Council’s investment advisors CPG Advisory have indicated that they expect much of the assets will pay down within a couple of years. The likelihood is that a rump of assets will be sold at some point rather than the fund run down to zero over many years.

 

The Blackrock value in this report is the value as at the 31 March as value as at the 30 April 2012 was unavailable at the time of writing.

 

Floating Rate Notes

 

The investment portfolio includes $16.007 million in floating rate notes (FRN).

 

The Royal Bank of Scotland FRN was purchased at a capital price of $2,025,000.00. The premium of $25,000 is being amortised on payment of the quarterly coupons. The life to date amount amortised is $22,754.01 bringing the book value to $2,002,245.99.

 

The National Australia Bank FRN was purchased at a capital price of $3,006,360.00, the premium of $6,360.00 will be amortised on payments of the quarterly coupons. The amortised amount to date is $1,483.70 bringing the book value to $3,004,876.29

 

A Macquarie Bank FRN was purchased on 13 March 2012 for the amount of $2,000,000.00 with a trading margin of 1.9%.

 

The balance of the FRN’s is held by the CBA for $4,000,000.00, the Bank of Scotland for $1,000,000.00 and Westpac for $4,000,000.00.

 

 

 

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome 1:       Leadership in Sustainability.

Direction 1c:      Long term financial viability is achieved.

 

 

Financial impact statement

 

Funds are invested with the aim of achieving budgeted income in 2011-12 and outperforming the UBS Australian Bank Bill Index over a 12 month period.  The current revised budget provision for income from this source is $2,391,411.00. Investment income to 30 April 2012 amounted to $2,489,573.49.

Following is the detailed Investment Report – April 2012
Conclusion

 

All investments as at 30 April 2012 have been made in accordance with Council Investment Policy. All investments meet the requirements of s625 of the Local Government Act and the Local Government (General) Regulation.

 

Changes to the economic climate and financial markets are being closely monitored. Appropriate adjustments to the investment strategy will continue to be made as required.

 

 

 

Recommendation

 

That the investment report for April 2012 be received and noted.

 

 

Attachment/s:

 

Nil