Proposed revision of Integrated Planning and Reporting ... · 6. Council’s investment management...

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17 October 2018 - Extraordinary Meeting of Council 1 EXORD171018 3.3. CS380208 Proposed revision of Integrated Planning and Reporting documents and community consultation on ICTE and Warrick Lane projects Director: Wayne Rogers, Director Corporate Services Author: Ross Kingsley File: F18/2149 Division is not required Topic Exhibition of revised Integrated Planning and Reporting (IP&R) documents and community consultation on the ICTE and Warrick Lane projects, in accordance with the Local Government (General) Regulation. Analysis The Regulation requires a defined series of steps to be undertaken for the approval and funding of major capital projects. Separate reports to Council’s Extraordinary meeting of 17 October 2018 address the capital expenditure guidelines which apply to the International Centre of Training Excellence (ICTE) and Warrick Lane transformational projects, and the business case for each project. This report addresses the requirements of the IP&R guidelines in regard to these projects, and our proposed approach, including exhibition of revised planning documents and community consultation. Attachment/s 1. Attachment 1 - proposed amendments to the Delivery Program 2017-2021 [CS380208.1] Report Recommendation 1. Endorse the proposed amendments to Council’s 2017-2021 Delivery Program (refer attachment 1) and Long Term Financial Plan (refer attachment 2) to incorporate the funding strategies for the ICTE and Warrick Lane projects, for public exhibition. 2. Endorse the proposed community consultation program for the ICTE and Warrick Lane projects, indicated in Key reasons paragraph 2c. 3. Results of this consultation process, including the consideration of submissions, be reported to Council as part of the Capital Expenditure Review for the ICTE and Warrick Lane projects, in December 2018. Key reasons 1. IP&R guidelines and consultation requirements a. Council’s IP&R framework documents, including the Community Strategic Plan Our Blacktown 2036, recognise the transformational projects as key priorities for the

Transcript of Proposed revision of Integrated Planning and Reporting ... · 6. Council’s investment management...

Page 1: Proposed revision of Integrated Planning and Reporting ... · 6. Council’s investment management and liquidity a. Council has historically set conservative parameters and controls

17 October 2018 - Extraordinary Meeting of Council 1

EXORD171018 3.3. CS380208 Proposed revision of Integrated Planning and Reporting documents and community consultation on ICTE and Warrick Lane projects

Director: Wayne Rogers, Director Corporate ServicesAuthor: Ross KingsleyFile: F18/2149

Division is not required

Topic Exhibition of revised Integrated Planning and Reporting (IP&R) documents and community consultation on the ICTE and Warrick Lane projects, in accordance with the Local Government (General) Regulation.

Analysis The Regulation requires a defined series of steps to be undertaken for the approval and funding of major capital projects.

Separate reports to Council’s Extraordinary meeting of 17 October 2018 address the capital expenditure guidelines which apply to the International Centre of Training Excellence (ICTE) and Warrick Lane transformational projects, and the business case for each project.

This report addresses the requirements of the IP&R guidelines in regard to these projects, and our proposed approach, including exhibition of revised planning documents and community consultation.

Attachment/s 1. Attachment 1 - proposed amendments to the Delivery Program 2017-2021 [CS380208.1]

Report Recommendation 1. Endorse the proposed amendments to Council’s 2017-2021

Delivery Program (refer attachment 1) and Long Term Financial Plan (refer attachment 2) to incorporate the funding strategies for the ICTE and Warrick Lane projects, for public exhibition.

2. Endorse the proposed community consultation program for the ICTE and Warrick Lane projects, indicated in Key reasons paragraph 2c.

3. Results of this consultation process, including the consideration of submissions, be reported to Council as part of the Capital Expenditure Review for the ICTE and Warrick Lane projects, in December 2018.

Key reasons

1. IP&R guidelines and consultation requirementsa. Council’s IP&R framework documents, including the Community Strategic Plan Our

Blacktown 2036, recognise the transformational projects as key priorities for the

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future of the City. The documents outline the strategic vision and key steps for each project. This information has been extensively discussed with the community in the past 2 years, including as part of our annual IP&R process.

b. Our current IP&R documents, adopted on 27 June 2018, do not incorporate the funding strategies for the transformational projects. This is because, at the time these documents were being finalised and then exhibited, work was still progressing on preparing detailed cost estimates for the transformational projects.

c. Funding allocations are subject to Council’s formal consideration of the business case for each project, under the capital expenditure guidelines.

d. As commitment to fund the ICTE and Warrick Lane projects would entail significant amendments to Council’s 4 year Delivery Program and Long Term Financial Plan, the IP&R guidelines require the exhibition of amended planning information for public comment.

e. Consideration of the consultation results is required before Council adopts the revised IP&R documents.

f. The IP&R consultation process can readily be accommodated in meeting similar requirements in the capital expenditure guidelines. The proposed consultation program (refer attachment 1) has therefore been designed to satisfy both sets of requirements.

2. Proposed consultation program on ICTE and Warrick Lane projectsa. Extensive communication and stakeholder engagement has already been

undertaken for the ICTE and Warrick Lane projects. However, to satisfy the NSW Office of Local Government Capital Expenditure Guidelines, a formal consultation program will be undertaken. It is proposed this will occur in October – November 2018. This program will utilise existing Council communication and consultation mechanisms. Consideration has been given to the reasonable and practical steps to engage the broad community on the 2 projects and provide every opportunity for comment, questions and submissions.

b. The proposed engagement program is outlined in the table below:

Element Details Timeframe

Website Council’s website will be the core consultation platform to which enquiries will be directed. This will contain all information and a feedback mechanism

22 October – 19 November (close of submissions, however information still available)

Newspaper advertising Corporate page features From 23 October

Digital advertising Being arranged (e.g. Google ads)

22 October – 19 November

Exhibition displays Civic Centre and all 5 libraries – with brochures and documents available

22 October – 19 November

Direct mail (City wide) #1 Rate notices – with information flyer(ratepayers who receive

Late October

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Element Details Timeframe

email notices to also receive flyer attachment)

Direct mail (City wide) #2 Blacktown City Bulletin – feature articles on the projects and consultation

Early November

Telephone enquiries Dedicated enquiry contact and number advertised for each project (noting response will be by way of call back)

15 October – 15 December

Media campaign Ongoing but escalated for this process and ICTE / Warrick Lane projects

From 12 October

Social media promotion Ongoing but escalated for this process and ICTE / Warrick Lane projects

From 12 October

Community forums Local forum – Willmot

City-wide forum – Max Webber Library, Blacktown

Monday 22 October

Monday 12 November

Community ‘pop-up’ forum

Mount Druitt Westfield Saturday 3 November

c. Councillors will receive invitations and additional information on the community forums in due course.

d. The above program is consistent with, and in keeping with, the community consultation approach undertaken in 2014 regarding Council’s special rate variation.

e. The cost of the consultation program will be contained by utilising existing communication mechanisms and events, together with already assigned transformational projects resources. The main additional cost is printing information material, documents and display materials. Costs will be met within the approved communication budgets of the ICTE and Warrick Lane projects.

3. Consultation timeframea. The exhibition and consultation period proposed is 28 days, commencing on

Monday 22 October. Submissions will close on Monday 19 November.b. The results of consultation will be reported to Council as part of the capital

expenditure review process, in December 2018.c. This timeframe is subject to Council’s consideration of the preliminary business

cases for the ICTE and Warrick Lane projects and amended IP&R information at the Extraordinary meeting of 17 October 2018.

4. Overview of funding strategya. At previous briefing sessions during 2017 and 2018 Councillors have received

presentations on a proposed funding strategy for the transformational projects program.

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b. In summary, the funding strategy comprises the allocation of funding from 5 key sources:i. external borrowingsii. allocation of proceeds from Council’s Land Development activitiesiii. internal borrowings from internally restricted assetsiv. repayment of internal borrowing from future budget allocationsv. S7.11 funding (note will only be utilised for partial funding of one of the

Transformational Projects).c. The funding strategy is based on projected expenditure for the various projects

compared with the availability (on a cash flow basis) of the above 5 funding sources. In order to enable timely completion of the transformational projects, the use of less than $10 million of external debt is necessary. However, this will always be the last source of funding used, and will be repaid as quickly as possible to minimise interest expense.

d. Greater detail of the funding strategy is provided in the following Supporting analysis section.

Supporting analysis

1. Proposed amendments to the 2017-2021 Delivery Programa. The Delivery Program is the IP&R document which details, over a Council term,

how the long term vision of the Community Strategic Plan will be progressed and resourced through projects, works programs and services. The Delivery Program provides summary budget information for the 4 year timeframe.

b. Council’s 2017-2021 Delivery Program was first adopted in June 2017 and is reviewed annually to reflect any changes in Council’s strategy and incorporate each year’s more detailed Operational Plan and budget.

c. Blacktown City’s transformational projects are already incorporated in the Delivery Program by specific information and Operational Plan actions. The proposed amendments to the Delivery Program which will be exhibited therefore relate only to the funding strategies for the ICTE and Warrick Lane projects, and how these funding allocations would affect the 3 year budget position 2018-2021.

d. The proposed exhibition document is provided at attachment 2.2. Proposed amendments to the Long Term Financial Plan

a. As part of Council’s overall resourcing strategy to support Our Blacktown 2036, the Long Term Financial Plan provides a detailed 10 year financial projections to ensure Council’s financial sustainability.

b. This document is required to be updated annually. The current document, which relates to the period 2018-2018, was adopted by Council on 27 June 2018.

c. The proposed exhibition document is provided at attachment 3.3. Our current financial position is strong

a. Council’s current financial position is sound. It has been debt free for 20 years, has an adopted long term strategy to fund asset renewal, significant land holdings which are able to be developed and sold, strong liquidity and low rate arrears. By capitalising on these financial strengths, the proposed funding strategy provides Council with the capacity to fund its Transformational Projects program.

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4. Maintaining our strong financial positiona. Council’s sound financial position is the result of a long term commitment to

conservative and prudent financial management. Council has established focus on balancing the need to address increasing community expectations, while adopting prudent budgets which allow it to continue to operate within its limited revenue base. As there will be some future operational subsidies required for some of the transformational projects this will necessitate a continued and enhanced focus on the long established disciplines Council has for financial planning and management.

b. In 2017, Council implemented a monthly performance reporting framework to augment its existing quarterly budget reviews and annual financial reports. In future years this reporting framework will play an important role in helping Council effectively maintain its strong financial position by enabling effective decision making regarding future budget allocations.

5. Maintaining and renewing our existing infrastructurea. In preparing a funding strategy for the new transformational projects, consideration

has also been given to ensuring Council can continue to adequately maintain and renews its existing infrastructure. In 2014 Council was granted approval by IPART for a special rate variation (SRV), which was staged over 2 years (2014/15 and 2015/16) to fund asset renewal works. This additional SRV revenue, combined with additional allocations of funding from other Council budget allocations, has resulted in a significant improvement in our renewal and replacement of aging infrastructure. In 2014 Council’s asset renewal backlog was $79.824 million. In 2018 the backlog has reduced to $48.795 million.

b. In the short to medium term, it is considered the current asset renewal funding strategy will continue to enable Council to adequately manage its asset renewal priorities. However, Council is confronted with the challenge of a rapidly expanding asset base, and increased utilisation of existing aged facilities. Council will need to continue to need to monitor whether its rate of asset renewal is adequate, and if found to no longer be adequate, consider options for increasing asset renewal funding. Unfortunately, within the regulated rate pegging environment, it may be necessary, in the future, for Council to contemplate an additional special rate variation (SRV) to address asset renewal needs.

6. Council’s investment management and liquidity a. Council has historically set conservative parameters and controls for the

management of its investment portfolio. Council was one of the few NSW councils in the previous decade to have not invested in high risk investments such as CDOs, and as a consequence it has not suffered any capital loses. With a significant land acquisition program to acquire approximately $1.5 billion of Section 7.11 funded land, cash management is a significant challenge for Council. Considerable effort has been given to devising a funding strategy for the cost of the transformational projects so that, adequate funding is available to align with the staged approach of these projects completion.

b. Council’s current ratio as at 30 June 2018 was 3.05:1, well above the industry target of 1.5:1, and highlighting Council’s strong liquidity. This is further demonstrated by Council’s Cash expense cover ratio, which as at 30 June 2018 was 21.91 months, compared to an industry target of > 3 months.

7. Transformational projects program funding strategy – capital costsa. Underpinning Council’s Transformational Projects program is a funding strategy

which comprises 5 key funding sources. These are as follows:

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i. External borrowingsii. Allocation of proceeds from Council’s Land Development activitiesiii. Internal borrowings from internally restricted assetsiv. Repayment of internal borrowing from future budget allocationsv. S7.11 funding (note will only be utilised for partial funding of one of the

Transformational Projects).b. The funding strategy involves the use of multiple sources of funding to enable the

delivery of major transformational projects over the current term of Council, with further projects to occur in subsequent terms of Council, to a total value (in present value terms) of around $300 million. It is noted that, at the time of preparing this report, the funding strategy is primarily targeted towards the funding of:i. International Centre of Training Excellence (ICTE) - $100 millionii. Warrick Lane/University - $76.5 million.

c. For the other 6 transformational projects, detailed scoping and cost estimates are still being completed. At the time of writing this report it is estimated the overall program will total around $300 million, noting that the funding strategies for further transformational projects will be considered in future Council reports.

8. External borrowingsa. In overall terms, the primary source of funding will be proceeds from the disposal of

land. However, as these proceeds will occur over many years, in order to bring forward the availability of funding, other sources of funding will be needed. The use of external borrowings will be necessary to ensure there is adequate funding available, and that the external borrowings will be repaid by future proceeds from land disposal.

b. Interest rates are currently at historically low levels. Making the use of external debt to help fund key transformational projects which will benefit the city for many years is both appropriate and responsible. In the proposed funding strategy the use of external borrowings is primarily only for cash flow purposes. By using external borrowings Council can complete the delivery of the major transformational projects earlier, than if it was to wait until sufficient proceeds from land disposals been received. As Council is currently debt free, it has the capacity to take on significant external borrowings, subject to future capacity to repay and industry benchmarks. The actual permissible debt, based on industry benchmarks, is in the order of $215 million. This amount though would result in considerable future interest expense, and the overall repayment amount is considered well above Council’s actual capacity to service this debt.

c. At this point the funding strategy deals with only the ICTE and Warrick Lane for which projected external borrowings will total a maximum of $8.5 million. This amount will be lower should proceeds from our land development activities occur earlier than projected.

d. It is further noted that borrowings will be in accordance with Council’s adopted borrowing policy (Report CS370124 October 2017), which guides the use and purpose of external borrowings. In summary, in accordance with this policy, Council will only use funds from external borrowings for the creation or major refurbishment of significant infrastructure assets, and, that external borrowing will be the last source of funding utilised after other funding sources have been exhausted.

9. Allocation of proceeds from Council’s Land Development activities a. Council has, over many years, had success in the development of surplus

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2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37Base 36,109 63,639 93,608 108,13 123,73 131,37 139,84 158,53 168,20 177,92 187,62 197,30 206,96 216,59 226,21 231,66Optimistic 40,121 70,710 104,00 120,14 137,48 145,97 155,38 176,14 186,88 197,69 208,46 219,22 229,95 231,66Pessimistic 32,498 57,275 84,247 97,318 111,36 118,23 125,85 142,67 151,38 160,13 168,85 177,57 186,26 194,93 203,59 212,23 220,85 229,45 231,66

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Land Project cash available (cumulative)

operational land holdings, the proceeds from which have been used for specific projects. In 1984, Council established a ‘Land Projects’ internal committee with a long term objective of maximising the return on surplus of Council "operational" land holdings. Proceeds from Council’s Land Development activities have helped fund major iconic new infrastructure in the City, such as the AFL/Cricket Precinct at Blacktown International Sportspark, the Blacktown (Max Webber) Central Library and the Blacktown Civic Plaza. In recent years, we have expanded our Land Development program to increase the rate at which we develop and sell operational land.

b. An important consideration is the variability, both in terms of timing and amount, of proceeds from land development activities. These can be impacted by a number of factors, many of which are beyond Council’s control. These include prevailing economic conditions (such as interest rates, economic growth, unemployment) which can either positively or negatively impact on the demand for real estate and market prices.

c. To allow for the potential variability of the future timing of proceeds from land development activities, the funding strategy allows for 3 alternate scenarios relating to the timing of cash flows. In the ‘pessimistic’ scenario it is projected that land development activities generally takes longer. Conversely in the ‘optimistic’ scenario projected future proceeds from land development activities occur sooner, and in the third scenario, being the ‘base’ scenario revenues occur at a midpoint between the ‘pessimistic’ and ‘optimistic’ case scenario. In each scenario overall proceeds are approximately the same, but the timing of when they are received varies. This is shown in the graph below:

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Land type Land location Number of lots $ M

Residential Pony Club Lots 10 & 5 Dp 26987 Burdekin Rd Blacktown 3 17.8$ Residential Hambledon and Schofields Roads, The Ponds 29 11.8$ Residential Lot 17 Fermoy Road, Marsden Park 44 11.1$ Residential Lot 103 DP 1191633 & lots 9-11 DP 1210641 Schofields Rd, Schofields 35 10.8$ Residential 155 & 159 Regent Street, Riverstone (Lot 5 & 6, Sec N, in DP 712) 50 10.6$ Residential 231 Garfield Road East, Riverstone (Lot 4 Sec 27 in DP 1459 – Property No. 115581) 31 6.4$ Residential Lots 149 & 150 DP 810290 James Cook Dr, King Langley 29 5.3$ Residential 154 Regent Street, Schofields 28 4.0$ Residential Lots 1-4, 37-44, Sec 22 in DP 1480 Melbourne Rd, Riverstone 12 3.4$ Residential Lot 7, Sec F, DP 712 Brighton Street, Riverstone 10 2.3$ Residential Part Lot 107 DP 1191633 Schofields Road, Schofields 1 2.0$ Residential Lot 10 DP1164625 Jim Filmer reserve & Lot 1 DP228688 Reserve 23 Blacktown 2 1.9$ Residential Lot 58 Junction Road, Schofields 10 1.4$ Residential Adna Street, Plumpton 6 1.3$ Residential Eskdale/Kingston St, Minchinbury 6 1.2$ Residential Lots 16-18, Sec 3, DP 5172, Shaughnessy Street, Oakhurst 5 1.0$ Residential Lots 1 & 2 DP 558746 and Lot 40 Sec 4 DP 1479 Sydney Street Riverstone 3 1.0$ Residential Road sale Pelican Road, Schofields (56-1421-3) 1 0.8$ Residential 10 Quakers Road, Marayong 1 0.5$ Residential Road sale Hambledon Road, Schofields (F15/462) 1 0.5$ Industrial Closure of part Hollinsworth Rd, Marsden Park 1 0.6$ Commercial Lot 3, Flushcombe Road, Huntingwood Employment Lands 1 6.9$ Other Scheduled lands - Riverstone 16 5.7$

325 107.9$ TOTAL

d. Council has existing land holdings that are forecast to generate net cashflows of approximately $108 million on the base case scenario outlined in the table below:

e. Council projects to acquire and develop additional land holding to generate net cash flows of $124 million approximately up to 2036/37. Future properties to be acquired and developed will be assessed based on Council’s Land Development Strategy on the following key performance indicators:

i. Return on revenue (also known as net profit margin) – target rate of 16% or greater. Return on revenue is calculated as net profit as a percentage of net sales revenue.

ii. Return on costs – target 19% or greater. This is calculated as net profit as a percentage of total development costs.

iii. Internal Rate of Return (IRR) – Target rate of 17.5%. IRR is the calculated discount rate for a project at which level the net present value of costs equals the net present values of revenues for the project.

f. These scenarios have been used to inform what ranges of external borrowings may be needed to compensate, especially in earlier years, should proceeds from land development projects be delayed.

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2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37Base 8,600, 50,250 58,100 68,750 88,000 82,400 67,100 60,400 53,100 45,400 33,900 21,750 8,950, -Optimistic 1,400, 39,550 45,250 53,450 70,900 63,250 44,650 35,450 25,450 14,850 350,00 -Pessimistic 15,000 59,900 69,700 82,600 103,50 99,850 87,750 83,450 78,700 73,700 65,050 56,050 46,450 36,250 25,450 13,950 1,750, -

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g. It is noted that the projected debt levels for the Warrick lane and ICTE projects only are outlined in the table below:

h. To give a clearer indication of overall debt levels for the entire transformational projects program, the debt levels below relate to an anticipated total program of $300 million, which relies on future decisions of Council.

i. In each scenario the maximum level of debt occurs in the 2023/24 year, with the outstanding loan balance from this point reducing until all external debt is repaid by 2029/30 (optimistic scenario) to 2035/36.

External debt required (Loan balance at year end)

j. As contained in Council’s borrowing policy external debt will always be the final source of funding used. Accordingly, should the timing of land development proceeds be more favourable than the projected then Council would only require a lower level of debt. The actual level of external debt would be closely monitored during the full duration of the transformational projects funding strategy.

10. Internal borrowings from internally restricted reservesa. Council presently has significant amounts of internally restricted reserves, which as

at 30 June 2018 totalled $220.8 million. The funds held in internally restricted reserves are for specific purposes as resolved by Council. However, following

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detailed analysis of when these amounts will be likely required for expenditure, it has been determined that an internal borrowing of up to $30 million from these internally restricted reserves is possible. This amount can be repaid in approximately 11-13 years (2030/31) from future budget allocations. Therefore, some of the funds held in internally restricted reserves can be used to help forward fund a proportion of the transformational projects.

11. Repayment of internal borrowings from future budget allocationsa. Since 1998/99 Council’s annual budget has included its Infrastructure Sinking Fund,

an annual allocation which has been used as a contributory funding source towards major capital projects.

b. Some of this allocation is non-discretionary, in that, in accordance with previous Council resolutions, it must be allocated to specific purposes (such as road renewal works and drainage infrastructure). The balance of the allocation is discretionary. Council’s adopted transformational projects funding strategy includes the allocation of $5 million per year (which for just ICTE and Warrick Lane is required until 2024/25 or for the entire transformational projects program is required until 2032/33) towards the repayment of internal borrowings for funding part of the cost of the transformational projects.

12. Section 7.11 fundinga. An important source of funding for Council is S7.11 developer contributions,

whereby Council can levy new development for part of the cost of new infrastructure that will help support the new development. The Warrick Lane project incorporates an underground car park, and plaza/recreation area above the car park. These works will be funded from Council’s S7.11 CP 19 Blacktown Growth Precinct plan, to a value of $40 million.

13. Transformational projects program funding strategy – operating costsa. At the time of writing this report projections relating to operating revenues and

expenses have only been completed for the following 2 transformational projects: i. International Centre for Training Excellence (ICTE)ii. Warrick Lane/University.

b. In regard to the ICTE it is projected that its annual operational subsidy in present day terms will be in the order of $1.5 million pa. the basis for this projection is covered in separate report CT380106. It is proposed that Council progressively, over a 3 years, include expansionary budget allocates of $500,000 pa. commencing from 2019/20 up until 2021/2022 so that in that there is provision of $1.5 million subsidy for the ICTE. The allocations of funding from 2019/20 to 2021/2022 will be reserved in a new internally restricted reserve to provide a future source of funding for the ICTE future upgrades and works. The inclusion of these expansionary requests will necessitate the need to carefully consider other budgetary expansionary requests in these years. It is noted though that Council has previously included additional funding in its annual budget for new facilities such as the AFL/Cricket Precinct, Blacktown Leisure Centre Stanhope and the Blacktown Showground Precinct.

c. In regard to the Warrick Lane transformational project, it is projected that this project should be cost neutral. Revenues will be generated by the commercial and retail space of the 2 flanking buildings, which is estimated to be approximately $520,000 pa. and that this revenue will fund operational costs associated with the project including security, maintenance and cleaning.

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Context

1. Preliminary and ongoing consultationsa. In addition to the formal consultation program discussed in the Key reasons

section, many key community and stakeholder engagement steps have already been undertaken or are ongoing in regard to the transformational program and the ICTE and Warrick Lane projects.

b. These measures are in keeping with the intent of the capital expenditure and IP&R guidelines and include:

Incorporation of the transformational projects and updated information in our IP&R documents

Ongoing media promotion and escalated campaigns at key points

Community discussions including the budget forums in 2017 and 2018

Targeted stakeholder discussions relevant to each project, including advocacy to government where appropriate.

________________________________End of report_______________________________

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DELIVERY PROGRAM 2017-2021PROPOSED

Revised information including funding strategies for the

• International Centre of Training Excellence

• Warrick Lane development

transformational projects

Public exhibition 22 October – 19 November 2018

Attachment CS380208.1

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Proposed Amendments to Delivery Program 2017-2021

Explanatory Note

The following information represents proposed revisions to Blacktown City Council’s

Delivery Program 2017-2021.

The most recent annual update of Council’s 4 year Delivery Program was adopted

as part of Council’s Integrated Planning and Reporting framework documents on 27

June 2018.

The purpose of this revised information is to reflect, in the relevant sections of the

Delivery Program, the proposed funding strategies for 2 of Blacktown City’s

transformational projects:

International Centre of Training Excellence (ICTE)

(located in the Blacktown International Sportspark at Rooty Hill)

Warrick Lane development

(in Blacktown City Centre)

The necessary funding allocations to deliver these 2 projects entails a significant

amendment to the 2017-2021 Delivery Program.

Accordingly, revisions are proposed to the following sections of the Delivery Program

2017-2021. In each case, amended text and figures are indicated in green.

Pages referred to are those in the adopted Delivery Program 2017-2021, which is

published on Council’s website www.blacktown.nsw.gov.au.

Contents:

(proposed amended pages of Delivery Program 2017-2021)

Pages 21-23 Budget summary

Pages 27-28 International Centre of Training Excellence

Page 29 Warrick Lane development

Attachment CS380208.1

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Proposed Amendments to Delivery Program 2017-2021

Budget summary

The budget summary is an overview of Council’s budget estimates for the term of the Delivery Program 2017–2021. The budget for each financial year is reviewed annually and updated for the current financial year and for the remaining years of the Delivery Program.

The budget is presented in 3 main sections as follows:

The operational result, which includes all operational income, expenditure and depreciation

The capital result, which includes capital income and expenditure for capital projects throughout the City

Funding movements, which includes funding allocated to and from restricted cash reserves during the financial year.

Combined, these 3 components project balanced budgets over the 4 year budget period. These projections highlight that Council is ensuring it is not spending beyond its funding capacity.

Provision has been made in the budget for the following projects and activities:

$5 million allocated towards further progressing the funding strategy for the City’s program of transformational projects

A further $4.6 million allocated towards the construction phase of the new Animal Rehoming Centre to be built at Glendenning

$18.3 million for road and footpath improvements across the City

$4.2 million for drainage improvements across the City

$80 million for the purchase of land in the new release areas to deliver essential roads and drainage infrastructure

$24.8 million for new open space in the growing areas of Riverstone, Schofields and Marsden Park (consisting of open space - $4.2 million, drainage $15.2 million and roads - $5.4 million)

$1.7 million for the final stage of the construction of Riverstone Parade, Riverstone (provision of a 4

land road from Garfield Road East to Victoria Street including pavement, kerb and gutter, drainage and cycleway)

$6.6 million for building improvements across the City

$2.5 million to upgrade facilities at Council’s sporting grounds

$1.2 million for rehabilitation works of Breakfast Creek, Main Branch, Blacktown

$893,000 to improve the City’s playgrounds

$1.6 million for new, upgrade and renewal works in Nurragingy reserve, Doonside.

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4 year budget forecast summary

The following table is a budget forecast summary for the 4 year period of the Delivery Program. The overall forecast budget for this term of Council is $2.7 billion

2017/18 2018/19 2019/20 2020/21

Operational expenditure (including depreciation)

$306 million $328 million $339 million $352 million

Capital expenditure (including dedicated assets)

$304 million $313 million $404 million $400 million

Total $610 million $641 million $743 million $752 million

Source of income

Major areas of expenditure (operational):

Waste management - $46.5 million

Open space - $30.8 million

Buildings - $25.5 million

Aquatic, leisure and recreation - $19 million

Kids Early Learning - $21 million

Planning services - 17.5 million

Customer service and governance support services - $16.4 million

Roads, footpaths and bridges - $60.7 million

Street lighting - $7.1 million

Libraries - $9.6 million

2% - Interest on investments

3.1% - Other revenues

7.4% - Fees and charges

2.6% - Proceeds from the sale

of Council assets (property

development and plant)

41.5% - Rates and annual charges

43.3% - Grants and contributions

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Budget Summary 2018-2021

2018/19 2019/20 2020/21

$ $ $

Operational

Income Rates and annual charges (220,456,055) (233,253,925) (244,132,409)

Fees and charges (39,346,717) (40,428,770) (41,540,547)

Interest received (10,869,254) (10,888,946) (11,242,860)

Other revenues (16,526,431) (17,011,670) (17,479,394)

Grants and contributions - operating (25,313,397) (24,708,234) (24,221,544)

Net gains from the disposal of assets (13,852,800) (26,324,100) (19,161,000)

Total operational income (326,364,654) (352,615,645) (357,777,754)

Expense Employee costs 150,419,348 156,023,081 161,002,071

Materials and contracts 71,893,309 74,553,609 77,891,801

Other expenses 36,102,525 37,565,627 40,494,827

Total operational expenditure 258,415,182 268,142,317 279,388,699

Operational result - (surplus) / deficit (67,949,472) (84,473,328) (78,389,055)

Depreciation (non-cash item) 69,150,000 71,183,019 72,635,148

1,200,528 (13,290,309) (5,753,907)

Capital

Income Grants and contributions - capital (204,401,000) (250,321,157) (244,962,932)

Total capital income (204,401,000) (250,321,157) (244,962,932)

Expense Capital expenditure 203,063,003 328,607,584 315,361,437

Dedicated assets 110,000,000 75,755,921 84,498,319

Total capital expenditure 313,063,003 404,363,505 399,859,756

108,662,003 154,042,348 154,896,824

Funding movements

Transfer from reserve (211,439,020) (339,306,155) (308,507,916)

Transfer to reserve 182,417,289 288,711,635 261,654,047

Add back depreciation (69,150,000) (71,183,019) (72,635,148)

Add back book value of assets disposed (11,690,800) (18,974,500) (29,653,900)

Total funding movements (109,862,531) (140,752,039) (149,142,917)

Net result - (surplus) / deficit 0 0 0

Capital result - (surplus)/deficit

Operational result including deprciation - (surplus) / deficit

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Transformational projects International Centre of Training Excellence - $100 million Project lead Blacktown City Council Potential partners Sydney Planning Panel, Western Sydney Parklands Trust, Cricket NSW, Football Federation Australia, Western Sydney Wanderers, NSW Softball, Baseball NSW, Athletics NSW, Little Athletics NSW, AFL NSW/ACT, tertiary education providers, health professionals and insurance companies. Strategy statement To design, develop and deliver a technologically-advanced building for sports science, training and accelerated- recovery available for athletes of all levels and the broader public as part of Blacktown International Sportspark Sydney. It is intended that the International Centre of Training Excellence (ICTE) will be open in 2020. 2036 statement - Where we will be The ICTE is a nationally and internationally-renowned facility, the centrepiece of the BISP. The Centre caters for sport at every level, from community sporting groups to local elite athletes and visiting international teams. The public and workers have access to the facility to aid them in injury recovery. Priorities for 2018/19 The appointment of a team of experts for the ICTE project (project managers, architects and business case writers. Key actions for 2018/19 will be:

three packages of planning approval documents prepared: o roads and infrastructure o fields and tracks o building.

report of Environmental Effects submitted for Council approval

tender packages for construction issued, assessed and awarded

construction works in multiple packages (including the main building works) are anticipated to commence in 2018 and continue through to the end of 2019.

Fit-out and commissioning of the ICTE building is anticipated to occur in 2020.

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Funding strategy The funding strategy for the ICTE will be approved by Council in late 2018, following consideration of the business case and a capital expenditure review of the project, including community consultation. The funding strategy is incorporated in a revised Long Term Financial Plan to be exhibited and adopted by Council.

Anticipated capital cost of the project: $100 million

Anticipated net operating cost of the facility: $1.5 million per annum. Operational Plan action relating to this project 5. A sporting and active city 1.2.3 (page 111)

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Transformational projects Warrick Lane development - $76.5 million Project Lead Blacktown City Council Potential partners Commonwealth and NSW Government agencies Strategy statement To secure the development of the Warrick Lane precinct, attract external investment and revitalise Blacktown Central Business District. In order to achieve this, Council will acquire sites, build necessary infrastructure and approach investors. Council’s plan will include key infrastructure, car parking and public open space, as well as commercial development sites, including uses such as university, civic, hotel, office and residential. 2036 statement – Where we will be The Warrick Lane site will be developed as a university, civic, commercial and residential hub in the Blacktown CBD, serving to attract further high-quality, sustainable development in accordance with the Blacktown City Centre Masterplan. Priorities for 2018/19 The Warrick Lane Masterplan was adopted by Council. Local Environmental Plan revisions for planning controls in the precinct have been submitted for approval by the NSW Government. Specialised consultants have been appointed for the project (project managers, architects, landscape architects and community consultation). The first components to be delivered are the roads, below ground car park and a new civic plaza. Acquisition process for all relevant property has commenced. The primary actions for 2018/19 are:

lodgement of planning documents in late 2018, with approval anticipated from the end of 2018 and early 2019

commence main tender process in early 2019, with site demolition works to commence in April 2019.

Attachment CS380208.1

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Funding strategy The funding strategy for the Warrick Lane development will be approved by Council in late 2018, following consideration of the business case and a capital expenditure review of the project, including community consultation. The funding strategy is incorporated in a revised Long Term Financial Plan to be exhibited and adopted by Council.

Anticipated capital cost of the project: $76.5 million

Revenue generated from retail leases will fund the necessary cleaning, maintenance and operating costs.

Operational Plan action relating to this project 3. A smart and prosperous economy 2.1.2 (page 85)

Attachment CS380208.1

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