Supplementary Agenda of Council

ETHICAL DECISION MAKING AND CONFLICTS OF INTEREST

A GUIDING CHECKLIST FOR COUNCILLORS, OFFICERS AND COMMUNITY COMMITTEES

Ethical decision making

Is the decision or conduct legal?

Is it consistent with Government policy, Council’s objectives and Code of Conduct?

What will the outcome be for you, your colleagues, the Council, anyone else?

Does it raise a conflict of interest?

Do you stand to gain personally at public expense?

Can the decision be justified in terms of public interest?

Would it withstand public scrutiny?

Conflict of interest

A conflict of interest is a clash between private interest and public duty. There are two types of conflict:

Pecuniary – regulated by the Local Government Act and Department of Local Government

Non-pecuniary – regulated by Codes of Conduct and policy. ICAC, Ombudsman, Department of Local Government (advice only). If declaring a Non-Pecuniary Conflict of Interest, Councillors can choose to either disclose and vote, disclose and not vote or leave the Chamber.

The test for conflict of interest

Is it likely I could be influenced by personal interest in carrying out my public duty?

Would a fair and reasonable person believe I could be so influenced?

Conflict of interest is closely tied to the layperson’s definition of ‘corruption’ – using public office for private gain.

Important to consider public perceptions of whether you have a conflict of interest.

Identifying problems

1st Do I have private interests affected by a matter I am officially involved in?

2nd Is my official role one of influence or perceived influence over the matter?

3rd Do my private interests conflict with my official role?

Whilst seeking advice is generally useful, the ultimate decision rests with the person concerned.

Agency advice

Officers of the following agencies are available during office hours to discuss the obligations placed on Councillors, officers and community committee members by various pieces of legislation, regulation and codes.

Contact	Phone	Email	Website
Bega Valley Shire Council	(02) 6499 2222	council@begavalley.nsw.gov.au	www.begavalley.nsw.gov.au
ICAC	8281 5999 Toll Free 1800 463 909	icac@icac.nsw.gov.au	www.icac.nsw.gov.au
Division of Local Government (DPC)	(02) 4428 4100	dlg@dlg.nsw.gov.au	www.dlg.nsw.gov.au
NSW Ombudsman	(02) 8286 1000 Toll Free 1800 451 524	nswombo@ombo.nsw.gov.au	www.ombo.nsw.gov.au

TO: The General Manager
Bega Valley Shire Council

Disclosure of pecuniary interests / non-pecuniary conflict of interests

In accordance with the Council’s Code of Meeting Practice and the requirements of the Local Government Act and regulations or dispensation issued by the Division of Local Government I hereby disclose the following pecuniary interests and/or non-pecuniary conflict of interests at the meeting as indicated below:

Ordinary meeting held on _____ / _____ / 20___

dd mm yy

	Item no & subject
	Interest (tick one)	Pecuniary interest Non-pecuniary conflict of interest
	* Nature of interest
	If Non-pecuniary (tick one)	Disclose & vote Disclose & not vote Leave chamber

	Item no & subject
	Interest (tick one)	Pecuniary interest Non-pecuniary conflict of interest
	* Nature of interest
	If Non-pecuniary (tick one)	Disclose & vote Disclose & not vote Leave chamber

Signed
Print Name	Councillor

* Note: Under the provisions of Section 451(1) of the Local Government Act 1993 (pecuniary interests) and Part 6.11 of the Model Code of Conduct prescribed by the Local Government (Discipline) Regulation 2004 (conflict of interests) it is necessary for you to disclose the nature of the interest when making a disclosure of a pecuniary interest or a non-pecuniary conflict of interest at a meeting.

Council 20 March 2013 Item 11.6

11.6. 25-27 Market Street Merimbula - Classification of land at the Mobil Service Station Site be made operational.

Advising Council of classification of land at 25-27 Market Street Merimbula as operational.

Group Manager Infrastructure, Waste & Water

Background

On 29 September 2009 Council resolved to bid for the former Mobil fuel site in Market Street Merimbula, subject to certification the property had been remediated to residential standard. The offer of $1.5m plus GST was accepted, with settlement to take place by 30 November 2011. Settlement has since been deferred on 2 occasions while the remediation process continued.

Three Certificates of title were issued for this land on the 28December 2012 for

Lot 1 DP 163738,Lot A DP 201599

Lot 12 DP 567206

Lot 2 DP 91361

All public land must be classified by council as either “community” or “operational” land. The main effect of classification is to restrict the alienation and use of the land. “Operational” land has no special restrictions other than those that may apply to any piece of land.

Council has further resolved, previously, as follows:

12 December 2012

That Council note the report and proceed to settlement of 25-27 Market Street Merimbula, with the Mayor and General Manager authorised to execute documents and apply Council’s seal

That a loan of $1.5m over 5 years be raised for the purpose of acquisition of 25-27 Market Street Merimbula, serviced by Merimbula roads and parking development contributions

That a licence to occupy be secured from Mobil and the site be turfed in preparation for the holiday season.

That the reports on this matter be declassified after settlement.

27 October 2009

That Council endorse the action of the General Manager to make the revised Expression of Interest for 25 – 27 Market Street, Merimbula as detailed in the report to Council dated 27 October, 2009, for $1.5 million (plus GST).

That the matter be deferred for further report, subject to satisfactory resolution of the terms contained in the revised Expression of Interest.

10 November 2009

That Council note the acceptance by Mobil of its offer to purchase 27 Market Street, Merimbula, inclusive of modified clauses in the contract enabling either party to rescind should the remediation works or environmental report not be complete to standard by settlement or by extension.

That the General Manager and Mayor be authorised to execute contract documents.

That following exchange of contracts, the reports on this matter be declassified.

Legal

Any public land that is acquired by or vested in council after 1 July 1993 may be classified by resolution of council. Land must be classified on its acquisition by council or within 3 months after it acquires the land under the Local Government Act section 31(2) If not, the land is automatically classified as community (s.31(2)) (below)..

LOCAL GOVERNMENT ACT 1993 - SECT 31
Classification of land acquired after 1 July 1993

31 Classification of land acquired after 1 July 1993

(1) This section applies to land that is acquired by a council after the commencement of this Division, other than:

(a) land to which the Crown Lands Act 1989 applied before the acquisition and continues to apply after the acquisition, and

(b) land that is acquired for the purpose of a road.

(2) Before a council acquires land, or within 3 months after it acquires land, a council may resolve (in accordance with this Part) that the land be classified as community land or operational land.

(2A) Any land acquired by a council that is not classified under subsection (2) is, at the end of the period of 3 months referred to in that subsection, taken to have been classified under a local environmental plan as community land.

(2B) While the land remains unclassified:

(a) the land may not be used for any purpose other than that for which it was being used immediately before it was acquired, and

(b) the council may not dispose of any interest in the land.

(3) A council must not resolve under this section that land be classified as operational land if:

(a) the land is classified as community land immediately before its acquisition, or

(b) the resolution would be inconsistent with any other Act, the terms of any trust applying to the land or the terms of any instrument executed by the donor or transferor of the land.

Conclusion

The acquisition of 25-27 Market Street Merimbula had been resolved by Council on 29 September 2009. The classification of the land to operational will enable progress towards detailed design for the CBD bypass. The classification of the land will also enable Council to progress towards sale, lease or development of the site once subdivision is complete

ATTACHMENTS

Nil

Recommendation

That Council resolve under section 31(2) of the Local Government Act to classify the land at 25-27 Market Street Merimbula as Operational

Council 20 March 2013 Item 11.7

11.7. Sapphire Aquatic Centre Facility Management Agreement

Sapphire Aquatic Limited, the entity contracted by Council under a Facility Management Agreement to manage and maintain the Sapphire Aquatic Centre at Pambula, has notified Council that they are seeking additional funding until the expiry of the Facility Management Agreement in October 2013.

General Manager

Background

Sapphire Aquatic Limited (SAL) are engaged under a Facility Management Agreement (FMA) to manage and operate the Sapphire Aquatic Centre. The Chairman has advised Council in writing (Attachment No 1 – Confidential) that SAL are experiencing cashflow difficulties and may no longer remain financially solvent. SAL have advised that unless Council is willing to provide additional funds of between $100,000 and $120,000 to allow SAL to continue to trade, they may withdraw from the current facility management agreement prior to its expiry on October 7, 2013.

ISSUES

Legal

The facility management agreement allows for withdrawal from the agreement without material breach if both parties agree to the withdrawal.

Financial insolvency is a breach item under the FMA, causing the agreement to be void.

A criterion for Council to receive crown funding in the construction of the facility requires the facility to be open for a period of 5 years. Presently the facility has been open for 2.5 years.

Asset

The Pambula Aquatic Centre, while an asset of Council, was constructed by a community entity named Pambula Aquatic Centre Inc (PACI), supported by Federal Regional Local Infrastructure Project (RLCIP) grant of $2.2m, Council funds of $1.1m and community/Rotary Club funding of $750k, to provide an enclosed aquatic facility. The asset has not formally reverted back to Council due to a number of outstanding issues with the facility. A recent independent asset investigation commissioned by Council identified a number of issues regarding the condition and operation of pool assets.

Council, SAL and Pambula Sports Complex Committee have been working on a Masterplan for the complex and a DA for squash courts, supported by grants, donations and GSRC funding.

PACI hold an outstanding debt (head works charges) to Council for $119,700 repayable over the next nine (9) years at $13,300 per annum. The original agreement was that this debt would be transferred to SAL so that PACI could be wound up as a legal entity. If SAL were to withdraw from the FMA, then this debt would need to be written off.

Social / Cultural

Council has a standing resolution that stated that Council would underwrite any advance receipts made by members of the community in the event that SAL ceased to trade. This underwriting would extend to any memberships and learn to swim classes paid in advance.

Economic

Council was initially advised by PACI that the operation of the Aquatic Centre would only require a contribution from Council of $80,000 (plus GST). This was the equivalent contribution as provided to the old Pambula outdoor pool complex. The advice given was that the new facility would be self-sufficient and not require additional funds from the community. Council agreed to proceed with the facility.

In the budgetary process for the 2011 financial year, SAL approached Council with a cash flow shortage. The facility was not generating the revenue that was predicted and an additional $40,000 in annual contribution was sought. Council agreed to the increased contribution under the notion that the old Pambula outdoor pool only operated for 6 months of the year and therefore it was reasonable that a full year operation like the indoor facility would require more funds. This brought the total Council contribution to $120,000 per annum plus GST.

In the budgetary process for the 2012 financial year SAL approached Council again with a cash flow shortage. There were a number of operational issues that had arisen, such as increased power costs and wages. SAL requested that Council increase its contribution by a further $30,000 to an annual contribution of $150,000 per annum. Council agreed to this request making it clear to SAL that no further increase would be considered.

In the budgetary process for the 2013 financial year SAL approached Council again seeking a further $50,000 per annum to balance their budget. The main cause of this shortfall was the continuing increase in electricity costs, among other issues. Council denied this request and advised SAL that they needed to show where they had identified and made savings within their operations before asking for additional funds from Council. In addition, during the 2013 financial year the deferred payment of the headworks charges levied on the facility were to commence being repaid. Council agreed that Council would “pay” the first years liability of $13,300 on behalf of SAL, in addition to the annual contribution from Council remained at $150,000 plus GST.

On Wednesday March 13, 2013 SAL presented to Council advising that electricity prices were continuing to rise, even with the installation of solar panels, and that in order to remain financially sustainable they would require an additional $100,000 by the end of June 2013 and approximately $120,000 to remain in operation to the expiry of the facility management agreement in October 2013.

Attached to this report (Attachment No 2 – Confidential) is a comparison of the original operating budget prepared by SAL for the first year of operation, against the current 2013 operating budget.

The attached letter makes mention that Council currently pays for the electricity and chemical costs of its other aquatic facilities. That is correct - however those costs are deducted from the contribution paid to the operators of those facilities towards the maintenance and upkeep of Councils assets. The reason for Council paying for chemicals and power directly is the increased buying power that Council attracts and therefor cheaper prices for the facilities. The Sapphire Aquatic Centre purchases electricity on Council’s contract currently. SAL is requesting that these costs be paid in addition to any contribution made by Council.

Financial

Council has a budget vote of $150,000 for the Aquatic Centre. There has not been any provision made in the Long Term Financial plan for an increased contribution to the Aquatic Centre beyond CPI over the next 10 years.

Any additional funds allocated to SAL would require Council to identify an alternate service or facility that the funding would need to be transferred from. The request is equivalent to 0.6% of the general rate income of Council.

SAL have advised in their advice to Council that they are willing to remain under the FMA, assuming that funds are provided to either the end of June 2013, or the expiration of the FMA on October 7, 2013.

Conclusion

Council has previously increased its contribution to SAL from $80,000 in 2010 to $150,000 in 2013. Council also contributed in excess of $1,000,000 to the capital construction costs of the facility.

Councils current resolution to underwrite any future receipts as well as the crown stipulation that the facility must remain open for a period of not less than 5 years means that Council must keep the Aquatic Centre operational, regardless of whether or not SAL remain the custodians.

Council has scheduled the preparation of documents to seek Expression of Interest (EOIs) from the market to manage and maintain the SAC from the expiry of the current FMA. That process could be brought forward.

If Council was unable to provide funds to SAL, which resulted in SAL withdrawing from the FMA, Council would have a number of options available to it, including;

Ø Providing a one off payment to an operator to keep the facility in operation while Council tenders for a new FMA with a new operator. This operator may or may not be currently associated with SAL.

Ø Council could manage the facility itself allowing it time to investigate and analyse the facility to confirm a more definite level of ongoing contribution

Ø The facility may be closed for a period of time for maintenance.

If Council resolves to provide additional funding to SAL, Council will need to identify the source of these additional funds for amendment to Councils operating budget and Long Term Financial Plan.

ATTACHMENTS

1 . Letter to Bega Valley Shire Council from Sapphire Aquatic Limited - 14 March 2013 (Councillor Only) (Confidential)

2 . Sapphire Aquatic Centre 2010 - 2013 Comparison Budget (Councillor Only) (Confidential)

Recommendation

1. That Council note the written advice from Sapphire Aquatic Limited stating that they will shortly be unable to meet their financial obligations.

2. That Council resolve as to whether or not additional funds can be sourced to allow SAL to continue trading.

3. That Council resolve the value of those funds and their source of funding. Noting that the value of funds will dictate the timeframe for SAL’s exit from the Facility Management Agreement.

4. That if Council is unable to provide additional funding, Council delegate authority to the General Manager to proceed with the orderly withdrawal of SAL from the current Facility Management Agreement

5. That Expressions of Interest be called for new Facility Management Agreement.

6. That Council determined what arrangements to implement in the interim until a new Facility Management Agreement can be tendered..