· Web viewThis report provides a summary of the City’s COVID-19 response to date. It also recommends a statement of principles from Council to guide the City’s strategic and

Agenda

Special Council Meeting

14 April 2020

Dear Council member

A Special Meeting of the City of Nedlands is to be held on Tuesday 14 April 2020 commencing online at 5.30 pm for the purpose of a COVID-19 Response.

Mark GoodletChief Executive Officer

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9 April 2020

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Table of Contents

Declaration of Opening....................................................................................Present and Apologies and Leave f Absence (Previously Approved).............1. Public Question Time.....................................................................2. Addresses by Members of the Public.............................................3. Disclosures of Financial Interest.....................................................4. Disclosures of Interests Affecting Impartiality.................................5. Declarations by Members That They Have Not Given Due

Consideration to Papers.................................................................6. Coronavirus Disease 2019 Response............................................7. Rental Rebate Requests Due to COVID-19 Pandemic –

April 2020.....................................................................................Declaration of Closure...................................................................................

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City of Nedlands

Notice of a special meeting of Council to be held in online on Tuesday 14 April 2020 at 5.30 pm for the purpose of COVID-19 Response.

Special Council Agenda

Declaration of Opening

The Presiding Member will declare the meeting open at 5.30 pm and will draw attention to the disclaimer below.

(NOTE: Council at its meeting on 24 August 2004 resolved that should the meeting time reach 11.00 p.m. the meeting is to consider an adjournment motion to reconvene the next day).

Present and Apologies and Leave f Absence (Previously Approved)

Leave of Absence None.(Previously Approved)

Apologies None as at distribution of this agenda.

Disclaimer

Members of the public who attend Council meetings should not act immediately on anything they hear at the meetings, without first seeking clarification of Council’s position. For example by reference to the confirmed Minutes of Council meeting. Members of the public are also advised to wait for written advice from the Council prior to taking action on any matter that they may have before Council.

Any plans or documents in agendas and minutes may be subject to copyright. The express permission of the copyright owner must be obtained before copying any copyright material.

1. Public Question Time

A member of the public wishing to ask a question should register that interest by notification in writing to the CEO in advance, setting out the text or substance of the question.

The order in which the CEO receives registrations of interest shall determine the order of questions unless the Mayor determines otherwise. Questions must relate to a matter affecting the City of Nedlands.

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Special Council Agenda 14 April 2020

2. Addresses by Members of the Public

Addresses by members of the public who have completed Public Address Session Forms to be made at this point.

3. Disclosures of Financial Interest

The Presiding Member to remind Councillors and Staff of the requirements of Section 5.65 of the Local Government Act to disclose any interest during the meeting when the matter is discussed.

A declaration under this section requires that the nature of the interest must be disclosed. Consequently, a member who has made a declaration must not preside, participate in, or be present during any discussion or decision-making procedure relating to the matter the subject of the declaration.

However, other members may allow participation of the declarant if the member further discloses the extent of the interest. Any such declarant who wishes to participate in the meeting on the matter, shall leave the meeting, after making their declaration and request to participate, while other members consider and decide upon whether the interest is trivial or insignificant or is common to a significant number of electors or ratepayers.

4. Disclosures of Interests Affecting Impartiality

The Presiding Member to remind Councillors and Staff of the requirements of Council’s Code of Conduct in accordance with Section 5.103 of the Local Government Act.

Councillors and staff are required, in addition to declaring any financial interests to declare any interest that may affect their impartiality in considering a matter. This declaration does not restrict any right to participate in or be present during the decision-making procedure.

The following pro forma declaration is provided to assist in making the disclosure.

"With regard to the matter in item x ….. I disclose that I have an association with the applicant (or person seeking a decision). This association is ….. (nature of the interest). As a consequence, there may be a perception that my impartiality on the matter may be affected. I declare that I will consider this matter on its merits and vote accordingly."

The member or employee is encouraged to disclose the nature of the association.

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5. Declarations by Members That They Have Not Given Due Consideration to Papers

Members who have not read the business papers to make declarations at this point.

6. Coronavirus Disease 2019 Response

Council 14 April 2020Applicant City of NedlandsEmployee Disclosure under section 5.70 Local Government Act 1995

Nil.

Director Lorraine Driscoll, Director Corporate & StrategyCEO Mark GoodletAttachments 1. Declarations of State of Emergency and

Extensions2. Minister’s letter to the City of Nedlands3. Debt Recovery Policy4. Hardship Provisions Policy5. Purchasing of Goods & Services Policy6. Forecast Operational Impact 7. Department of Local Government and

Communities Operational Guidelines on Financial Ratios

Executive Summary

A state of emergency has been declared by the State Government in relation to Coronavirus Disease 2019 (COVID-19).

This report provides a summary of the City’s COVID-19 response to date. It also recommends a statement of principles from Council to guide the City’s strategic and financial approach going forward now that the initial risk management work and alignment with State and Federal Government direction has been achieved. A series of recommendations are included to enable Council’s strategic and financial direction to be enacted by the City. These recommendations include a new hardship provisions policy due to COVID-19, provide direction on the draft 20/21 budget, amend delegations to speed up the City’s ability to respond to COVID-19, enable the CEO to enact the Hardship Provisions Policy through delegations, provide more flexibility for traders, authorise specific a new City initiative to help the community where needed, continue the City’s childcare operations and align City purchasing tender limits with the State Government soon to be released tender limit change.

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Recommendation to Council

In response to the Coronavirus Disease 2019 (COVID-19), Council:

1. provides the following statement of principles in its response to COVID-19;

“The safety of the City of Nedlands community is Council’s highest priority during this COVID-19 crisis. Council acknowledges the unprecedented current and future impacts of COVID-19 on the City of Nedlands community. In responding to this crisis, the City will continue to;

a. Take whatever measures are needed to ensure the safety of the City of Nedlands community;

b. Meet its responsibilities for cooperation with all levels of Government to combat COVID-19;

c. Ensure that it continues to provide its services wherever and however it can in a financially responsible manner;

d. Play its role in providing economic activity in support of fiscal stimulus;

e. Do what it can to responsibly support those in the community who face economic hardship due to COVID-19.

2. revokes its Debt Recovery Policy;

3. approves the City of Nedlands Hardship Provisions Policy as per Attachment 2 of this report to provide relief to City of Nedlands residents, ratepayers, community groups, businesses and suppliers to the City of goods and services that now, or will, encounter extenuating hardships caused by the direct and indirect impacts of COVID-19;

4. requests that the CEO prepares the draft 20/21 budget;

a. based on a zero overall dollar value increase on rates and waste; and

b. targeting the following Financial Ratios which will assist the City’s increased fiscal response to COVID-19 and ensure future financial viability and ensure continued emphasis on asset renewal;

i. Liquidity (Current) Ratio 1.10, or 0.80 if borrowing for underground power;

ii. Asset Consumption Ratio 0.6iii. Asset Renewal Funding Ratio 0.9iv. Asset Sustainability Ratio 1.10v. Debt Service Cover Ratio 2.0, or 1.8 if borrowing for

underground power

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vi. Operating Surplus Ratio 0.01, or -0.15 if borrowing for underground power

vii. Own Source Revenue Coverage Ratio 0.4

5. requests that the CEO communicates Council’s position on the COVID-19 response to the community and in particular to those with an outstanding balance on their 19/20 rates;

6. authorises the CEO to seek amended or additional bank facilities if required (i.e. bank overdraft, change of purpose of existing loans, deferral of loan repayments, negotiation of bank repayment terms);

7. requests the CEO to advance a suite of shovel ready capital expenditure projects, including underground power, to best position the City for any stimulus funding that may become available;

8. approves the following amendments to delegations and to the Register of delegations in order to expedited efficient administrative processes and to give the CEO the ability to implement the Hardship Provisions Policy;

a. The CEO may waive or grant concessions in relation to any amount of money that is owed to the local government, subject to section 6.12(2), to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government Act 1995, section 6.12(1)(b);

b. The CEO may make an agreement with a person to pay their rates and service charges, to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government Act 1995, section 6.49;

c. The CEO may, if an instalment remains unpaid after the day on which the next instalment becomes due the local government, revoke the ratepayer’s right to pay by instalments, to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government (Financial Management) Regulations, regulation 66(2);

d. The CEO may recover an unpaid rate or service charge and the cost of proceedings in court of competent jurisdiction, to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government Act 1995, section 6.56(1);

e. The CEO may give notice to a lessee of land in respect of which there is an unpaid rate or service charge, requiring the lessee to pay its rent to the local government in satisfaction of the rate or service charge, to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government Act 1995, section 6.60(2).

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f. If a local government gives notice to a lessee, under section 6.60(2), and the lessee fails to pay rent to the local government, the CEO may recover the rate or service charge as a debt from the lessee, to be conditional on application of the City of Nedlands Hardship Provisions Policy, in accordance with the Local Government Act 1995, section 6.60(4).

g. The CEO may charge a person granted permission under this regulation a fee in accordance with the Hardship Provisions Policy for each month or part of a month for each m2 of public thoroughfare that is enclosed by a hoarding or fence as per the amount provided in the Hardship Provisions Policy, in accordance with the Local Government (Functions and General) Regulations 1996, regulation 6(8);

9. approves an extension to 12 months period for temporary use, wherein development approval of the local government is not required, in accordance with regulation 61(2)(d) of the Planning and Development (Local Planning Schemes) Regulations 2015;

10. consents to adjustments to waste collection services in parks and other reserves as determined necessary by the CEO;

11. approves the Community Outreach Program to assist vulnerable members of the community to access help;

12. approves ongoing operation of Point Resolution Child Care Centre and the negative budget income adjustment of -$120,000 to the end of June 2020;

13. add emergency fund line item to current and 20/21 budget of $1,000 and the amount for 2020/21 to be approved as part of the 2020/21 budget consideration process;

14. approves an amendment to the City of Nedlands Purchasing of Goods and Services Policy as per Attachment 2, on the condition that the Local Government (Functions and General) Regulations 1996 are amended to a $250,000 tender limit; and

15. ratifies the provision of free parking at Highview Park for Sir Charles Gairdner hospital workers, given the increased worker demand in preparation of their COVID-19 response.

ABSOLUTE MAJORITY

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Discussion/Overview

Background

On the 16th March 2020 the Minister for Emergency Services made a Declaration of State of Emergency under section 56 of the Emergency Management Act 2005, in relation to COVID-19 (refer to Attachment 1).

On the 17th March 2020 the Minister for Health made a Declaration of Public Health State of Emergency under section 167 of the Public Health Act 2016, in relation to COVID-19 (refer to Attachment 1).

Both declarations have been extended and remain current (refer to Attachment 1). These declarations give the State Government authority to issue enforceable directives under the Emergency Management Act and the Public Health Act.

In addition to enforceable directives the State and Federal Governments have issued various recommendations for safe practices as COVID-19 increases.

The Hon David Templeman MLA Minister for Local Government; Heritage; Culture & the Arts, has also written to Councils (refer to Attachment 2) to seek local governments’ cooperation at this time.

The City has been monitoring the evolution of the COVID-19 impacts on Australia and Western Australia. In preparation for these impacts full risk assessments were carried out across the organisation to enable the City’s business continuity response to be put in place and to enable the City to align with the Federal and State Government directions and recommendations on hygiene practices, social distancing and service restrictions.

Internally a COVID-19 Working Group (CWG) was formed, which keeps direct contact with State and Federal Governments communications channels, coordinates the City response and communicates to the community.

Tasks to date have been to give effect to the increased hygiene practices, with more cleaning carried out where it provides services with people interactions, and with communication to the community supporting this.

The City has also responded to the requirement for social distancing by changing customer contact protocols and meeting mechanisms, while ensuring that it continues to provide the customer service needed to allow the community to transact its business with the City. The CWG includes a member of the Communications business unit, to ensure messaging is delivered as quickly and effectively as possible to the community.

Some years ago, the City embarked on a cloud-based IT service, a key consideration being business continuity and the ability for a large portion of

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the workforce and the elected members, to conduct business online and remotely. This foresight has made for a relatively seamless transition to online remote business for the organisation.

The City’s Council and Committee meetings are now conducted online and live streamed to the community.

The requirement for social distancing has required some creative thinking in terms of service delivery. Key changes include:

Youth Program; Emerge Youth Art AwardsThe program has been adapted from a physical exhibition of youth art and ceremony to a virtual exhibition of videos and photography

Community Outreach Program The program has been introduced to respond to meet some of the day-to-day needs of community members impacted by coronavirus. The types of needs we will be able to meet include things like:

Shopping Picking up prescriptions from the chemist Deliver Activity Packs to seniors Dog-walking Providing accurate information on COVID-19 Providing Check-in calls to people who need them Letting people know about local businesses that are doing home delivery

and facilitating the person’s access to that if required Linking people with other services where appropriate.

Tresillian OnlineTresillian are currently developing an online course delivery in Term 2.

Library servicesExtended ‘books on wheels’ service offered to all City residents over the age of 65 has been met with a very positive response.

Council direction is now required on the overarching principles that will shape the strategic and financial directions in responding to COVID-19.

Statement of PrinciplesThe proposed statement reflects the prioritization of community safety as the primary strategic and financial driver at this time. It also emphasizes the need to cooperate with all levels of Government and support the directives impacting the various services operated by the City. The statement acknowledges that local governments need to normalize business operations as far as possible and to do its part to keep the wheels of the economy by continuing to conduct its business. The final part of the statement acknowledges that there will be hardship faced by some community members which the City can address through a Hardship Provisions Policy.

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“The safety of the City of Nedlands community is Council’s highest priority during this COVID-19 crisis. Council acknowledges the unprecedented current and future impacts of COVID-19 on the City of Nedlands community. In responding to this crisis, the City will continue to;

a. Take whatever measures are needed to ensure the safety of the City of Nedlands community;

b. Meet its responsibilities for cooperation with all levels of Government to combat COVID-19;

c. Ensure that it continues to provide its services wherever and however it can in a financially responsible manner;

d. Play its role in providing economic activity in support of fiscal stimulus;e. Do what it can to responsibly support those in the community who face

economic hardship due to COVID-19.

Revocation of the Debt Recovery PolicyIn order to deal with hardship issues within a new Hardship Provisions Policy, the Debt Recovery Policy (refer to Attachment 3) is recommended for revocation, as it is superseded. Debt recovery becomes a clause within the Hardship Provisions Policy

Hardship Provisions PolicyThe new Hardship Provisions Policy (refer to Attachment 4) is intended to provide financial relief to those affected by COVID-19 because of job loss, loss of business and the loss of service from the City. It aims to provide responsible relief by the provision of documentation from the affected person confirming their hardship where the City doesn’t already have its own evidence of this.

Key elements include:

Return of fees for cancelled bookings of City facilities; Rent waiver for not-for-profits and groups who rent City facilities; Storage facilities; Rates payment deferral for 12 months; Ensuring State Government levy relief is passed on; Commercial tenants of the City to receive 50% rent relief and balance

deferral arrangements with no interest charged on outstanding amounts rather than the standard 11% by local governments;

Residential tenants of the City to receive 25% rent relief and balance deferral arrangements with no interest charged on outstanding amounts rather than the standard 11% by local governments;

Interest free payment deferral of infringements and prosecutions; No new debt recovery referrals and no interest on deferrals; Ongoing childcare services at Point Resolution; Faster payment for suppliers.

It is noted here that the next report provides detail on the situation for community / sporting groups and commercial and residential tenants and the City’s response.

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Shovel Ready ProjectsThe City’s ability to move swiftly should there be grant funding for capital works, is contingent on it having projects that are at or near the construction stage. It is recommended that the City advance a suite of projects already in the pipeline to capture this opportunity, should it arise.

DelegationsThe proposed delegations align the relevant legislation with the Hardship Provisions Policy so that the CEO can enact the hardship provisions.

Temporary UseThe Planning and Development (Local Planning Schemes) Regulations allows the City to not require development applications for temporary works, such as occurs with events, for a period of 48 hours. The local government is able to extend this period, and in the current situation this will assist those hoping to change service delivery to take-away food for instance, to do this without being required to obtain a development application. Normal health food hygiene approval would still be required, to protect the safety of the community.

Waste Services in ParksIt is recommended that the CEO be able to adjust waste services in parks up and down to respond to demand.

Point Resolution Childcare ServicesThe Federal Government has mandated continued provision of childcare services and the funding for this. The Federal Government intends to provide 50% funding and the operator will not be permitted to recover the remainder from the clients. This recommendation to continue the service at a -$120,000 loss to the end of the financial year is for noting.

Emergency Funding Line ItemIt is proposed to include a nominal $1,000 line item for emergency items. This will allow a contingency provision for under section 6.8(1)(c) of the Local Government Act 1995, which states:

(1) A local government is not to incur expenditure from its municipal fund for an additional purpose except where the expenditure:

(a) is incurred in a financial year before the adoption of the annual budget by the local government; or

(b) is authorised in advance by resolution*; or(c) is authorised in advance by the mayor or president in an

emergency.

(1a) In subsection (1) -additional purpose means a purpose for which no expenditure estimate is included in the local government’s annual budget.

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(2) Where expenditure has been incurred by a local government –

(a) pursuant to subsection (1)(a), it is to be included in the annual budget for that financial year; and

(b) pursuant to subsection (1)(c), it is to be reported to the next ordinary meeting of the council.

Accountability for emergency expenditure is by way of reporting back to Council, under (2)(b).

Purchasing of Goods and Services PolicyThe City has been informed that in order to assist efficient expenditure the State Government intends to increase the tender threshold from $150,000 to $250,000 where a local government has a purchasing policy in place to ensure sound and accountable purchasing practice is adhered to.

The City has such a policy and it is proposed to bring this into alignment with the new $250,000 limit, upon gazettal by the State Government.

Highview Park ParkingThe City has been requested to assist Sir Charles Gairdner Hospital with worker parking due to increased demands in its preparation for COVID-19. This has been provided and ratification of this decision is sought.

Key Relevant Previous Council Decisions:

The following resolutions on the COVID-19 response were passed by Council at the 31st March 2020 Ordinary Council Meeting.

That Council:

6. notes the changing environment and delegates to the CEO:

a. the authority to adjust spend and income where appropriate as the impacts of COVID-19 are realised in order to protect and safeguard the financial position of the city. Any adjustments to the financial statements are to be as a direct result of COVID-19 only;

b. save for the collection of rubbish the authority to reduce and or/change services and/or service delivery to reflect the changing environment presented by COVID-19; and

c. requests the CEO to provide a financial update each month of the impact of COVID-19 on the financial position of the City and of any changes to services.

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That Council:

1. instructs the Chief Executive Officer to provide Councillors with an assessment based on his knowledge and judgments of the impact of COVID-19 on the City, including:

a. the likely impact on revenues, both rate and grant;b. the likely growth, if any, in late rates payments and the impact on

cash flows;c. the impact on operations of closed or reduced services, including

library services and all others impacted;d. the reduction in staff needs and what staff redundancies, if any, are

required for good and proper management of the City;e. all other impacts including financial, management and community

impacts; andf. all other relevant considerations;

2. instructs the Chief Executive Officer to provide recommendations following his assessment;

3. instructs the Chief Executive Officer to provide his assessment report to Councillors as soon as completed; and

4. instructs the Chief Executive officer to allocate time at the first subsequent briefing session or the Council Committee meeting in April to allow discussion on the assessment report.

An appraisal of the impacts and the City’s response was provided to the 7 April 2020 briefing session. Further appraisals will be provided as the situation becomes clearer. This report provides the detail of the City’s appraisal and response recommendations.

Consultation

The City’s Community Engagement Coordinator is a member of the Coronavirus Working Group so that deployment of messaging is carried out quickly and in a coordinated manner. The City’s Website provides key information and links to the State and Federal Government sites so that only current and reliable information is being disseminated from the City.

Service changes and new services are being communication are being designed and circulated through appropriate channels to suit the community stakeholders.

The City is receiving information from various of its tenants on loss of business that is occurring due to the current situation. The decision of Council regarding hardship provisions will be communicated to those affected.

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Strategic Implications

How well does it fit with our strategic direction? The COVID-19 emergency has cut across the City’s strategic directions in the move to prioritize community safety. Despite this there remains a strong correlation between the City’s responsibility to support economic activity and maintain its capital expenditure. This is reflected through the continuation of the current capital works program supporting both economic activity and the strategic prioritization of asset renewal. Secondly the 20/21 budget is to be set with Asset ratios that ensure the continuation of capital works at a financially sustainable level.

Who benefits? The measures proposed in the hardship provisions policy benefit those who are genuinely experience COVID-19 hardship. Where possible services will continue for the whole community.

Does it involve a tolerable risk?Full COVID-19 risk assessments have been carried out across the organisation to prepare for the COVID-19 response. The actions have been implemented and are adjusted as the situation evolves.

Do we have the information we need?While it is not possible to collect robust evidence for all COVID-19 related responses, the City’s position is that it will align with the information provided by the State and Federal Governments to inform its decision making. This is one of the principle recommendations.

Budget/Financial Implications

The financial impacts on the City are difficult to quantify at present due to the unknown hardship impacts on the community, the length of time during which the COVID-19 emergency is likely to run, and the time taken for economic recovery. Nevertheless, projections to the end of the financial year have been calculated based on the current and likely income and expenditure downturn.

The City has current borrowings of approx. $6.5million. The strategy over the last number of years has been to repay borrowings to position the City to have sufficient borrowing capacity for major projects.

City staff have developed good relationships with its bankers and are confident that funds can be accessed should they be required. The ability for the CEO to directly negotiate amendment and additional bank facilities will provide efficiencies and better deals with the banks to benefit the City.

Financial Impacts to the End of 19/20

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Anticipated financial impacts to the end of the 19/20 financial period are presented in attachment 7. The table presents worst case scenario and is based on information known at the time of writing the report.Financial Impacts and Strategy in 20/21The 20/21 budget will be drafted:

with a focus on maintaining capitals works for renewal purposes and to continue to support economic activity; and

based on no overall increase of cost to the ratepayer for the rates and waste service charges

Can we afford it? Affordability in the 20/21 budget development will be guided through the application of the financial ratios. For easier understanding the Department of Local Government and Communities Operational Guidelines on Financial Ratios are provided in Attachment 6.

The City’s Financial Ratios for the past three years are shown below.

The Operational Guidelines provide recommended minimum standards for the various ratios. These are guidelines and the City is able to work outside of the standard ratios providing it does so with it overall financial health in hand and with a plan to return to the standards in future. The COVID-19 emergency is a time when it is appropriate to consider the minimum ratios that the City should adhere to in order to ensure the City maintains financial viability, while supporting the Statement of Principles.

Liquidity (Current) RatioLiquidity refers to how quickly and cheaply an asset can be converted into cash. This ratio provides information on the ability of a local government to meet its short-term financial obligations out of unrestricted current assets.

The Standard is met at 1.0, or 100%.

The proposed Liquidity Ratio is 1.10, or 0.80 if borrowing for underground power.

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In 2017/18 the City’s liquidity ratio dipped to 0.85 on the basis that it deliberately targeted the underground power project, which was operational rather than capital expenditure and in addition the included the recognition of the owners’ portion of short term borrowings for the underground power project as a liability. The City is current working toward further underground works and as such it is proposed that a minimum target liquidity ratio be set near the 17/18 rate of 0.85.

Asset Consumption Ratio (ACR)This ratio seeks to highlight the aged condition of a local government’s stock of physical assets. If a local government is responsibly maintaining and renewing / replacing its assets in accordance with a well prepared asset management plan, then the fact that its Asset Consumption Ratio may be relatively low and/or declining should not be cause for concern – providing it is operating sustainably.

The basic standard is met at 0.50 to <0.60. The standard is improving at 0.60 to 0.75.

The proposed Asset Consumption Ratio is 0.6.

This ratio places the City in a position of slight improvement to its stock of physical assets. This aligns the City with the Strategic Community Plan and the State Government’s imperative to support economic activity through capital expenditure.

Asset Renewal Funding RatioThis ratio indicates whether the local government has the financial capacity to fund asset renewal as required and can continue to provide existing levels of services in future, without additional operating income, or reductions in operating expenses.

The basic standard is met at 0.75 to 0.95. The standard is improving at >0.95 to 1.05 (while the ASR falls within the range 90% to 110%, and ACR falls within the range 50% to 75%.)

The proposed Asset Renewal Funding Ratio is 0.9.

There is the required alignment here with the ASR and the ACR, meaning that for the age of the City’s asset stock enough funding will be applied to capital expenditure to maintain long term asset viability.

Asset Sustainability Ratio (ASR)This ratio approximates the extent to which assets managed by a local government are being replaced as these reach the end of their useful lives. It is calculated by measuring capital expenditure on renewal or replacement of assets, relative to depreciation expense. Expenditure on new or additional assets is excluded

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The standard is met at 0.90. The standard is improving at 0.90 to 1.10.

The proposed standard is 1.10.The City’s drive to improve it assets has been occurring at a significantly better rate than the standard, in response to the Strategic Community Plan and the desire to renewal old asset stocks. There is flexibility here for the City to relax this expenditure to potentially meet a downturn in revenue, while still being at the top end of the standard.

Debt Service Cover RatioA local government’s ability to service debt is measured by the ‘Debt Service Cover Ratio’. This is the measurement of a local government’s ability to produce enough cash to cover its debt payments.

The basic standard is met at 2.0 to <5.0. The standard is advanced at >5.0.

The proposed standard is 2.0 or 1.8 if borrowing for underground power. The main impact being the recognition of the owners’ portion of short-term borrowings for the underground power project as a liability on the City’s balance sheet.

The City is in the fortunate position of having a strong debt servicing capacity. This will allow is to consider adding debt to undertake projects such as the underground power or other stimulus projects that may arise. It may also allow consideration of support to worthwhile community group projects.

Operating Surplus Ratio (or Financial Performance Ratio)If a local government consistently achieves a positive operating surplus ratio and has soundly based long term financial plans showing that it can continue to do so in future, having regard to asset management and the community’s service level needs, then it is considered financially sustainable.

A positive ratio indicates the percentage of total own source revenue available to help fund proposed capital expenditure, transfer to cash reserves or to reduce debt. A negative ratio indicates the percentage increase in total own source revenue (principally rates) that would have been required to achieve a break-even operating result.

The basic standard is met at 0.01 to 0.15. The standard is advanced at >0.15.

The proposed standard is 0.01, or -0.15 in the event of funding underground power.

Apart from 2018 when funding for the underground power saw a drop below zero the City has met or exceeded the standard. It is proposed that this continue, though with an acknowledgement that should the underground power project proceed this ratio may need to be relaxed again.

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Own Source Revenue Coverage Ratio (Coverage Ratio)A local government’s ability to cover its costs through its own taxing and revenue efforts.

The basic standard is met at 0.40 to 0.60. The intermediate standard is met at >0.6 to 0.9. The advanced standard is met at >0.9.

The proposed standard is 0.40.

This proposed standard will ensure the City meets it’s the basic requirements while acknowledging that income will be affected by the COVID-19 emergency.

How does the option impact upon rates?Building of the 2020/2021 budget has commenced. It is recommended that the budget be prepared based on no overall increase of cost to the ratepayer for the rates and waste service charges.

The approach that has been initiated over the last number of years ie a zero-based approach to operational budgeting will continue, acknowledging though that there is likely to be an increase in costs as a result of the increasing demands brought about by LPS3.

City income is roughly 2/3rds rates income and 1/3rd a combination of fees & charges, grants and interest earnings. It is critical that to ensure services to the community that the budget is struck as normal in June, rather than delaying the budget adoption, to allow sufficient cash flow for much needed projects within the Community and to support the economy.

Historically the City has budgeted on the basis of a small deficit to breakeven outcome, it has however the ability to budget to a deficit of 10% of its rates income, meaning potentially the City could budget an outcome of a deficit in the region of $2.4milllion and retain its compliance with the LG Act and Financial Regulations.

What the City cannot do is become insolvent and targeting the financial ratios will prevent this from occurring.

These matters will be dealt with during the 2020/21 budgeting process.

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7. Rental Rebate Requests Due to COVID-19 Pandemic – April 2020

Council 14 April 2020Applicant City of NedlandsEmployee Disclosure under section 5.70 Local Government Act 1995

Nil

Director Lorraine Driscoll – Director Corporate & StrategyCEO Mark GoodletAttachments Nil

Executive Summary

In view of the COVID-19 Pandemic and the enforced social distancing, limits on gatherings and restrictions and subsequent closure of business operations, the City has received numerous requests from its tenants to consider waiver or discount of rent payments.

This is an adjunct report to the previous item, providing further detail on the situation for these groups.

This item is reflective of the principles covering the impending Federal Government Code of Conduct for Commercial Agreements and also of the recent request by the Premier, Hon Mark McGowan, that all local governments consider concessions on Rates, Fees and Charges to provide relief for families and businesses from the impacts of the COVID-19 Pandemic.

This report considers the options available to Council to grant temporary rent concessions, in view of the substantial impact the pandemic has had on the activities and operations of its tenants and, for many, their reduced income earning potential that allows the payment of rents. A conservative approach is recommended by Officers at this time however, Council may choose to consider a more generous offering.

Recommendation to Council

That Council:

1. notes the application of the Hardship Provisions Policy to Community/Sporting Groups and to Commercial and Residential tenants, in supporting them during the COVID-19 emergency; and

2. requests a further item be presented to Council in September 2020, to consider the ongoing implications of the pandemic on the City’s Tenancy Portfolio.

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Discussion/Overview

Background

The City currently has a Tenancy Portfolio of 60 agreements. 29 of those agreements are where a Tenant exclusively uses a space in exchange for rent.

Those 29 agreements reflect an annual rental of approximately $345,000 per annum, or the equivalent of $28,750 per month. It is notable that this is not averaged equally through the year as some rentals are paid annually, and some on a seasonal basis (sporting clubs).

Of the 29 agreements that pay rent, 13 are agreements of a Commercial nature, 11 are Management Licenses to not-for-profit Community Groups, and 5 are Residential properties.

Risk Management

Risk Management measures have progressively been put in place by Officers over the last few weeks as advice has been provided by State and Federal Government. The City has already enforced closure of all Community Halls. This decision has forced 9 Management Licence Holders to cease operations and based on a 6-month shut down, this has already reduced rental revenue by $17,090.

At the time of writing this report, 18 of the 24 spaces (cannot include the residential properties) which potentially could close, were closed due to either the State and Federal direction or because of significant income reduction.

As the nation officially enters ‘complete lockdown’, it is likely that 23 of the 24 spaces will close at some point.

Business Case and Options

When reviewing the possible rent relief schemes that the City might employ, Officers have consistently been keeping track of advice and assistance being offered at State and Federal Government Levels for both Tenants and Landlords, and have also been noting positions of other Local Government Authorities who have formalised an approach to relief for their own Tenants.

At the time of writing this report, there has been no mandate by State or Federal Government in relation to discounts for Residential Tenancies. It is recommended that a conservative discount of 25% of monthly rental be employed

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As noted above, Council are advised that there has already been a $17,090 financial impact through loss of 100% of the Management Licence income, borne by the enforced closure of the Community Halls.

Based on the most up to date information that a 6-month period of relief is required, the following options could be considered for Residential and Commercial Tenants:

1. Discount of remaining rental payments by a percentage to be determined by Council. *Noting a minimum 50% will be mandated in the impending Federal Government Code of Conduct for Commercial Agreements

2. Waiver of all rental payments.3. Deferral of rental payments. This option is not recommended as it will

breach the impending Federal Government Code of Conduct for Commercial Agreements

4. No Waiver or Deferral of rental payments. This option is not recommended as it will breach the impending Federal Government Code of Conduct for Commercial Agreements

To give Council further detail around options 1 and 2, the below tables display the financial impact under three (3) scenarios; 50% discount. 75% & 100% for Commercial Tenants. As described above, the 100% loss of Management Licence rental income, and a 25% discount of Residential Tenancies remain constant

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Legislative Requirements

All agreements of tenure have been entered into pursuant to Section 3.58 of the Local Government Act 1995 and the conditions therein.

Section 6.12 of the Local Government Act 1995 allows a local government to waive or grant concessions in relation to any amount of money which is owed. This is an absolute majority decision of Council.

As announced by Prime Minister Scott Morrison on 7 April 2020, there is an impending Code of Conduct for Commercial Agreements which is to be legislated in mid-late April 2020.Key Relevant Previous Council Decisions:

Nil

Consultation

As the COVID-19 Pandemic has evolved, Officers have been consulting with Tenants with information as it has come to hand. The fluidity and ever-changing nature of the situation has meant Officers have been information sharing with Tenants regularly.

Tenants have overwhelmingly conveyed a sense of unease, and Officers will continue to provide detail as it comes to try and ease those concerns.

Upon Council’s decision of this report, Officers will promptly convey decision to all affected Tenancies.

Strategic Implications

The City’s Strategic Community Plan 2018-2028 lists eight values that it will strive to abide by. Council’s decision to offer rental relief will fit the following values:

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Great Governance and Civic Leadership Great Communities Great for Business

The recommendations contained in this report, provide support to those Businesses and Community groups operating from City premises

This has a direct benefit to the Tenants and the community they serve

The current circumstances require positive action from the City, this recommendation is a risk mitigation strategy, to do nothing would further put at risk the ability for the Businesses and Community groups to continue operations post the Pandemic.

This is a fast-evolving set of circumstances; this analysis is based on the latest and most up to date information available

Budget/Financial Implications

Should Council adopt the Officers recommendation, the City’s Rental Revenue will be reduced by an estimated $81,719.59 over the next 6-months.

Can we afford it? Revenue reductions will be managed in line with the changing environment, the CEO has the authority to adjust revenue and expenditure as a result of COVID 19 to ensure the financial viability of the City

How does the option impact upon rates?No impact in the current year, however, may impact upon future years - this will be reviewed during the 2020/21 budget round.

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Declaration of Closure

There being no further business, the Presiding Member will declare the meeting closed.

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Documents

· Web viewThis report provides a summary of the City’s COVID-19 response to date. It also recommends a statement of principles from Council to guide the City’s strategic and