"Kiosk Lease Agreement"
CITY OF PORT PHILLIP REPORT ORDINARY MEETING OF COUNCIL 8 NOVEMBER 2010 2 PROPOSED LEASE, KIOSK 2, 6 JACKA BOULEVARD, ST KILDA ADDRESS / LOCATION: 6 JACKA BOULEVARD, ST KILDA GENERAL MANAGER: JOHN HICKS, CITY AND INFRASTRUCTURE SERVICES PREPARED BY: JEANENE SIMMONS, SENIOR PROPERTY ADVISOR FILE NO.: 14/01/1567 ATTACHMENTS: 1 – LOCATION PLAN AND PHOTO 2 – SURVEY PLAN 1. EXECUTIVE SUMMARY 1.1 To provide Council with information regarding the outcome of the recent tender process for the lease of Kiosk 2, 6 Jacka Boulevard, St Kilda and to recommend a preferred tenderer. 2. RECOMMENDATION That Council: 2.1 Commences the statutory procedures under Section 190 and 223 of the Local Government Act 1989 (“the Act”) and publishes a notice in local newspapers advising of Council’s intention to grant a lease and inviting interested persons to make a submission under Section 223 of the Act for the proposed lease of Kiosk 2, 6 Jacka Boulevard, St Kilda on the following terms: Tenant: The Spiropoulos Family Trust; Area: approximately 254 square metres; Term: 5 years; Permitted use: kiosk – the preparation, service and sale of food and non- alcoholic refreshments; and Rental: Year 1 - $ 68,500.00 per annum inc GST, Year 2 - $70,897 per annum inc GST, Year 3 - $73,378 per annum inc GST, Year 4 - $75,947 per annum inc GST and Year 5 - $79,744 per annum inc GST. 1 AGENDA - ORDINARY MEETING OF COUNCIL – 8 NOVEMBER 2010 2.2 Authorises the General Manager City and Infrastructure services to undertake the administrative procedures necessary to enable Council to carry out its functions under Section 223 of the Act in relation to this matter, and 2.3 Resolves to hear and consider any submissions received pursuant to Section 223 of the Act at an Ordinary Meeting of Council to be held in February 2011. 3. BACKGROUND AND CONTEXT 3.1 This site is Crown Land managed by Council on behalf of the Department of Sustainability and Environment (DSE). A location plan and survey plan are provided in Attachments 1 and 2. 3.2 The current tenancy agreement for Kiosk 2 at 6 Jacka Boulevard, St Kilda is due to expire on 17 December 2010. 3.3 Tenders were advertised in the Port Phillip Leader and the Emerald Hill Weekly in the week commencing 6 September 2010. The business opportunity was described as follows: 3.3.1 Lease area: approximately 254 square metres; 3.3.2 Term: 5 years; 3.3.3 Permitted Use: kiosk – the preparation, service and sale of food and non-alcoholic refreshments; and 3.3.4 Lessee to be responsible for all outgoings. 3.4 The following evaluation criteria were included in the Invitation to Tender documentation (listed in order of importance): 3.4.1 The adequacy of the financial offer to Council; 3.4.2 The managerial, technical and financial capacity of the tenderer to fulfill all contractual obligations proposed; 3.4.3 Prior operational / business experience; 3.4.4 The proposed use (including range of services and or products) and its fit with Council’s strategic direction for the Property and the foreshore area; and 3.4.5 Compliance with the Tender documentation. 3.5 A Tender Evaluation Panel (TEP) was duly established on 27 September 2010 comprising the following Council Officers: 3.5.1 David Graffen – Property Co-ordinator 2 AGENDA - ORDINARY MEETING OF COUNCIL – 8 NOVEMBER 2010 3.5.2 Jeanene Simmons – Senior Property Advisor; and 3.5.3 Martin Kilner – Property Advisor. 3.6 Four responses were received by the closing date of 1 October 2010. The applicants were: Mr Peter Spiropulos of Spiropoulos Family Trust (the current kiosk operator), Mr Con Velaetis, Mr Luis Matos de Haza of Luigi’s Kiosk and Ms Ann Briese of the St Kilda Tourism Association Interim Board. 4 CONSULTATION AND STAKEHOLDERS 4.1 Discussions have been held with DSE officers with respect to the future use of the property. 4.2 The Invitation to Tender document was sent to 19 interested parties and two open for inspection appointments were held on 15 September 2010 and 27 September 2010. 5. DISCUSSION 5.1 EVALUATION OF TENDER SUBMISSIONS 5.1.1 The TEP met on 5 October 2010 to review the tender responses. All TEP members signed the probity and confidentiality declaration form. No conflicts of interest were identified. 5.1.2 The offer from Spiropoulos Family Trust included the following elements: 18.104.22.168 Rental: $68,500 per annum inc GST plus fixed increases of 3.5%. Rental is below the current level of $88,000 per annum inc GST. 22.214.171.124 Proposed menu offers a range of healthy alternatives including focaccias, salads, fruit and yoghurt. 126.96.36.199 Tenderer has made 170K worth of improvements to the kiosk over the past 3 years (eg CCTV system, air conditioning, outdoor marquee, security shutter etc). 188.8.131.52 Tenderer is agreeable to the provision of tourism information and brochure stands within the kiosk. This offer was deemed to be the most advantageous to Council. 5.1.3 The TEP completed a single score sheet to arrive at an aggregated position. Rankings were Spiropoulos Family Trust at 96% out of 100, followed by three other expressions of interest evaluated at 64, 55 and 11 out of 100 respectively. 3 AGENDA - ORDINARY MEETING OF COUNCIL – 8 NOVEMBER 2010 5.1.4 The Spiropoulos Family Trust achieved a ranking of 1 based on its strong financial offer, business expertise and successful track record in foreshore operations. 5.2 OPTIONS 5.2.1 The preferred option is to award preferred tenderer status to the Spiropoulos Family Trust in accordance with the TEP recommendation and grant a lease to that same business based on the terms outlined in 2.1 above. 5.2.2 Council could elect to award preferred tenderer status to another tenderer or cease the tender process entirely. These alternatives are deemed inappropriate as they do not address the upcoming expiry of the kiosk tenancy agreement and may raise probity concerns. 5.3 ALIGNMENT TO COUNCIL PLAN 5.3.1 The Council Plan 2009-2013 commits the Council to responsibly managing community assets and resources now and into the future. 5.4 POLICY IMPLICATIONS 5.4.1 The proposed lease aligns with Council’s strategic direction to provide property that meets current and future community needs. 5.5 FINANCE / RESOURCE IMPLICATIONS 5.5.1 Council will receive a total rental income of $368,466 inc GST from the proposed 5 year lease. 5.5.2 There are no special resourcing issues associated with the preferred option. 5.6 LEGAL & RISK IMPLICATIONS 5.6.1 The Minister for Environment and Climate Change must approve the grant and purpose of the proposed lease to the Spiropoulos Family Trust. It is anticipated that the lease term and use will be supported by DSE. 5.6.2 The current tenancy agreement for Kiosk 2 provides for a maximum over-holding period of 3 months. This will allow operations to run through to mid March 2011 while the statutory procedures take place. 6. IMPLEMENTATION STRATEGY 6.1 TIMELINE 4 AGENDA - ORDINARY MEETING OF COUNCIL – 8 NOVEMBER 2010 6.1.1 Indicative timelines are shown below, if Council adopts the recommendations in this report: Date Event 8 November 2010 Council resolves to commence the statutory procedures under Sections 190 and 223 of the Local Government Act 1989 for the proposed lease agreement to Spiropoulos Family Trust Week commencing 15 Notice of Intention to Lease advertised in local November 2010 papers. 15 December 2010 Advertising period closes. February 2011 Council considers any submissions received. March 2011 Council finalises the statutory procedures and awards the lease agreement. New lease agreement commences. 6.2 COMMUNICATION 6.2.1 Council’s decision with be communicated through the publication of the notice of intention to lease land. 7. OFFICER DIRECT OR INDIRECT INTEREST 7.1 No officers involved in the preparation of this report have any direct or indirect interest in the matter. 5