Kiosk Lease Agreement by cfh10287

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									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.




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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

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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:

                    5.1.2.1 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.

                    5.1.2.2 Proposed menu offers a range of healthy alternatives including
                            focaccias, salads, fruit and yoghurt.

                    5.1.2.3 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).

                    5.1.2.4 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.


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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



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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.




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