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1 12.1 COMPARISON OF BUSSELTON JETTY REBUILD OPTIONS REPORTING

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12.1   COMPARISON OF BUSSELTON JETTY REBUILD OPTIONS

       REPORTING OFFICER           Chief Executive Officer – Andrew Macnish
                                   Director Community and Organisational Development -
                                   Matthew Smith
                                   Director Lifestyle Development – Nigel Bancroft
                                   Director Community Infrastructure – Mark Goodlet,
                                   Executive Manager Systems and Information - Cheryl Ling
                                   Economic Development Manager – Paul Martin
       FILE NO:                    DEV3
       ATTACHMENT(S):              1.    Summary Matrix of options of Jetty Rebuild
                                         prepared by AMD Chartered Accountants.
                                   2.    Report from AMD Chartered Accountants –
                                         Circulated under separate cover.

       This report is provided to Council accompanied by a declaration in
       accordance with Section 5.70(2) of the Local Government Act 1995, that
       one of the Officers providing input into the report (Paul Martin) owns a
       residential property in the CBD. This property is his place of residence.

       PRÉCIS

       This item presents a comparison of the options available to Council for a
       rebuild of the Busselton Jetty together with the associated analysis of the
       short term and the longer term impact on the Shire’s finances.

       The report compares the upfront capital costs together with the ongoing
       maintenance costs and makes comment on the overall cost to the Shire over
       the coming 50 years. Assessing the ability for the Jetty to fund its
       maintenance requirements into the future is critical to underpinning of this
       (icon) asset’s sustainability.

       In accordance with the Council requirement, this report also presents a
       report from AMD. It was commissioned to audit BJECA’s previous and
       future projections of operating surplus and associated assumptions as these
       are critical elements to the financial modelling of future sustainability of the
       Jetty.

       The information contained within this report reaches a conclusion that the
       Jetty can only be sustainable and cover all future maintenance and capital
       costs with minimal support from the Shire by accepting the State
       Governments offer towards the rebuild.

       The financial analysis clearly demonstrates that the more capital works that
       can be done upfront, combined with the benefit of leasehold monies
       subsidising maintenance cost, then the less the Shire will have to prop up
       ongoing funding for the jetty through ratepayer funds.

       Whilst the financial modelling exercise demonstrates a certain sensitivity to
       various parameters there appears to be sufficient scope to progress
       negotiation with the State. As such Officers are recommending Council
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accept the State Government offer towards rebuilding the Jetty (with works
commencing in Spring 2008) and attempt to seek a contribution from the
newly elected Federal Labor Government.

BACKGROUND

There has been significant background to this item the most of which is
summarised in an item to Council on 26th September 2007.

Subsequent to this item being considered Council resolved the following at
its meeting of 31st October 2007:

     C0710/269

     1.   That Council Decision C0709/228 of 26 September, 2007 be
          revoked.

     2.   That the Council delegate authority to the CEO to write to the
          State Government and advise them of the above decision.

     3.   That Council extends the term of the Busselton Jetty Advisory
          Committee (BJAC) to the date of the next ordinary election and
          requests the existing members to continue their membership until
          that time. Should there be a change in the Shire President, then
          that Councillor be replaced on the Committee by the current
          serving Shire President as is his/her right pursuant to Section
          5.10(4) of the Local Government Act 1995.

Councillors then received a briefing from Busselton Jetty Advisory
Committee and the State Government on their respective positions regarding
the Jetty Rebuild.

This information resulted in the following Council resolution made at its
meeting of 14th November 2007:

     C0711/285

     1.   That Council defer considering the BJAC report and the
          recommendations in item 15.5 of the Council agenda for
          14 November 2007, on Busselton Jetty Rebuilding options,
          pending the completion and reporting to Council of an analysis
          provided by the Shire’s Auditor (AMD) which shall include, but
          not be limited to, the following:

          (a)   A 50 year maintenance plan of Option 1 indicating the
                sustainability of the Jetty to fund future maintenance and
                capital costs following works proposed in the spring of
                2008. This be based upon BG&E’s maintenance and capital
                cost projections associated with Option 1 and identify the
                annual amount required to be placed into a reserve to cover
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                all projected upgrade and maintenance costs for the next
                50 years.

          (b)   Review of BJECA’s annual audited profit and loss
                statements and assessment of the validity and provide
                comment on the future surplus projections made by BJECA.

          (c)   Review previous work undertaken in respect to the State
                Government’s offer and prepare the information to enable
                an “apples to apples” comparison between the two options

     2.   That a report be considered at the 28 November 2007 Council
          Meeting addressing the issues above and complying with the
          whole of life asset maintenance cost analysis required as per
          Council resolution C0710/240.

In line with this, AMD Chartered Accountants (the Shire’s auditors) were
engaged to undertake this investigation and the summary of these results is
attached at Attachment 1. A detailed report on this investigation is
circulated under separate cover.

Since Council’s resolution on the 14th November the Federal Government
election has occurred.      Prior to the election the Coalition made a
commitment that if re-elected it would contribute $6 million towards the
rebuild on the condition the State made a cash contribution not tied to land
sales. The Labor party would not commit prior to the election. Given the
Labor party victory the Coalition offer lapses.

The Regional Partnerships application to DOTARS for $4 million still remains
in the system awaiting a formal government response.

CONSULTATION

There has been extensive consultation on this matter previously. Limited
consultation has occurred in preparation of this item as it has not been
required.

Should Council accept the State Government’s offer, continued consultation
would be undertaken with groups effected by the relocation from Churchill
Park and other parties directly affected.

Shire Officers would also be advocating that Landcorp undertake extensive
consultation with the community and stakeholders on the detailed design of
the areas to be redeveloped.

STATUTORY ENVIRONMENT

There is no requirement for a Business Plan in accordance with the Local
Government Act 1995 Section 3.58 unless the Shire purchases freehold the
land associated with the sporting groups relocation for a value exceeding $1
million.
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Should Council choose to accept the State Government’s offer the following
would occur:

1.   A project agreement between the Shire and the State would be
     finalised and presented to Council for consideration. This document
     would outline all the issues associated with the partnership between
     the State and the Shire. Drafting of this document had commenced
     but ceased with the decision of Council of the 31st October.

2.   A revised Jetty Licence would be finalised and also presented to
     Council for consideration. This licence would replace the 1988 licence
     and clarify a number of issues. As with the project agreement,
     drafting of this item had commenced but ceased with the decision of
     Council of 31st October.

3.   The Shire would be involved in the preparation of a development guide
     plan (DGP) for the foreshore area with Landcorp. This would include
     details on the primary allocation of land use, access, open space,
     community facilities etc. This information would be required to allow
     for full consideration of any rezoning requests. Further to this and
     after the land use allocation has been agreed detailed design guidelines
     would be prepared by Landcorp in conjunction with the Shire for the
     private development areas and detailed specification for the public
     reserves to ensure an appropriate level of public amenity is achieved.

4.   Landcorp would prepare and submit for consideration a rezoning
     application for the parcels of land to be developed. This would be
     supported by development proposals for the land forming part of the
     DGP. Such an application would be dealt with by the Shire as per any
     other rezoning application and given the significance of this proposal
     the proponent (Landcorp), would be required to liaise with the Shire
     and potentially the Council in working up the detail of its proposal. In
     conjunction with the rezoning application the State offer requires
     Council to relinquish vesting of the Crown reserves affected by the
     proposal. Council would consider this request at this point in the
     process.

As can be seen there are many decision-making steps involved and
opportunities for Council to be involved with finalising the detail of the
State’s offer over the coming months. The State’s funds associated with
their offer will not become available until Council has initiated rezoning and
relinquished vestings of the land to be developed.

In addition to this process an agreement document will need to be prepared
by the Shire covering its requirements for the operations of the Jetty. This
can then be negotiated with BJECA and incorporate any other project
parameters that will depend upon the construction timing. Specifically this
would need to include access and business operations during (sectional)
construction. The results of these negotiations would be detailed in a future
report to Council for consideration.
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POLICY IMPLICATIONS

Council resolved on the 17 October 2007 to prepare a policy requiring the
following:

     C0710/240

     1.     That Council note this report and formally acknowledge the
            significance of this matter to the Shire through its consideration
            of corporate documentation such as the strategic plan, corporate
            plan and financial plans.

     2.     That Council endorse the development of a policy relating to new
            asset creation and gifted assets. This policy would include
            requiring new asset creation decisions to be preceded by a whole
            of life cycle cost analysis, determination as to whether the asset
            would be replaced at the end of its useful life and if so, how this
            would be funded with intergenerational equity in mind.

     3.     That Council reiterate the requirement to have in place an Asset
            Depreciation Reserve and the require that all new assets have an
            allocation to asset replacement reserve funding, where the
            decision has been made to replace the asset at the end of its
            design life.

While the policy has not yet been drafted, any consideration for spending
significant sums of money on the Jetty (an asset the Shire is responsible
for) clearly needs to be cognisant of whole of life costs and replacement
options. On this basis a whole of life plan has been developed for the
Busselton Jetty costed out and utilised to compare various reconstruction
options. Without whole of life costing it is difficult to understand the impact
of delaying capital works or taking into consideration full replacement costs
of the facility in the future.

FINANCIAL IMPLICATIONS

Borrowings overview
The Shire's current year adopted budget includes a planned borrowing for
Jetty upgrade works of $2 million. The Shire's current adopted 5 Year
Financial Plan reflects a further borrowing of $4 million in the following
financial year ie 2008/09 totalling a borrowing of $6 million. Each of the
options modelled by AMD Chartered Accountants requires additional
borrowings by the Shire as follows (refer to the Officer Comment section of
this report for a description of each Option):

Option   A : + $1.0 million totalling $7.0 million
Option   B : + $2.6 million totalling $8.6 million
Option   C : + $2.7 million totalling $8.7 million
Option   D : + $5.0 million totalling $11.0 million
Option   E : + $11.0 million totalling $17.0 million
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Options A is similar to the option recommended by BJAC and is not reliant
upon acceptance of the State Government’s offer.

Inclusion of the additional borrowing requirements as set out above in the
Shire's annual budget for 2008/09 satisfies the requirements of S6.20 of
the Local Government Act.

Each of the options from B to E assumes the return to the Shire by the State
of $6 million plus interest after 5 years. Appropriate accounting processes
will be instigated to ensure the clear and separate identification of project
costs enabling the "acquittal" and subsequent reimbursement of $6.0 million
plus interest from the State Government after 5 years.

It should be noted that under Options B to E borrowing costs for the amount
of $6 million to be returned to the Shire after five years have not been
included in the financial modelling. There is a net nil cost to the Shire over
the initial five year period. There is however a cashflow impact in the
amount of $420,000 for each of the first five years.

Ability to borrow
As noted above, the current adopted 5 Year Financial Plan already reflects a
$6 million borrowing by 2008/09. The estimated debt service ratio as a
percentage of rates and untied grants for 2008/09 is 4.71% and which is
comfortably below the maximum recommended ratio percentage of 10%.

It is considered that the borrowing capacity of the Shire, with the current
definition of the debt service ratio, could accommodate the Shire loan
options from A through to E with a debt service ratio of 9.9% with option E.
It should be further noted however that each of the options from B provide a
rental income stream to assist in the servicing of Shire debt.

In reference to the $1 million Shire contribution requirement under Option E
for each of years 1, 2 and 5, and $668,000 in year 3 and $102,050 in year
4 (we refer also Option B and the $1 million requirement for years 1 to 7) it
should be noted that the current 5 year financial plan already supports the
debt servicing cost of a $6 million borrowing in the amount of $567,000 per
annum for 20 years. Opportunities to fund the difference between the two
amounts or indeed the full $1 million could be explored to further reduce the
funding requirement from general rate revenue if a Federal Government
contribution was not forthcoming.

Financial Sustainability and Opportunity Cost
Option A requires a Shire contribution of $99 million over a 50 year period
and provides little or no surplus funds at that period end (refer comments
below).

Option B through to Option D provides a reducing level of Shire contribution
over the 50 year period ranging from $8.8 million to $978,014.
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The large Shire contribution required under Option A would constrain
funding available for other Shire activities particularly in years 1 to 7 (Shire
contribution of $3 million per annum) and as such represents a considerable
opportunity cost. Additionally, aspects of the Leisure Services Plan which
are addressed as part of options B to E are not included in Option A.

Options B through to D project a decreasing annual financial impost (across
the options) on the Shire such that other strategic imperatives could also be
addressed. The projected surplus particularly under Option D provides an
opportunity for the Shire to address the important issue of the community
infrastructure asset gap if utilisation of the surplus arising could be
negotiated to be used for such purpose.

Risk assessment
The long term nature (50 years) of the cost and income projections included
in the financial model carries inherent risk as regards the accuracy of such
projections. Assumptions in respect of cost escalation factors, interest
rates and income expectations are an essential component of any financial
model but an appreciation of the sensitivity of a financial model over 50
years to even relatively minor variations should not be underestimated.

Option A predicts net surplus funds after 50 years of $732 and as such
provides very little margin for variation in that a minor shortfall in estimated
annual operator profit or increase in relevant cost indices could have the
consequence of requiring the Shire to fund further amounts in addition to
the $99 million already estimated.

Options B, C, D and E represent lower risk strategies with Option D offering
the most resilience to variations in the financial model assumptions with an
estimated net surplus after 50 years of $182 million.

STRATEGIC IMPLICATIONS

Ensuring the long term sustainability of the Jetty must be one of the highest
priorities for the Shire at this juncture. The Jetty is a key tourism and
community iconic asset for the Shire and the region with an excellent
opportunity to be made sustainable into the future.

Rebuilding the Jetty is a key project identified on Council’s endorsed
Strategic Plan. In the words of the South West Development Commission
CEO, this offer (of the State) is a very good one. It is understood the
Minister for the South West is very interested in the outcome of Council’s
consideration of this report. Arguably, the future of the MOU with the State
is riding on the success (or otherwise) of this flagship Jetty Rebuild Project.

In addition to this, many reports commissioned by the Shire since the 1980s
have identified the need for improvements to the foreshore area and
improving links between the foreshore and the CBD.                The State
Government’s offer has the potential to achieve this in line with community
expectations and values. The project plan to relocate sporting groups is
                                 8


another important strategic element that should not be understated as it
addresses many issues identified in the Shire’s Leisure Services Plan.

OFFICER COMMENT

Options Analysis
AMD Chartered Accountants have prepared a number of options to be able
to compare Councils options in respect to the Jetty Rebuild. These are:

Option A: New section 2, short term repairs to sections 3 and 5. Drive piles
for two swimming platforms. Total cost $8,519,000. This is funded by a
Shire contribution of $7 million and $1.6 million from BJECA.

Option B: Rebuild sections 2,3 and 5 and Scout Road Boat Ramp. Total
cost $16.2 million funded by $1.6 million from BJECA, $8.6 million from
Shire, and $6 million from the State Government.

Option C: Rebuild sections 2,3,5 and 10 and Scout Road Boat ramp. Total
cost $22.3 million funded by $1.6 BECA, $8.7 million from Shire, $6 million
State Government, $6 million Federal Government.

Option D: Full restoration including – rebuilding sections 1,2,3,5 and 10.
Repair sections 4,6,7,8 and 9 and Scout Road Boat Ramp. Total cost $24.6
million funded by $1.6 million BJECA, $11 million Shire, $6 million State
Government and $6 million Federal Government.

Option E: Same scope as option D. Funded by $1.6 million BJECA, $17
million Shire, $6 million State Government.

The financial implications of these options on the Shire is outlined in
Attachment 1 and in the report from AMD Chartered Accountants circulated
under separate cover.

The results of the analysis conducted by AMD Chartered Accountants
clearly indicate from a cash flow, financial impost on the Shire and risk point
of view option D is the most suitable.

Option D requires Council acceptance of the State Government offer and
attempting to secure a commitment from the newly elected Federal Labor
Government.

Option D could be structured in a manner to undertake works in the spring
of 2008 (an important point noted by BJAC) to get the train running again.
The final details associated with the structure of the tender to best
accommodate works occurring in line with the budget available is being
finalised and will be presented to Council early in the new year.

BJAC has done a sound job in producing options associated with the Jetty
rebuild and recognises the importance of getting on with reconstruction
works as soon as possible due to very sharp upward pressure brought about
by cost escalation. However the option recommended in their report does
                                 9


not address the sustainability of the Jetty and more importantly has the
highest financial impact on and risk to the Shire.

Acceptance of the State’s offer impacts significantly on the financial
sustainability of the Jetty as it:

*    Provides a cash injection of $6 million upfront.           The model
     demonstrates the more the Shire spends now the less the ongoing
     costs of maintenance are. The high level of cost escalation rate is also
     combated.

*    Returns a contribution to the Shire at the end of the project (in this
     case assumed to be 5 years) equal to the Shire’s upfront contribution
     towards the rebuild subject to surpluses being available. Officers
     instructed AMD Chartered Accountants to take a pessimistic view and
     cap the return to the Shire at $6 million plus interest. This figure may
     have the capacity to increase depending upon the land development
     project surpluses which will only improve the options involving the
     State. It is proposed to include in the draft project agreement a clause
     which will provide the Shire with an annual audit of the project to
     track and continually predict likely surpluses and thus the potential
     return to the Shire.

*    The creation of 4 additional ground leases provide an income stream
     which feeds the maintenance fund and thus reduces the Shire’s
     liability to top up the annual requirement for the fund. (thus reducing
     impact on ratepayers and establishing a balance in the trust fund
     capable of earning significant interest). Although it could be argued
     the State may agree to creation of these ground leases without the
     current State offer, it is clear the Shire would have to share this
     income with the State (represented in current State Government
     Policy) and also contribute towards the creation of the lots including
     services. Both of these issues would impact upon the financial
     attractiveness of these leaseholds outside of the current State offer.

An important aspect of the model is the financial surpluses achieved by the
Jetty operator (BJECA). The Shire’s reliance on these surpluses would need
to be secured in the commercial agreement between the Shire and BJECA to
clearly articulate surplus targets and monitor entry prices and other variables
in the financial model.

Federal Government funding

Although a commitment was not secured from the Federal Labor Party prior
to their election win, Officers consider it worthwhile to continue to pursue
this matter given an application for $4 million remains in the system.

Correspondence has been received on 27th November 2007 from the
Principal Advisor of the Regional Partnerships program seeking direction
from the Shire as to if it intends to withdraw the application for $4 million
given, they claim, the Shire has rejected the State Government’s funding
                                10


offer and is only going to progress with a smaller project. On this basis it is
clear that a contribution of this magnitude from the Federal Government is
only possible with a contribution from the State Government. The author of
the correspondence is basing this information on an article which appeared
in the West Australian.

Should Council resolve to accept the State Government’s offer towards the
rebuild Officers will advise DOTARS the application is not being withdrawn.
Given this it is proposed that a delegation be sent to Canberra similar to
previous delegations to raise awareness of the project and seek a resolution
to the Regional Partnerships application. This should be initiated as soon as
the new cabinet is announced.

Officers would also seek the State Labor Government’s assistance in
securing a Federal Government contribution. The details of what this
assistance might include will be discussed with the State should Council
accept the State Government’s offer towards rebuilding the Jetty.

Should a timely Federal Government contribution not be forthcoming,
Officers would recommend Council proceed with Option E and explore
options to offset the annual contributions required in the first few years at
that time.

Progressing the Planning Aspects of the State Government’s Offer

The land development components of the State Government’s offer have
the potential to set the direction for the future development of Busselton
and thus impact on the future character and functionality of the town.

Understandably, constituent development proposals will give rise to interest
and debate in the community. Consideration of these issues, as will occur
following receipt of a rezoning application, should be made in a land use
context and not a financial context. Council will have the primary role in the
determination of these matters being the statutory decision maker on any
initiation of a change to the town planning scheme. Should the Shire wish
to proceed with negotiation on the State’s offer, Council may wish to
reinforce with Landcorp at this stage the necessity for the Council and the
community to be fully engaged in this process.

Commencing works in Spring 2008

As previously indicated Officers strongly support the commencement of
works on the Jetty Rebuild in the Spring of 2008.

Council would be responsible for determining the final scope of these works
as part of the tender process. Setting the scope will depend upon the
timing of the commitment to release the State Government upfront
contribution. Even if delays in resolving planning detail associated with the
State Government’s offer occur, some works can commence in Spring
2008.
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Summary of comment

The issue of the Busselton Jetty Rebuild has been the subject of 2 years of
community and Shire debate and extensive media coverage. It is hoped that
this item represents a certain culmination and provides a clear/decisive
mandate for the Shire to strongly move forward in respect to this project.

The information prepared by AMD Chartered Accountants clearly identifies
the financial benefit to the Shire to accept the State Government’s offer and
move ahead with a rebuild starting in the Spring of 2008.

Officers are proposing the community and the Shire be extensively involved
in the planning detail associated with the land development.           Such
involvement will provide an opportunity to address many of the issues which
have been identified to date.

Progressing the State Government offer will still require more decisions of
Council in respect to the detail associated with the offer. Council therefore
retains control over the process at this juncture.

Continuing to purse a Federal Government contribution with assistance from
the State Labor Government should be undertaken immediately and with
gusto as it could greatly impact upon the financial implications on the Shire.

TIMELINE/S FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Should Council support the Officer recommendation the following would
occur:

1.   A project agreement between the Shire and the State Government and
     a new Jetty Licence would be brought to Council for consideration
     early in the new year. A commercial agreement with BJECA would
     soon follow.

2.   The preparation of development options associated with the land
     development would occur in the coming months and culminate with
     Landcorp submitting an application for rezoning in April 2007.

3.   Tender documentation would be prepared for Council consideration
     early in the new year so the works on Section 2, 3 and 5 can
     commence in the Spring of 2008.

VOTING REQUIREMENT

Simple Majority

OFFICER RECOMMENDATION

1.   That the Shire accepts and undertakes it has a shared responsibility
     together with the State to use its best endeavours to help ensure the
                               12


     jetty is fully rebuilt and thereafter operated in a sustainable manner in
     perpetuity.

2.   That the Shire recognises the Busselton Jetty is a critical element of
     the local, regional and State tourism and heritage infrastructure and
     ensuring its sustainability will occur through a pursuit of business
     excellence in jetty operations and complementary tourism support.

3.   That Council endorse option D for the Jetty Rebuilding resolving to
     rebuild as much as possible in the coming years, commencing in Spring
     2008. Tender documentation be prepared reflecting this approach.

4.   That the commercial agreement between the Jetty Operators (BJECA)
     and the Shire to be drafted reflecting all necessary project conditions
     needing to be complied with.

5.   That all efforts be made including a delegation to Canberra to secure a
     commitment towards the rebuild from the Federal Labor Government.

6.   That Council notes the Jetty rebuild will not require expense in the
     current financial year. The additional borrowings required by Council
     and total project budget be reflected in the 2008/2009 financial year
     budget, Corporate Plan and Five Year Financial Plan.

7.   That BJECA be requested to irrevocably commit its $1.6 million of
     retained surpluses from the Jetty operations to be expended in the first
     instalment of any Jetty Rebuild expenditure (including tender
     documentation) and inform the Shire of its compliance with this
     commitment as soon as practicable (ie at its next scheduled meeting or
     earlier via a special meeting).

8.   That Council accept the State's conditional (14 point) offer with
     thanks and communicate this to the Minister for the South West
     together with its understanding that working within the framework of
     the State's position, the following values/matters underpin the Shire's
     acceptance: (the letter to emphasise the necessity for Council to have
     pursued the most up to date and independent cost modelling to satisfy
     its good governance requirements)

     (a)   The Shire acknowledges this to be the foundation project
           conducted under the MOU with the State (May 2006) and looks
           forward to similar significant projects in the future.

     (b)   The Minister for the South West be requested to reconsider
           condition number 12 of the State's offer pursuant to the
           outcome of the Federal Government position on its funding
           contribution.

     (c)   The Shire enters into a Project Agreement with the State that
           contains the following and this document be drafted through the
           BJWG:
                    13



Jetty Maintenance Fund (JMF)

This fund will be used to fund maintenance on the Busselton
Jetty and to comply with the Jetty Maintenance Plan and
Tourism Business Plan. This includes the maintenance of the
UWO and the IC but not to the extent either of these two
structures are replaced or demolished.

Net returns from Jetty operations together with gross returns
from the two existing (Goose and Equinox) foreshore leases plus
the four new crown lease sites will be directed into the JMF.
This fund will be established and administered to the satisfaction
of both parties including its audit, however, the JMF will contain
a clause that after five years of fund operation, it requires
review.      Unless this review demonstrates the continued
justification of contribution of all monies it was established to
receive then the Shire reserves the right to redirect surplus (to
the projected JM plan needs) funds for the purpose of promoting
and facilitating tourism within the shire (broad sense) which must
still have a nexus to the jetty's operation. The JMF will be
deemed to commence for the purpose of this five year review, if
not already commenced, from the day of handover of the rebuilt
jetty.

Definition of Reserves Purpose/s

For any and all reserves amended or created, the new reserve
purpose shall be as indicated on page 41 and 42 of this report
subject only to minor facilitative amendment for which the CEO
has discretion to negotiate.        In addition, applications for
enterprises made under existing and/or new management orders
will not be prejudiced by State agency value judgements, only
whether they comply with the agreed purpose.

Annual Audit report of Land Development project status

An agreed independent auditor shall provide an audit statement
to the Council about the project status including all
details/projections on the quantum and timing and risk factors
and other relevant variables for the recouping of the party's
project cost contributions. This audit shall also be continued on
an annual basis to the completion of the project. The State shall
ensure all necessary data is made available in a timely manner to
the appointed auditor to enable this audit to occur. The state to
use its best endeavours to provide as much certainty as possible
on the likely returns that might be available to the Shire at the
time the Shire considers awarding the construction tender.

Distribution of Land Development project surpluses
                      14


Distribution of land development project surpluses shall be on the
basis of a 30% tax equivalent to the State, a 35% dividend to
LandCorp and 35% dividend to the State until the State is repaid
its $6m (net of any amount it has already been recouped from
the englobo land purchase). Once project surpluses reach the
point where the state has recouped its $6m outlay in this regard,
the 35% State dividend shall flow to the Shire. After the Shire
has recouped all of its project costs (including construction
project management and interest), any project surpluses
thereafter will be negotiated by the two parties.

Jetty Licence

A jetty licence shall be prepared at the State's cost (not a project
cost) that shall contain a remedial clause that should the State
not ensure the facilitation of all the conditions it is obligated to
fulfil under the project agreement, then the Shire reserves its
right to hand back the jetty licence at no cost to the Shire and
with no further obligations other than to hand back full control of
the jetty operations and six foreshore leases to the State.

The jetty licence shall also contain a clause that allows the Shire
the ability to self insure under LG Act S6.32(3)(a). The Council
retains the right not to replace all or part of the jetty should all or
part of it be removed through a catastrophic event or other act of
God.

Town Planning process

LandCorp and the State will conduct the land development
project in accordance with standard statutory processes and not
as a public work and will secure with the Shire the use of a paid
dedicated officer to expedite the planning assessment process
should the best endeavours of the Shire's resources at the time
be insufficient due to other operational workloads.

A Class Reserve Retention / Establishment

Churchill Park

The undeveloped/recreational balance of Churchill Park (oval) and
associated facilities shall be established as A class reserve for the
purpose of recreation under the Land Administration Act with a
management order with power to lease issued to the Shire for
the reserve. The Shire will pay for the administrative component
of the application for this new arrangement but shall pay no
transfer fee or equity to the State.

Signal Park / Existing A Class Reserves
                      15


Those areas of existing A class reserves and that part of Signal
Park that do not form part of the final development land
transferred to Landcorp are to be retained and/or set aside as
A class reserves for the purpose of “recreation” or “recreation
and camping” and with the power to lease as appropriate under
the Land Administration Act, with management orders issued to
the Shire for the resultant reserves.

Busselton Surf Club

A community purposes site/lease/reserve to be created adjacent
to the Scout Hall with a power to lease to enable the club to run
a kiosk. Rent (minimum) would be directed to the immediate
foreshore maintenance.

Independent dispute resolution mechanism

There is to be an agreed independent dispute resolution
mechanism as part of the project agreement. Each party will
bear its own costs in attending to the project agreement and its
implementation.

Jetty Construction Principal

The Shire will be the Principal for the Jetty construction project
and any out of pocket cost in contracting expertise shall form a
project cost recoupable under the funding model.           Tender
documentation shall be a project cost. Agreement to being the
Principal is undertaken on the understanding the DPI and SWDC
continue to participate in facilitating excellent project
management oversight/co-ordination through specialist technical
support to the Shire.

Relocation of Groups

Relocation of sporting and community groups effected by the
proposal will be on the basis of like for like, new for old
replacement of facilities.

Land development project funds over and above those earmarked
in the Landcorp feasibility already cited shall not be committed
from the project without the resolution of Council. In addition,
Council reserves the right to be the body/entity to acquire any
land for the purpose of accommodating the relocated groups.

				
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