City Of Cockburn Minutes – SMRC RRRC WCF Odour Issue – 9 April 2009
15.2 (MINUTE NO 3934) (OCM 9/4/2009) – STATEMENT OF FINANCIAL ACTIVITY – FEBRUARY 2009 (5505) (N MAURICIO) (ATTACH)
RECOMMENDATION
That Council receive the Statements of Financial Activity and associated reports for February 2009, as attached to the Agenda.
COUNCIL DECISION
MOVED Clr S Limbert SECONDED Clr H Attrill that the recommendation be adopted.
Background
Regulation 34(1) of the Local Government (Financial Management) Regulations 1996 prescribes that a local government is to prepare each month a Statement of Financial Activity. Regulation 34(2) requires the Statement of Financial Activity to be
accompanied by documents containing:–
(a) details of the composition of the closing net current assets (less restricted and committed assets),
(b) explanations for each material variance identified between YTD budgets and actuals; and
(c) any other supporting information considered relevant by the local government.
Regulation 34(4)(a) prescribes that the Statement of Financial Activity and accompanying documents are to be presented to the Council.
Submission
N/A
Report
Attached to the Agenda is the Statement of Financial Activity for February 2009. These include explanations for material variances within operating revenue and expenditure, as well as for capital works & project expenditure.
Note 1 shows the program split for grants and contributions received towards asset purchase and development.
Note 2 provides a reconciliation of Council’s net current assets (adjusted for restricted assets and cash backed reserves). This provides a financial measure of Council’s working capital and an indication of its liquid financial health.
Also provided are Reserve Fund and Restricted Funds Analysis Statements. These assist to substantiate the calculation of Council’s net current assets position.
The Reserve Fund Statement reports the budget and actual balances for Council’s cash backed reserves, whilst the Restricted Funds Analysis summarises bonds, deposits and infrastructure contributions held by Council. The funds reported in these statements are deemed restricted in accordance with Australian Accounting Standards.
Financial Review – February 2009
The City continues to be on track to achieve its budgeted income for 2008/09 with land sales in the Tapper Road development enjoying a resurgence of late as a result of the first home owner grant providing a stimulus to land sales within the $160k to $240k price range. Rating income is slightly higher due to interim rates for Port Coogee and industrial precincts. Landfill income, planning and building fees are slowing considerably as a result of the slowing income.
Expenditure for salaries is below budget as every staff position is being scrutinised to ensure that the need is essential. This impact is saving the City funds with the payroll budget approximately $0.75m under budget. Material and contracts expenditure is also below budget as a number of operations are yet to commence. Utilities and insurance will
come in on budget. General expenditure is also expected to come in on budget as this covers areas such as the SMRC loan repayment and donations to community groups. Depreciation is running slightly ahead of budget.
Cash at bank and investments are also holding up with the City having $59.4M as at 28 February 2009.
Capital expenditure is running behind budget but this is expected as a number of capital projects are yet to commence, such as the Aubin Grove Facility ($1.9m), Cockburn Central library ($2.0m). However, a number of other projects are on budget such as the Hammond Road Regional Recreational Facility, Cockburn Civic Centre Seniors Centre and a range of road projects.
Material Variance Threshold
For the purpose of identifying material variances in Statements of Financial Activity, Financial Management Regulation 34(5) requires Council to adopt each financial year, a percentage or value calculated in accordance with Australian Accounting Standard AAS5 – Materiality. This standard defines materiality in financial reporting and states that materiality is a matter for professional judgement. Information is material where its exclusion may impair the usefulness of the
information provided. AAS5 does offer some guidance in this regard by stating that an amount that is equal to or greater than 10% of the appropriate base amount may be presumed to be material.
The materiality threshold adopted by Council for the 2008/09 financial year is $50,000 or 10% (whichever is the greater). In applying the threshold, officers give due regard to the nature of the data and how it is best consolidated (e.g. at an individual project level, specific works program, distinct activity, nature and type level etc).
Change of Rating Category – UV to GRV
The City is continuing to review the status of all UV (Unimproved Value) properties within its boundaries especially those in established urban areas. The purpose of the UV status is to value land primarily as land used for rural purposes and not for urban residential, commercial or industrial properties. This is in line with the principal used by the Valuer General, in that UV valuations should only be used for rural land, otherwise GRV should be the primary valuation method.
A number of properties have been identified as having fallen into the categories below:
1. Industrial properties in predominantly urban areas classified as UV;
2. Urban developments in urban areas classified as UV;
3. Former rural blocks not used for rural purposes in urban areas; and
4. Rural lots in urban areas (not used as rural blocks) classified as UV
The City has identified 274 lots that will be submitted to the Director General of the Department of Local Government and Regional Development under delegated authority to have their valuation classification changed from UV to GRV as the table below indicates. In all, 78% will receive lower rates but the City will be no worse off as several of the lots identified in the review will pay higher rates because of their industrial use. To date, these industrial properties have received and paid lower rates than if they had been in other (more urban) municipalities.
The City will write to all affected properties advising them of the change.
Strategic Plan/Policy Implications
Governance Excellence
• To conduct Council business in open public forums and to manage Council affairs by employing publicly accountable
practices.
Budget/Financial Implications
Where variances reported are of a permanent nature (i.e. not due to timing issues), they will impact Council’s end of year surplus/deficit position.
Legal Implications
Section 6.4 of the Local Government Act, 1995 and Regulation 34 of the Local Government (Financial management) Regulations 1996, refer.
Community Consultation
N/A
Attachment(s)
Statement of Financial Activity and associated reports – February 2009.
Advice to Proponent(s)/Submissioners
N/A
Implications of Section 3.18(3) Local Government Act, 1995
Nil.
___________________________________________________________________________________________________
16.1 (OCM 9/4/2009) – CITY OF CANNING DECISION TO WITHDRAW FROM THE SMRC (4904) (M LITTLETON)
RECOMMENDATION
That Council:
(1) seek a briefing paper from the SMRC outlining:
1. the history of the odour issue.
2. The steps taken to address the concerns of residents, the DEC and the City of Canning.
3. The amount of funding expended to address the odour
issue.
4. The number of times the City of Canning or their representatives have formally sought action on the odour issue (or any other issue) through notices of motion, formal questions on notice or statements to the SMRC Council.
5. The potential implications of the City of Canning’s withdrawal from the project and these implications can be mitigated; and
(2) seek a meeting with the Chief Executive Officer and Mayor of the City of Canning to discuss their intention to withdraw from the SMRC project.
COUNCIL DECISION
MOVED Clr S Limbert SECONDED Clr H Attrill that the recommendation be adopted.
Background
The Southern Metropolitan Regional Council (SMRC) currently acts as a disposal point for all of the City of Cockburn’s domestic waste (i.e. waste generated by our residential properties). It operates a multifaceted waste management facility which uses alternative waste treatment technology to maximize the recovery of MSW (municipal solid waste) and to divert as much waste as possible away from landfill. The facility consists of a number of treatment processes including:
• Waste composting facility (WCF) – which subjects MSW to a
process of segregation, anaerobic digestion and microbial
stabilization to produce compost and residual waste.
• Material recovery facility (MRF) – separation of recyclable waste
stream.
• Green waste (GW) – shreds and processes clean green waste
stream.
The SMRC is a Regional Council made up of the Municipal districts of the Cities of Cockburn, Melville, Rockingham, Fremantle and Canning and the Towns of East Fremantle and Kwinana. It is formally constituted under the auspices of the Local Government Act 1995 and must comply with that legislation. It was established to plan, develop, co-ordinate and implement sustainable waste management solutions and greenhouse gas abatement programs with, and for, its 7 member Councils and their communities.
The SMRC has been addressing odour issues for the past 18 months and did allocate approximately $2.6Million to improve the odour capture and ducting infrastructure within the plant last financial year. Residents in close proximity to the plant however continue to express concern at fugitive odours leaving the site and impacting on their quality of life. The City of Canning have been fielding the lion share of concerns raised by concerned citizens and have now, at a Special Council
meeting of 19 February 2009, taken steps to withdraw from the SMRC project as demonstrated by the following resolution:
Following the advice and recommendation provided by Hardy Bowen Lawyers in its confidential advice of 19 February 2009,
the Acting Chief Executive Officer be instructed to write to the Southern Metropolitan Regional Council (SMRC), instructing them under the provision of the Establishment Agreement, that:
(a) The City of Canning withdraws from the SMRC immediately.
(b) The City is not amenable to direction in relation to the delivery of waste, other than to the Regional Resource Recovery Centre (RRRC), and that if the RRRC is unable to accept the waste, it will be delivered by the City to a site of
its choosing.
(c) The SMRC be advised that the City is of the view that there is a dispute in relation to the obligations of the RRRC,
having regard to:
(i) the economic sustainability of the facility; and
(ii) the environmental hazards caused by the facility;which requires to be dealt with in accordance with the good faith negotiations in the Project Participants Agreement.
(d) The City should initiate a dispute under the lease in relation to the odour emissions, with a view to determining whether there has been a breach of the lease.
(e) A further report be presented to Council outlining the progress of the above matters within one month.
(f) A further report be presented to Council outlining a media campaign to the ratepayers of the City within one month of
this motion.
Submission
To inform Council of the City of Canning’s decision, to withdraw from the SMRC project to seek further information from the SMRC regarding the implications of that decision and to seek a meeting with the City of Canning to discuss the matter.
Report
A recent statement contained within the City of Canning’s Minutes published on their website (refer 10 March 2009) identified that … … from October 2007 to 24 February 2009, 56 reports relating to the Southern Metropolitan Regional Council have been presented to the City of Canning Council. Further, questions raised during public question time on this subject matter, have occurred at 21 City of Canning Council Meetings during this time period’. Clearly
this has been an issue for some time, however, the magnitude of the issue for Canning may have been somewhat tempered by the support that existed at a Council level. Former Mayor, Dr. Mick Lekias, was Canning’s representative on the SMRC board and a supporter of the philosophy and principles of sustainability and waste recovery which underpin the SMRC business. Whilst the political issues for Canning may not have changed, clearly support for the project has, yet Canning do not appear to have taken steps to engage with other member Councils nor seek to express their dissatisfaction at board level.
The decision to withdraw from the SMRC project is a significant one for Canning and officers believe it presents a significant risk to the City of Cockburn’s stake in the business. To date the City of Canning have not sought to engage with the City of Cockburn regarding their current issues with the SMRC nor have they formally advised the City of their
decision to withdraw from the project.
The SMRC originated and evolved on the strength of the collegiate approach adopted by the member Councils and much has been achieved over the years. Unfortunately the success of the recovery effort has been tempered by operating deficits, plant closures, plant breakdown and cost over-runs, substantial fee escalations, the outstanding odour issue and now the substantial reduction in commodity prices. Cockburn understands these issues impact on us as much as Canning. It is a shame that Canning had not sought to discuss their concerns with Cockburn prior to making their decision to withdraw from the project nor to actively engage the SMRC where they believed that they had failed in their operational, governance or administrative obligations to its members. These are fundamental issues to do with the business and the City of Cockburn would have supported Canning in these efforts had it been approached.
Despite the concerns being raised in the Chamber, neither the City of Canning nor their representatives have formally raised any issues through a notice of motion, questions on notice or statements to the SMRC Council as reported in the SMRC Minutes. The odour issue and its impact on the community and on Canning Council has been understood and the SMRC have taken steps to address that odour issue. The success of the capital works project has been the subject of
further technical studies undertaken by The Odour Unit and a subsequent review undertaken by the DEC. One would assume that actively participating in the business of the SMRC gives the City of Canning the very best opportunity to influence the direction, operation and administration of the SMRC and puts it in the best position to influence change and address the issues. The decision to withdraw does not enable Canning to do any of these things. Cockburn however
must seek further information to understand the risk of the decision and our exposure to further financial liability. To do this the following recommendation is proposed:
(1) seek a briefing paper from the SMRC outlining:
1. the history of the odour issue
2. the steps taken to address the concerns of residents, the DEC and the City of Canning.
3. The amount of funding expended to address the odour issue.
4. The number of times the City of Canning or their representatives have formally sought action on the odour issue (or any other issue) through notices of motion, formal questions on notice or statements to the SMRC Council.
5. The potential implications of the City of Canning’s withdrawal from the project and these implications can be mitigated; and
(2) seek a meeting with the CEO and Mayor of the City of Canning to discuss their intentions to withdraw from the SMRC project.
Strategic Plan/Policy Implications
Lifestyle and Aspiration Achievement
• To identify community needs, aspirations, expectations and priorities for services that are required to meet the changing
demographics of the district. Natural Environmental Management
• To manage the City’s waste stream to achieve sustainable resource management, in an environmentally acceptable
manner.
Budget/Financial Implications
N/A
Legal Implications
N/A
Community Consultation
N/A
Attachment(s)
N/A
Advice to Proponent(s)/Submissioners
N/A
Implications of Section 3.18(3) Local Government Act, 1995 Nil.
