The Knowns and Unknown of the $70m Mackay Park Centre
A quick overview.
On July 29th, 2020 the Mayor advised her councillors that "the community knows what the community knows". The community have been fed lies and deceptions from the outset about the Gateway To the Batemans Bay. Council have had tight control of the narrative and, as such, have gne out of their way that "the community knows what the community knows". Some simple mathematics. If you build a new building it has to be paid for. If you don't have the money you have to find it somewhere. Council was given money for their original $46 million pool but they had bigger ideas. Now they want a $70 million pool but have to find $20 million. That $20m has to come from either increases in rates, selling stuff off or doing less on roads, reserves and rubbish. There is a COST to having a new pool and that COST is $20 million PLUS. The PLUS is the difference between annual running costs and annual revenue. Let's call this the BLOWOUT. Estimated to be close to $2.5million per year. From the moment the doors open on the new Centre We don't accurately know how much the new Centre will make and how much the new Centre will cost to run each year. This is an unknown and Council refuses to tell us. But we do know, based on some sketchy figures from the original $46m plan that the projected loss every year, predicted in 2017, would be around $2 million if you added depreciation. That figure was based on turnstyle figures. And pretty questionable ones at that. In 2017, before COVID, the broadbrush figures said the building would run at a loss of $900,000 per year. Now we have a MUCH bigger building but pretty much the same population. A $2 million loss per year is now way off the mark given it is now a $70 million complex (and growing more expensive by the day as more contingencies come to light). Knowns: The project cost of $70 million comes is ONLY funded $51m in State and Federal Grants. The balance of $19m comes from ratepayers pockets schemed in secret backroom discussions and agreements by Councillors. The Community has not been provided any details. However, the community is aware of Council's plans to move internal funds around, dig into infrastructure money identified for shire wide projects such as roads and bridges, parks and reserves Crown Land revenues and internal restricted and un-restricted funds and Section 94A contributions, and use the sale money from the Southern Phone shares and Moruya Racecourse. Estimate overheads to run the Centre of $2m per year. Council have continued to advise anyone who asks about a business plan for the Mackay that "the full business case is, and has been, available on Council’s web site for some considerable time" THAT business case however is for a 2017 $46,099,100 integrated centre five generations ago in design. Council, however, still consider the projected incomes from usage of that design as accurate enough to have them factored into a "commercial in confidence" document being currently used to attract complex management tenders and tenders for gym leasing and pool tuitions. The Office of Local Government made comment in their letter (13th July 2020) to the General Manager that they were concerned over the Council's capacity to service the new Centre saying: "OLG notes that, factoring in all costs, the built facility is projected to operate at a loss for the first 10 years of operation. Council must be satisfied of the community demand for the facility, as proposed, and the ability to subsidise the facility from the General Fund. Council should also consider the potential adverse effect of the current COVID-19 pandemic on the projected revenue of both the built facility and Council." The General Manager chose NOT to provide this letter to Councillors prior to their voting to commit to awarding the construction tender. In terms of "the community demand" Council still stands by the 2017 projection of 127,276 people attending the pool each year (348 per day) paying $8.50 per visit. Council stands by 38,720 people attending the Theatre per year to see 12 productions and they stand by 20,608 visiting the gym (to be leased) which equates to 56 people each day paying $9.50 each visit. When asked by the Office of Local Government for documents including the business case the Council sought to withhold their "Updated business case" and Quantity Surveyor estimates. Council acquiesced when the OLG insisted and provided the BBRAALC operating costs April 2020.xlsx and SGS extract.docx saying "Can I please stress again, the sensitivities associated with these documents, as we do not want to have our tender process for the management of the new centre compromised in anyway. The SGS extract provides the economic modelling undertaken early in the project, I still believe that modelling is valid although the costs of the centre has changed." The modelling referred to by Council in their correspondence to the OLG on Friday, 1 May 2020 is in regard to the projected figures (in the table below) that Council stands by in 2020 knowing that they were assumed in 2017 that came with a very clear disclaimer: 10. Warranties and Disclaimers (in part) "Readers should be aware that the preparation of this report may have necessitated projections of the future that are inherently uncertain and that our opinion is based on the underlying representations, assumptions and projections detailed in this ‘point in time’ report. There will be differences between projected and actual results, because events and circumstances frequently do not occur as expected and those differences may be material. We do not express an opinion as to whether actual results will approximate projected results, nor can we confirm, underwrite or guarantee the achievability of the projections as it is not possible to substantiate assumptions which are based on future events."
Option 1 Integrated Facility Southern Precinct Utilisation (Visits/Year) by Area
Council has made it known from the outset that two of the real estate sales it intends to make is the sale of the Batemans Bay Information Centre and the Batemans Bay Community Centre, earmarking both of these as required to support the running costs of the new Mackay Park Centre. The justification for the leasing and then sale of Batemans Bay Community centre is encapsulated in the General Managers statement of May 2019 where she writes "Maintaining the existing facility would duplicate functions and add operational costs while removing potential sale or lease options, including the revenue arising from such. This would have the effect of inadvertently increasing the operational cost of the AALC and deprive that centre of a potential source of income, therefore compromising its affordability, including the theatre." As you can see from the above statement by the GM, in her correspondence to Dr Sue Mackenzie, it is clear that Council's decision to lease the Batemans Bay Community Centre is part of a long game to transition the community away from their centre and direct them to the new Mackay Park Centre to bolster the income stream of that facility. The revelation by Clr Nathan this week during an Extraordinary Council Meeting that the leasing revenue of the Batemans Bay Centre will contribute in the order of $1 million over the next ten years (destined to assist in the operational costs of the new centre) showed a naivety on her part in that it has already been considered that a discount will be given to SEARMS, based on their resistance to pay full commercial rental, and the fact that they will be most likely be required to allow access to the public toilets and be co-renting the space with Meals on Wheels rather than having exclusive use of the whole building. It is now expected that Council will receive well below Councillor Nathan's $100,000 per year and the figure will more than likely be closer to the $52,000 at $1000 per week with the lessee seeking to then sublease to other like-agencies. BY comparison, in 2018 the Batemans Bay Community Centre had 1482 community bookings that gave it an annual income of $71,935 with an expenditure (minus depreciation) of $56,435. Irrespective as to whether Council leases out the building to a third party or not, the fact that Council owns the building obligates them to the expenditures of maintaining and running the building as "landlord". Council have also advised that the written down value for the Centre, as reported by Council in its annual 2019-20 AAS27 report, that the value of community centre complex including building, carpark, pathways is $1,169,996 while the written down depreciation for the Centre as reported by Council in its annual AAS27 report 2019-20 accumulated depreciation is $702,798. All of this is small change when the projected running costs of the Mackay Park Centre are well in excess of $2m per year, and that is after the generously projected hordes have been through the turnstyles paying $8.50 for a pool visit, $9.50 for a gym visit and $35 a ticket to the theatre enjoying 12 performances per year. In all there are more unknowns than knowns and the "knowns" are mainly smoke and mirrors. What we do know is that Council has a long game they are playing that has little to do with any real community consultation nor does it have to do with whoever is elected. The long game is a Council staff game and there is little in the way of openness and transparency and, in regards to the Mackay Park Centre, there are no accurate income and expenditure details on the table for anyone, including the OLG, to scrutinise. To add insult to injury the staff are even selective in the information they provide to Councillors and to the Audit and Risk Committee, choosing instead to play the cards close to their own chest. This has led to staff to overuse the excuse of "commercial in confidence" which will soon result in a formal complaint that will suggest that Council staff may well have lied in order to deny public access to documents. It appears all we can now do is wait. But in the meantime Council staff will continue their maneuvers as they presently do around the Gateway to Batemans Bay with discussions under way with a potential developer for the Batemans Bay Bowling Club site which is to be vacated shortly, once the new bridge has opened. In the meantime we can be assured by the words of Mayor Liz Innes who reminds us that "the community knows what the community knows". From where I sit, that remains "Sweet Stuff All". And that is just how they like it.