Council’s Long Term Financial Plan

Along with most other Councils in the State, under current funding models, Willoughby’s operational deficit is unsustainable. The average infrastructure backlog across the State is $1,000 per capita. Willoughby’s infrastructure backlog is estimated to be between $500 – $1,000 per capita. This is the cost to bring Willoughby’s infrastructure back to an acceptable level.

MEASURES TO ADDRESS LONG TERM FUNDING NEEDS

New income sources: The Long Term Financial Plan proposes a series of new income sources that have been explored and some that have yet to be considered in detail. They include income from parking meters under the Parking Management Strategy reported to Council in October, income from bus shelters through the new contract and potential for stand-alone advertising panels in the CBD and possibly other centres.

Savings measures: Further to this Council has embarked on a Service Review project. The aim of the Service Review is to identify organisational efficiencies, improve performance, improve service delivery, and to create overall cost savings. The Service Review project will undertake an analysis of Councils services, systems, processes, work streams, resources and overall costs, with a review of market based comparisons for some relevant services.
From an original analysis, Council Officers believe that an initial savings of $1M can be attained. Staff also believe, however, that further revenue raising opportunities may fall out of the Review as well as opportunities for savings through regional collaboration with other Councils.

Special rate variation: The ‘rate peg’, which controls the amount NSW Councils can increase rates in order to cover price increases, is set each year by IPART. If a Council wishes to raise their rates above the ‘rate peg’ they must make an application to IPART for a special rate variation. IPART makes a judgement on these applications on a condition that they meet the criteria of being “realistic, justifiable and affordable for ratepayers” (IPART fact sheet, 2013). There are a variety of reasons a Council may wish to apply for a special rate variation. These include improving infrastructure, addressing a maintenance backlog, to pay for new capital works or reduce operating deficits. Special rate variations may be granted on a permanent or temporary basis.
Key dates & figures

In order to apply for a Special Rate Variation it is required that final applications be submitted to IPART online and in hard copy before the 24th February 2014. Subject to the Council’s consideration of the outcome of the community consultation, an application could seek the following increase in rate revenue in order to address the funding needs identified in the Resourcing Strategy beginning in the financial year 2014/15:
Year 1 Income $2 – 2.5M
Year 2 Income $3.5 – 3.7M
Year 3 Income $4.5 – 4.8M
Year 4 Income $5.5 – 6.0M
Year 5 Income $6.5 – 7.0M

In order to achieve this income the increases in rates, based on a 2.3% Rate Peg as indicated by IPART for 2014/15 (and potentially subsequent years), would be:

The Concourse
Comments have been raised during community consultation relating to The Concourse and whether it has had any impact on rates or Councils financial position. The model used to fund The Concourse was designed to have minimal impact on residential rate payers. In 2004 a special rate variation was applied to businesses in the CBD increasing business rates by 10%. This was justified given the increase in commercial activity in the Chatswood CBD generated by the construction and opening of The Concourse.
The construction of The Concourse was funded from existing Council reserves, property and car park sales/long term leases, s94 Contributions, grants and loans. The loans are serviced by $1 million debt servicing provision, from annual parking fine income (set aside as part of The Concourse funding plan), the special rates variation levied in the Chatswood CBD, s94 Contributions and a proportion of operating surplus if available.

All ongoing costs of The Concourse including maintenance are paid for with income generated by retail and commercial rent for premises on site on The Concourse. The proposed SRV application for 2014/15 will not be used to pay for The Concourse or for any ongoing costs associated with The Concourse.

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