MARGARET RIVER NEEDS A STRONG HEART*...business case development and cost estimation have been...

MARGARET RIVER NEEDS A STRONG HEART*

*Hub for Entertainment, Arts and Regional Tourism (HEART) Project

BUSINESS CASE 2015

AMOUNT REQUESTED

Margaret River Hub for Entertainment, Arts and Regional Tourism [HEART] Business Case Proposal Approved by the CEO, Shire of Augusta Margaret River

of 77

$5 million ($2014) Cover : Artist’s Impression of the completed Stage 2 of the Margaret River HEART (Willcox & Associates Pty Ltd)


of 77


of 77

Table of Contents

1 EXECUTIVE SUMMARY 6 2 PROJECT SCOPE AND EVALUATION 16

2.1 Project Purpose 16 2.2 Royalties for Regions Funding Amount 16 2.3 Project Description 18 2.4 Background 20 2.5 Current Management and Usage 24 2.6 Planning, Progress and Funding to Date 25

3. POLICY AND STRATEGIC FRAMEWORK 26 3.1 Alignment to the Royalties for Regions Policy Objectives 26 3.2 Alignment with SWDC Regional Investment Blueprint 27 3.3 Alignment with WAPC Southwest Regional Planning and Infrastructure Framework 27 3.4 Alignment with State Cultural Infrastructure Directions Policy 2012-14 and the Regional Arts and Culture Action Plan 2014-2018 28 3.5 Alignment to Western Australian Regional Development Trust Themes 29 3.6 Alignment with State Government Strategy for Tourism in WA 2020 30 3.7 State Aboriginal Tourism Strategy 31 3.8 Alignment with the State Planning Strategy 2050 32 3.9 Alignment with other SW Regional and Federal Government Strategies 34 3.8 Project Deliverables 35 3.9 Stakeholder Engagement 36

4. ECONOMIC, FINANCIAL AND RISK ANALYSIS 40 4.1 Critical Assumptions 40 4.2 Economic and Financial Analysis 41 4.3 Financial Analysis 51 4.4 Discounted Cash Flow Analysis 54 4.5 Assessment of Options 56 4.6 Funding Strategy 57 4.7 Total Budget 59 4.8 Sustainability and Ongoing Viability 61 4.9 Project Timeframe and Key Milestones 62 4.10 Risk Analysis 64

5 IMPLEMENTATION STRATEGY 67 5.1 Communication Plan 67 5.2 Project Management 67

6 SUPPORTING DOCUMENTS 74 7 SIGNING OFF BUSINESS CASE 74

7.1 Sign-off 74


of 77

Glossary of terms In the context of this document: Agency means a Western Australian State Government agency. Applicant means the organisation or Agency preparing a business case proposal requesting Royalties for Regions funding for a priority project. Business case proposal means the information prepared by the Applicant in support of the project. CAPEROC means the voluntary Margaret River Capes Regional Organisation of Councils consisting of the City of Busselton and the Shire of Augusta-Margaret River Deliverables means the expected productivity benefits, outputs and outcomes from the project. Department means the Department of Regional Development. Drawdown means the predicted need for Royalties for Regions funds for the purpose of delivering the project. HEART means Hub of Entertainment, Arts and Regional Tourism. MICE means meetings, incentives, conferences and exhibitions and can also mean meetings, incentives, conventions and events. Option means a feasible, alternative delivery mechanism to the project which was considered by the applicant when preparing the business case proposal. Output means the end product of the project. For example, an infrastructure asset, services delivered. Outcome means the intended consequence(s) of the project. For example, the project’s linkage to and delivery of the Applicant’s strategic objectives, alignment with the Royalties for Regions objectives. Project means the works or services proposed in the business case. Royalties for Regions means the Western Australian State Government’s Royalties for Regions program. Stakeholder means a party with an interest in or who is affected by the project.


of 77

1 EXECUTIVE SUMMARY

Project Overview The Strong HEART for Margaret River project is one of four transformational projects developed by the Shire under the Supertown contestable funding program in 2012. Since then further detailed planning and consultation, extensive conceptual design work, detailed business case development and cost estimation have been undertaken to make the project shovel ready for investment. The Strong HEART project involves the major refurbishment of the more than 30 year old degraded Cultural Centre and Squash Court facilities to transform them into a hub for entertainment, arts and regional tourism (HEART) strategically located in the Centre of Margaret River. The buildings are located on land owned by the Shire in Freehold title.

The Vision The Shire of Augusta-Margaret River’s vision is to create a vibrant hub for entertainment, arts and regional tourism that will enrich the quality of community life and strengthen and diversify the Margaret River Region’s economy. The multi-purpose, refurbished complex will be designed to simultaneously host a range of:

Cultural events, performing arts and festivals

Visual arts displays and exhibitions

Cinema screenings and premieres

Business meetings, expos and conventions

Sub-events related to major Iconic events such as the Drug Aware Surf Pro, Gourmet Escape, Cinefest Oz, Cape to Cape Mountain Biking and other major regional tourism events

Indigenous, multicultural and historical events and exhibitions

Community gatherings, events, celebrations and meetings

Support services when required to be used as an emergency evacuation centre for the Margaret River townsite catchment as occurred during the November 2011 Margaret River fires

The HEART project will create a multi-purpose, highly flexible entertainment and business events complex which both meets the needs of the current population and caters for projected population and visitor growth as outlined in the State Government’s SuperTowns Program. It will strongly complement the planned upgrading of the Margaret River Main Street with both projects revitalizing the central business district (CBD) of Margaret River which is the State’s premier regional tourist destination for interstate and international visitors.

Project Cost A total of $5 million in 2014 dollars is being sought from Royalties for Regions (RfR) programs. As the project will be undertaken in 2016 the $5 million will have escalated at 4% pa to $5.408 million. (See table 1 below) The total budget will be $7,091,840 in 2015 figures and leveraged funds would be $1,891,840 seeking $5,200,000 in RfR funding. That represents leveraged contributions of


of 77

27% from the Shire and other leveraged contributions with the remaining 73% from RfR . In other words $1 is being contributed for every $3 sought from RfR. Table 1 Cost Summary

Funding of $390,000 for the project was accessed in the 2014/15 financial year with contributions being made by the Shire ($155,000), the SWDC ($40,000), Arts Margaret River ($10,000) and the balance from Lotterywest ($185,000). Remedial works were identified by Theatre Consultant Richard Stuart in a commissioned “Review of Theatre Infrastructure and Equipment” in August 2013 as urgent OSH related matters and will be carried out in the first half of 2015. The works included the replacement of an unsafe fly tower mechanism, lighting bars and motorized winches and stage curtaining. The balance of the $1,177,500 remedial works and technical fit out requirements identified in the Richard Stuart Review have been incorporated into Stage 2 of the project. A Gloucester Park Transformer Load Assessment prepared by Anser Technical in August 2014 has also revealed that the power supply to the Gloucester Park sporting and cultural facilities is already at capacity as only a 300kva transformer is supplying power to all facilities including the current Cultural Centre. Western Power will upgrade the unit to a 1000 kva system to supply the future needs of the Cultural Centre redevelopment. The Western Power contribution is estimated at $250,000 with the Shire having to contribute


of 77

$40,000 to Western Power plus a further $20,000 to connect up Shire facilities to the new power supply. The new development will also leverage off and complement the previous investment of $11.2 million in the award winning new Civic and Administration Building opened by the Premier on 4th February 2012. The facilities themselves which are the subject of the major refurbishment and redevelopment and are therefore a further Shire contribution to the project have a fair value of $2,410,000 in the case of the Cultural Centre or a replacement value including demolition costs of $6,500,000 (Stage 2) and in the case of the squash courts and adjacent toilets, former crèche and offices constitute approximately 35% of the Recreation Centre and have a fair value of $843,500 and a replacement value of $2,275,500. (Stage 1) The valuations were provided by Griffin Valuation in 2013-14. Council’s contribution to Stages 1 and 2 is envisaged to be $1,081,600 in 2016 dollars to be financed by a Treasury Corporation Loan over 15 years at a fixed interest rate requiring repayments of approximately $90,000 per annum repaid by Developer Contributions.

Extensive Project Planning The project is identified as one of four transformational projects under the Supertown program and is a priority in the SW West Regional Blueprint, the Margaret River Supertown Growth Plan and the Capes Regional Cultural Facilities Needs Assessment (CAPEROC - Alexander 2012). This redevelopment has been carefully planned and designed in consultation with the Supertown Community Reference Group (CRG) and the Supertown Technical Advisory Committee (TAC). A Cultural Centre Redevelopment Working Group which is a broadly based group of key stakeholders was formed by Council resolution in August 2012 and has met regularly to progress and develop the project. Key stakeholders involved in the development of the concept plans and business case include the Margaret River Chamber Commerce and Industry, the Augusta Margaret River Tourism Association, the Margaret River Wine Industry Association, SWDC, the MR Senior High School, Arts Margaret River, 2 well respected theatre consultants, the wider arts community, local architects, a local conference and events promoter, hospitality and accommodation providers and community representatives. The provision of state of the art, flexible spaces for all forms of performance and visual arts, conferences, meetings and exhibitions will ensure significant benefits are delivered across the full range of triple bottom line indicators – social, economic and environmental – to fully comply with the Royalties for Regions objectives and ensure viability and sustainability in the long-term.

Project Sustainability The Shire will ensure that its own share of capital costs are met by the use of developer contributions to manage loan repayments of $1 million at 4.01% fixed interest over 15 years. Ongoing operating costs will be met by the Shire in contracting out the management of the theatre component of the development through a competitive tendering process and entering into a performance based contract with the successful tenderer for an indexed management fee. The commercial kitchen and catering facilities with be leased by competitive tendering leading to a performance based contract with the proceeds of the lease put into a reserve to be used to meet future refurbishment costs. Events attraction will be facilitated by becoming a platinum member of the Perth Convention Bureau and other business events networks and actively involving both the community sector and the private sector in the Centre’s operations.


of 77

In anticipation of the redevelopment and to ensure better management of the facility the Shire recently increased the management fee for the Cultural Centre management to $230,000 pa with CPI indexation to Arts Margaret River as the successful tenderer enabling the group to employ 4 professional staff and better manage a volunteer list of over 100 volunteers and a paid up membership (Arts Hub Members) of 348 individual/family and 12 Corporate members. Commercial event hire fees will be levied on a full cost recovery basis with provision for cleaning, power, staff wages and a component to contribute to refurbishment. The Shire has a profit sharing clause in the management agreement with Arts Margaret River whereby surplus funds generated by Arts Margaret River over $20,000 are shared with the Shire. It is intended that the HEART complex be run on commercial lines and the Shire is not intending to entrepreneur or underwrite any events which could potentially expose the ratepayer to loss. No additional funds are needed for managing external landscaped areas which are reticulated from the Shire’s waste water treatment scheme and undertaken as part of the adjacent Civic Centre gardening program. The HEART project proposes an initial installation of 160 PVC solar panels on the north facing gable roof of the Cultural Centre auditorium building and basketball court number 3 to supplement power needs. The panels will conservatively produce 53,000 kwh of power annually meeting approximately 26.5% of the HEART’s anticipated 200,000 kwh pa electricity needs.

Leveraging off Iconic Events The capacity to add value to existing major events such as the Margaret River Drug Aware Pro surfing event, Gourmet Escape, Cinefest Oz and the Margaret River Readers and Writers Festival will be enhanced by the improved facilities provided under the HEART project. The Cultural Centre already hosts events such the premiere of new Australian movies during Cinefest Oz and this year the Gourmet Escape held a sattelite event known as the Gourmet Food Trivia hosted by Matt Preston and A.A. Milne and featuring other famous celebrity chefs. These events are growing in number and in popularity and more and more opportunities will present themselves in an enhanced facility. Pre and Post redevelopment figures provided by Surfing WA following the upgrading of the Margaret River Pro from a Prime to a World Tour Championship event indicate that the ability to attract the ASP World Tour Event has resulted in a 33% increase in visitors from outside the Region and a 38% increase in visitor spending from outside the region. Spectator numbers increased from 25,000 to 40,000 up 38%. In terms of live event web casting, unique viewers increased from almost 750,000 to 3.43 million. Event website page views from just over 2 million to 14 million and social media reach from 250,000 to 12.7 million. The 2014 Margaret River Drug Aware Pro was awarded a Gold Medal at the WA Tourism Awards in the Major Festivals and Events category. Opportunities for satellite events include surfing museum displays, surf movies, presentation dinners, “meet the surfers” events, dances, music concerts, wine and food shows etc. The extension of funding to the Gourmet Escape for a further three years has entrenched the event as a major intrastate, interstate and international draw card event for the Region. Sattelite events using enhanced facilities at the HEART complex could include quiz nights, wine and food expos, cooking demonstrations, food movies, dance and music events, live simulcasts etc.


of 77

The CinefestOZ attracts some 18,000 attendances across six venues in the South West over the 4 day/5 night film festival. A number of film screenings, film industry meetings, workshops and networking events occur in the current facility and there is considerable scope for more film industry trade related events and film related investment opportunities. It is estimated that the event attracts some 5000 overnight and day visitors to the South West, contributing $1.283 million to GRP through a direct increase in output of $1.667 million, 8 additional jobs, $0.384 million more in wages and salaries and a boost in value added of $0.759 million. From this direct expansion in the economy from CinefestOZ related tourism, flow on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $0.660 million, 2 more jobs, $0.134 million more paid in wages and salaries, and a gain of $0.264 million in terms of value added. Across the South West, total output increases by $2.797 million from hosting CinefestOZ. Corresponding to this is anticipated increases in employment of 12 jobs, $0.624 million wages and salaries, and $1.283 million in terms of value added.

The Busselton Airport This Busselton Airport project involves several stages of upgrades to the runway and terminal facilities to ultimately allow direct flights into the region from the Eastern States and overseas. This project is of major importance to the Margaret River Region which is in the same time zone as Asia. The establishment of a business and events centre in Margaret River will generate business visitation through the Busselton Airport as the venue will become more accessible to eastern states and overseas visitors wishing to hold a business event in the Margaret River Region. The upgrading of the venue therefore supports the investment in the Busselton Airport upgrading and vice versa. The Shire and/or the operators of the HEART complex will become Platinum Members of the Perth Convention Bureau (PCB) immediately upon notification of funding success. The PCB is tasked by the State Government to attract events from interstate and overseas to WA. The CEO of the PCB Paul Beeson states in his letter of support received by the Shire on 5 December 2015 as follows:

“Demand for corporate meetings, small conferences, and pre/post touring options in unique locations is strong, particularly in the Margaret River Region, given the density of existing tourism infrastructure. A dedicated Business Events Centre would be ideally placed there, and add substantially to the region economically, socially and culturally.

During the 2013-2014 financial year, PCB secured 109 conferences and 84 corporate meeting and incentive events with an estimated direct delegate expenditure of $107.9 million. These pieces of business will materialise across 2014 – 2017.

In addition to conferences already secured for the Margaret River region, PCB is currently working on a number of bids that could have the potential to be held in the region should the infrastructure and standards meet the criteria set by our corporate and association clients.

With increased, dedicated meeting space, set in the unique Margaret River location, the proposed development will enhance the offering the region can provide to business events clients. A dedicated Business Events Centre would be ideally placed there, and add substantially to

the region economically, socially and culturally. To that end, being aware of the criteria and


of 77

submission process, its validity to access Royalties for Regions Funding is highly

appropriate”

Once the project gets the green light, Platinum Membership would be immediately gained as there is a 1-5 year lead time in planning conferences. Events could be attracted and bookings could be taken well in advance of the facility actually being opened.

Local Industry Participation With a range of 26 accommodation businesses providing 1544 beds within 10 minutes walking distance of the facility (Figure 1) the participation of accommodation businesses, commercial caterers and food and beverage providers will be a feature of the project’s operations. The Perth Convention Bureau, the Augusta-Margaret River Tourism Association, Chambers of Commerce and the Margaret River Wine Industry Association and the Shire itself will assist in attracting business to the Centre. Cultural and arts participation in the Centre will be facilitated by Arts Margaret River, local amateur and commercial theatre groups and members of the Shire’s vibrant arts scene. The facility is already part of the Circuit West touring network and caters for commercial buy in shows and events as well as local productions and events. Figure 1 - Location of Accommodation within Walking Distance of the Heart Complex


of 77

Table 2- Accommodation within 400m

Accommodation - 400m radius of Cultural Centre Guest Capacity

Grange on Farrelly Comfort Inn 66

Margaret River Resort 188

Forte Leeuwin 240

Rosewood Guesthouse 12

Short stay accommodation - 9 Mann St. 6

Total 512

Table 3 - Accommodation within 800m

Accommodation - 800m radius of cultural centre Guest Capacity

Trail 8

Must 8

Margaret River apartments 12

Darby Park 150

Margaret River backpackers 52

Prideau's 19

Studio 4 4

Australis 127

Margaret River Tourist Park 300

Margaret River Lodge 108

Station House Chalets 30

Peppermint Brook Cottages 32

Margaret River guesthouse 22

Rooftop Apartments 4

Sol Boutique Apartments 6

Central Avenue apartment 5

Margaret River Hotel/ M/R Holiday Suites 121

Uptown Apartment 6

Silver Tree 6

Brooksby Cottage 6

Short stay accommodation - 10 Mann St. 6

Total 1032

Grand Total 1544

The Shire’s Buy Local Policy (Regional Price Preference) will apply to all tenders and purchasing under the HEART project. In accordance with the Local Government Act 1995 Tenders when specified can be awarded to suppliers within the Shire of Augusta-Margaret


of 77

River with up to a 10% higher price variation all other selection criteria being equal. The Shire’s aim will be to support quality local suppliers to maximize the retention of RfR funds in the Shire and SW Region. The Shire will actively encourage the builder who is awarded the contract to employ local people and sub-contractors and to use local material suppliers. Aboriginal Participation A feature of the HEART will be the inclusion of the local Wardandi people and in particular the award winning Koomal Dreaming Group from Yallingup in welcome to country, cross cultural awareness raising, bush tucker experiences and Aboriginal arts and cultural displays. The Shire recently sponsored the Kambarang SW Aboriginal Gourmet Experience which was a fringe event held in conjunction with the SW Institute of Technology t at the Margaret River Education Campus on Friday 21 November. That is the style of event that the Shire will support at the HEART complex. State Funded Infrastructure and Apprenticeship Participation The Shire will work with the SW Institute of Technology (SWIT) and the Margaret River Education Campus (MREC) to leverage any opportunities for the placement of apprentices with the construction company appointed to carry out the works. It is proposed that the Tender for the building works will use the engagement of apprentices as a desirable criterion in selecting the preferred tenderer.

Economic and Financial Benefits The Margaret River HEART project will yield positive economic benefits for the Shire and the South West during both the construction and operation stages.

During the construction phase in 2015/16 and 2016/17the estimated benefit from the direct expenditure of $5.475 million for the Construction sector and an additional $525,000 for the Professional, Scientific and Technical Services sector of the Shire economy will result in a total increase in output of $11.1 million.

Corresponding to this is anticipated increases in employment of 31 jobs, $2.2 million in wages and salaries, and $4.2 million in terms of value-added. A net benefit of $5.1 million and a cost-to-benefit ratio of 1.85:1 is estimated after direct, indirect and induced effects are taken into account during the construction phase.

At the South West level of economic impact, total output, including all direct, industrial and consumption effects is estimated to increase by up to $12.059 million for the South West Region. This represents a net benefit of $6.1 million and cost-to-benefit ratio of 2:1 for the South West economy.

At the WA State level, total output, including all direct, industrial and consumption effects is estimated to increase by up to $15.136 million. This represents a net benefit of $9.1 million and a cost-to-benefit ratio of 2.52:1.

Under the three scenarios of 6, 12 and 18 events hosted in the venue per annum, the increase in total output associated with increased event tourism visitation from intra- and inter-state as well as overseas has been estimated using the REMPLAN tourism impact model.

Under the 6 annual events scenario, total output is expected to rise by $2.005 million. Corresponding to this are anticipated increases in employment of 10 jobs, $0.467 million wages and salaries, and $0.905 million in terms of value-added.


of 77



Over the 30-year operating life of the venue and allowing for refurbishment and depreciation, the Margaret River HEART should realise an annual cash surplus in every year of operation ranging from $170,358 p.a. in the first five years of operation to $342,651 p.a. in years 26 to 30 of operation, based on twelve events.

Social Benefits The social and community development benefits of the project include:

Fostering active participation in community activities and community cultural development;

Fostering a sense of community belonging and identity through participation in and attendance at cultural activities, community events, festivals and celebrations;

Building community capacity and resilience by strengthening community groups, networks and volunteerism through the use of the venue as a hub for events, arts and tourism activities;

Promotion of community capacity building and volunteerism through the community management of the facility by Arts Margaret River Inc. and as a venue for non-profit groups and organisations to meet and conduct activities;

Promoting equity and access to all community members inclusive of those with disabilities and from culturally and linguistically diverse cultures as well as young people, seniors and families through inclusive activities and events;

Ensuring universal disability access standards required by the BCA are being met or exceeded in catering for the needs of both staff and the Shire’s customers;

Creating a sense of place by modernising and extending existing facilities to create a vibrant and attractive cultural precinct which integrates with neighbouring buildings as an integral part of the Shire’s civic, cultural and recreational precinct creating a strong street presence with active frontages;

Creating pedestrian friendly linkages and connections to and through the adjacent sites and other uses and facilities in the Gloucester Park precinct;

Incorporating innovative architectural design which reflects the local character of the Shire, showcases local natural materials where possible and meets the standard set by best practice architectural design on display at the adjacent Civic and Administration Centre;

Providing attractive and motivating user friendly public spaces where the experience and enjoyment of visitors and audiences is enhanced;

Promote lifelong learning by using the Cultural Centre as a venue for community educational activities, conferences, seminars, presentations, community forums, Town meetings;

Enhancing the community’s emergency and disaster management capabilities through the provision of a central emergency evacuation centre;

Promoting the culture of the traditional owners of the land, the Wardandi people, through “Welcome to Country” acknowledgements, indigenous arts and cultural activities, historical displays and the inclusion of traditional bush tucker in food and wine events;

Providing a quality performing and visual arts venue for the showcasing of high quality touring shows and exhibitions;


of 77

Hosting state and national movie premieres such as through the annual Cinefest Oz Film Festival, and

Increasing the significant economic benefits generated from arts and cultural activity including employment and other opportunities for engagement with the community;

Environmental Benefits

The environmental benefits include:

The reduction in greenhouse gas emissions that results from reduced mining, production and transport costs from recycling and rejuvenating existing buildings rather than building new structures on a green field site

Safe removal and disposal of Asbestos from the Cultural Centre roofs, the squash courts roof and the side cladding and from the number 3 Basketball Court in accordance with Australian standards;

Incorporation of best practice green principles and technologies wherever possible and cost effective including solar passive and energy efficient design principles applied to both new construction and refurbishments;

Ensuring that new equipment purchased to service the facility is low energy rated;

Generation of electricity from solar panels installed on the north facing roofs of the Cultural Centre and the number three basketball court;

The use of recycled water from the Watercorp-Shire recycled water infrastructure on gardens and lawns;

Management of stormwater run-off in an environmentally responsible way utilising the centralised “rain garden” already established in the civic square between the Cultural centre and the new Civic and Administration Centre;

Shovel Ready for Investment The Shire owns the property on which the HEART complex will be located in freehold title. The power supply to the whole of Gloucester Park is currently provided by a 300kva system and has already peaked under current sporting and cultural centre usage. The largest drawer of power is the heated swimming pool. Western Power has agreed to upgrade the system to a 1,000kwa unit in 2015 and the Shire will fund the connection at an estimated cost of $60,000. No section 18 clearances are required under the Aboriginal Heritage Act. Fire hydrant services will be supplied by a ring main system utilizing the on site storage tanks of the new Shire Offices. All required approvals are in place or are easily obtained once the project has approved funding and there are no impediments to the project commencing as soon as funding is approved.


of 77

2 PROJECT SCOPE AND EVALUATION The scope of works associated with the Strong HEART for Margaret River project Stages 1 & 2 is detailed in 1.3 below. The project will provide a major refurbishment and redevelopment of over 30 year old facilities to meet contemporary standards of comfort and ambiance and provide a venue which can attract and host a variety of events, entertainment, arts activity, meetings, incentives, conferences and expos. In summary the project will provide:

A modern, air conditioned 310 seat theatre with up to date technical equipment

A flexible multi-purpose 243m² multi-purpose galley/exhibition/conferencing space

Spacious foyer areas and courtyard for simultaneous pre event and post event functions

Commercial kitchen and bar servery areas

Access to an additional 700 m² exposition space and major conference dining area in court 3 basketball space

New offices and storage space and upgraded wet areas

2.1 Project Purpose

The Shire of Augusta-Margaret River’s vision is to create a vibrant hub for entertainment, arts and regional tourism that will enrich the quality of community life and strengthen and diversify the Margaret River Region’s economy. The multi-purpose, refurbished complex will be designed with the purpose of hosting a range of:

Cultural events, performing arts and festivals

Visual arts displays and exhibitions

Cinema screenings and premieres

Business meetings, expos and conventions

Indigenous, multicultural and historical events and displays

Complementary events in conjunction with iconic events such as the Drug Aware Surf Pro, Gourmet Escape, Cape to Cape Mountain Biking and other extreme sporting events

Community gatherings, events, celebrations and meetings

Support services when required to be used as an emergency evacuation centre for the Margaret River townsite catchment as occurred during the November 2011 Margaret River fires

The Shire’s creation of a multi-purpose, highly flexible hub for events, arts and regional

tourism will meet the needs of the current population and caters for projected population and visitor growth as outlined in the State Government’s SuperTowns Program.

2.2 Royalties for Regions Funding Amount

A total of $5 million in 2014 dollars is being sought from Royalties for Regions (RfR) programs. As the project will be undertaken in 2016 the $5 million will have escalated at 4% pa to $5.408 million. (See table 1 below) The total budget will be $7,091,840 in 2015 figures and leveraged funds would be $1,891,840 seeking $5,200,000 in RfR funding. That represents leveraged contributions of


of 77

27% from the Shire and other leveraged contributions with the remaining 73% from RfR . In other words $1 is being contributed for every $3 sought from RfR. Funding of $390,000 for the project was accessed in the 2014/15 financial year with contributions being made by the Shire ($155,000), the SWDC ($40,000), Arts Margaret River ($10,000) and the balance from Lotterywest ($185,000). Remedial works were identified by Theatre Consultant Richard Stuart in a commissioned “Review of Theatre Infrastructure and Equipment” in August 2013 as urgent OSH related matters and will be carried out in the first half of 2015. The works included the replacement of an unsafe fly tower mechanism, lighting bars and motorized winches and stage curtaining. The balance of the $1,177,500 remedial works and technical fit out requirements identified in the Richard Stuart Review have been incorporated into Stage 2 of the project. A Gloucester Park Transformer Load Assessment prepared by Anser Technical in August 2014 has also revealed that the power supply to the Gloucester Park sporting and cultural facilities is already at capacity as only a 300kva transformer is supplying power to all facilities including the current Cultural Centre. Western Power will upgrade the unit to a 1000 kva system to supply the future needs of the Cultural Centre redevelopment. The Western Power contribution is estimated at $250,000 with the Shire having to contribute $40,000 to Western Power plus a further $20,000 to connect up Shire facilities to the new power supply. Table 1 Cost Summary


of 77

The new development will also leverage off and complement the previous investment of $11.2 million in the award winning new Civic and Administration Building opened by the Premier on 4th February 2012. The facilities themselves which are the subject of the major refurbishment and redevelopment and are therefore a further Shire contribution to the project have a fair value of $2,410,000 in the case of the Cultural Centre or a replacement value including demolition costs of $6,500,000 (Stage 2) and in the case of the squash courts and adjacent toilets, former crèche and offices constitute approximately 35% of the Recreation Centre and have a fair value of $843,500 and a replacement value of $2,275,500. (Stage 1) The valuations were provided by Griffin Valuation in 2013-14. Council’s contribution to Stages 1 and 2 is envisaged to be $1,081,600 in 2016 dollars to be financed by a Treasury Corporation Loan over 15 years at a fixed interest rate requiring repayments of approximately $90,000 per annum repaid by Developer Contributions.

2.3 Project Description

The latest Margaret River Cultural Centre redevelopment concept plans have been developed by the Redevelopment Working Group in an iterative and consultative process involving key stakeholders. Following on from the original 2012 Supertown designs of the Bollig Design Group local architects Willcox and Associates have been engaged to develop a major redevelopment planned for completion in three stages (Fig. 2.1 below) as follows: Stage One Multi Use Space

Re-pitch squash court and wet area roofs to remove industrial box gutter and replace asbestos roof with colorbond roofing and insulation. Construct covered walkway to car park.

Convert squash courts into multi-purpose gallery/expo/performance/conferencing space of 243m2 divisible by three by retractable acoustic walls and also including relocated 180 seat retractable seating from the main theatre.

Create a connecting foyer between the existing theatre and the newly refurbished multipurpose space created by the squash courts, including a new bar/servery facilites.

Construct a new commercial kitchen to service all areas from the central foyer location.

Renovate toilet area and construct new universally accessible toilet, green room, storeroom and rehearsal/conference break-out and future office accommodation area.

Renovate courtyard replacing asbestos roof to number 3 basketball court and courtyard verandah with color bond, extend verandah, reclad basketball court façade and create new universally accessible entry to the theatre along the old verandah on the north side of the courtyard.

Construct fire wall and acoustic wall

Stage Two Auditorium

Refurbish theatre and install new technology as per the Stuart report (see section 2.6 below)

Install permanent theatre style seating for 310 patrons

Construct new theatre foyer and new northern façade

Refurbish toilets and construct new universally accessible toilet

Create new office space in old kitchen with independent external access doors

Install climate controlled air conditioning to theatre auditorium


of 77

Replace asbestos roofing to auditorium and fly tower with colorbond roofing and insulation

Install PVC Solar Panels on auditorium roof

The staged approach will allow for continuous use of the facility with minimum disruption of the performances, meetings, events and functions currently booked for the theatre to be held in the completed stage one, once stage two commences.

Figure 2.1 Plan Showing Three Distinct and Sequential Stages

Stage 3 Conference Centre *

New construction of a dedicated conference centre of 652 m2 with capacity to host

conference of up to 600 delegates.

*Note that Stage 3 does not form part of this current business case proposal but is planned if required in the future for funding and development and is therefore included for information only at this stage. Additional Beak-out and Conferencing Facilities in Recreation & Civic Precinct The HEART Complex is strategically located within the Civic, Cultural and Recreation precinct. The HEART Complex will have access to a wide range of break out facilities which can be utilised to cater for a wide range of conferences, conventions, workshops, seminars and business meetings. Integration of additional meeting space and break-out rooms with a total capacity of ranging from 10 to 700 will strengthen the ability of the HEART to meet the needs of community, cultural and business events. (see Figure 2.2).


of 77

Figure 2.2 Additional Conference Breakout Rooms

2.4 Background

The project is one of four transformational projects identified and developed under the Supertown program and is included in the South West Regional Blueprint and the Shire’s Supertown Growth Plan adopted by the SWDC and the WAPC. The acute need for the project to proceed as a priority for the Shire has existed for some time. This introduction will provide background to the project with respect to the existing site and situation of the buildings and the planned Cultural Centre redevelopment as proposed. A staged approach has been adopted as part of a fiscally responsible and prudent approach to project management and operations. The alignment of this project with the objectives of the Royalties for Regions Program and associated policies will also be clearly stated at the outset. Detailed project objectives and deliverables, timetable, tasks, risk assessment and communications strategies will be provided deeper into the proposal. The Margaret River HEART will literally become the centre of entertainment and business events in the town of Margaret River and the Shire of Augusta Margaret River as well as making a strong contribution to the South West economy and region generally. The Margaret River Cultural Centre was opened in 1983 by Premier Ray O’Connor and is the Shire’s primary venue for the performing arts. The Cultural Centre was designed by local architect Chris Willcox of Willcox and Associates and is constructed from some of the last wood fired bricks produced in Western Australia. The external fly tower references rural flourmills. The auditorium features jarrah flooring and a mezzanine balcony, in acknowledgement of our timber heritage.


of 77

The 30 year old Margaret River Cultural Centre has been a well-loved and utilised community venue currently enjoyed by over 25,000 users per annum, but it is now in need of a major facelift to meet the needs of future generations. The proposed Cultural and Business Events redevelopment is an innovative solution in that it will revolutionize tired and poorly presented facilities into a state of the art entertainment and business events centre without an excessively expensive price tag often associated with regional convention centres. The Centre is a multi-purpose facility and is effectively the Town’s only public hall for major events and public gatherings, and also contains the Town’s only indoor cinema, as well as being used for dance classes and other private functions. It was also used as an emergency evacuation centre during the 2011 Margaret River fires. An outdoor activity space known as the Civic Square adjoins the Cultural Centre and the Shire’s award winning $11.2 million Civic and Administration Centre redevelopment. The facilities are structurally sound but are in a degraded condition due to limited Shire investment on refurbishment over the years. Major deficiencies (see below) exist with the current facilities which will be redressed in the proposed redevelopment. As part of this proposal the theatre will be completely renovated and updated with new finishes and technology. Three historically under-utilised and deteriorating squash courts will be renovated and converted into a 243 sq metre flexible multi-purpose space able to host a range of functions including art gallery, expo, museum, cinema, conferencing, hospitality. The multi-purpose space will be linked to the theatre by a new connecting foyer which can be used for pre and post-event functions or as a function area in its own right. The foyer will also act as an entrance to the 714 sq metre basketball court number 3 which can be used for major expositions such as during the Margaret River Agricultural Show or as a large convention dining area as has occurred with the recent Lion’s convention. Events will be able to be simultaneously run with the expanded foyer areas and facilities planned under the redevelopment. Asbestos roofing and cladding will also be removed and disposed of in accordance with best practice standards, solving a potential major health problem for future generations. Green design principles will be incorporated and solar panels will generate electricity from the north facing rooftops. The staged development has also been carefully and strategically planned to allow for a 650m2 dedicated convention centre to be constructed on the front of the property as a separate but fully integrated Stage 3 in the future if and when required. The existing facilities have a number of identified deficiencies which are identified in the following summary:

General Ambiance and Presentation The Centre is over 30 years old and is in dire need of a major refurbishment and redevelopment. The auditorium needs to be softened to make it more welcoming, inviting and comfortable for audiences. The auditorium also requires acoustic treatment to improve sound quality and efficient heating and cooling need to be installed throughout the building to meet contemporary patron comfort expectations. The Lack of hanging space and the temporary nature of the foyer conversion to a gallery is sub-optimal in presenting art works and for hosting larger exhibitions and permanent displays. The use of the foyer as an art gallery has also exacerbated the dark and uninviting nature of the foyer. The façade of the Cultural Centre and the adjacent squash court section of the Recreation Centre are poorly presented from an aesthetic viewpoint and detract from the new Civic and Administration Centre and the public space between the two buildings. The refurbishment of the Cultural Centre will as a secondary consideration complement or contrast the innovative award winning contemporary architecture of the new $13.2 million Civic and Administration


of 77

Centre precinct. The HEART project will complete the Civic, Cultural and Recreational precinct as an attractive icon for the State’s premiere regional tourist destination for interstate and overseas visitors.

Unacceptable Disability Access Arrangements Disability access arrangements for access and egress to and from the venue and within the venue are inadequate to meet contemporary standards for such an important facility. The building was opened in 1983 when universal access standards were deficient by today’s standards including the absence of automatic opening entry doors and unisex toileting/parenting facilities and a lift to the upper floor. Any redevelopment would trigger full compliance with the Building Code of Australia (BCA) in terms of universal access requirements. In addition the Shire aspires to best practice in terms of disability access and inclusion. As occurred with the design of the Shire’s new administration offices a disability access reference group was used as a consultation mechanism to include people with disabilities to achieve the best outcome.

Asbestos Removal Due to the age of the buildings which are the subject of this application the roofing and much of the side wall cladding of the Cultural Centre, Squash Courts and number 3 basketball court is constructed of corrugated asbestos cement sheeting. Asbestos is a dangerous toxic material which needs to be handled with extreme caution. Overall the condition of the asbestos is rated as fair but there are visible signs of wear and tear in many places which indicate that in the near future the material will need to be replaced with a suitable building material and disposed of in accordance with best practice procedures.

Photo 2.1 (above) showing asbestos roofs and wall cladding to be replaced as part of this project. Additionally the asbestos sheeting detracts from the visual appearance of the facilities and any funds spent on the upgrade will be sub-optimal if the asbestos cement sheeting is not replaced. Construction Cost Consultants Wild and Woollard estimate the cost of removal and replacement of the asbestos cement sheeting with colorbond and simple anticon insulation at $826,472. (Wilde and Woollard October 2014)

Inadequate Office accommodation The original Cultural Centre building did not include any dedicated office accommodation. A single combined box office and general office used by Arts Margaret River 2.5m x 4m was created as a makeshift measure several years ago. The office is used by up to three staff at any one time and as well as office equipment is not conducive to good working relations and productivity of general staff. Arts Margaret River have now created a further makeshift office


of 77

following the appointment of a new general manager, technical manager and marketing officer and relocated the ticket office to the foyer area further reducing the foyer space where queuing patrons for tickets block the front doors of the theatre. A new office will be created for the Arts Margaret River and centre operations where the existing kitchen facility is currently located. As part of the proposed redevelopment the former crèche and a decommissioned change room at the southeast corner of the complex will be fully renovated providing a rehearsal and break-out room. This will also be suitable for any additional office accommodation if required in the future. The box office will be relocated to a more central location between the new stairs in the auditorium.

Poor Bar, Kitchen and Catering Facilities The design of the Cultural Centre featured a kitchen opening into the main auditorium to allow catering for functions of a cabaret style of tables and chairs on the wooden floor which was popular in 1983. With the passage of time functions using that format are rare and there are other commercial venues such as the Quality Inn which cater for such functions. There is no sound lock from the kitchen to the auditorium so noise penetrates into the theatre. To service the whole expanded complex it is envisaged that the kitchen entry into the auditorium be eliminated by the installation of sound proof paneling and that a new corridor be constructed on the northern façade of the building to allow for the kitchen to be converted to office accommodation. A new centrally located kitchen will be incorporated into the central Foyer area. This will enable food to be prepared and delivered to all sections of the facility. This also has the advantage of allowing a more aesthetically pleasing architectural statement to be presented to Wallcliffe Road as the facade of the building facing the street. The bar facilities will be reoriented to service the new connecting foyer of approximately 190 sq. metres between the theatre and the renovated squash courts. The new connecting lobby will become an area to host pre event functions or for functions in its own right. The bar will also service the courtyard with a bi-folding window servery and forming an attractive outdoor function space.

Outdated Toilet and Washroom facilities The toilet facilities at the Cultural Centre are tired and need a major refurbishment including the replacement of pans, cisterns, re-tiling and wash basins. The wet areas are dark and have a poor ambiance and need to be bright and fresh looking in keeping with the ambiance of the revamped facility. The toilet facilities at the SE corner of the squash courts are in a very sub-standard condition and need to be refurbished to provide additional toilets and wet area facilities to service the whole complex. One disused change room will be converted to a green room for performers or presenters to freshen up prior to performing in the multi-purpose space. Storage Requirements Currently storage is inadequate to meet future needs and an increase in storage is factored into the project. Storage is an important component of any entertainment and business events centre where a diverse range of functions can be hosted simultaneously. The venue is designed for flexibility and so adequate storage is essential for the housing of display boards, tables and chairs, theatrical props etc. The key areas of storage will be at the south

eastern corner which will provide another 40 square metres of storage. This is in addition to the back of theatre storage areas which currently exist.


of 77

2.5 Current Management and Usage

Arts Margaret River, a local incorporated non-profit arts group, has managed the facility under a memorandum of understanding with the Shire for many years with modest financial support from Council. This has been an excellent arrangement over the years but the Council is now committed to investing significantly more funding into the management of the facility and to put the whole operations of the Centre on a more sustainable, financially viable footing in order for the Centre to reach its full potential. Council called for expressions of interest by Statewide advertising for the ongoing management of the facility in 2013. Following a major capacity building and restructuring process Arts Margaret River Incorporated was successful in being awarded the contract. Council has now entered into a 3 by 3 year license agreement with Arts Margaret River on the greatly enhanced management fee of $230,000 per annum indexed to inflation. The fee has enabled the employment of 4 professional staff members including a general manager, technical manager, marketing officer and administration support officer. The enhanced funding and the improved capacity of Arts Margaret River will assist in the preparation for a major redevelopment and upgrade of the facility in 2016 with Stage 1 commencing in the second half of the 2015-16 financial year and Stage 2 being completed in the first half of 2016-17. Table 2.1 Margaret River Cultural Centre Attendance by Type, 2013

Activity Type Attendances

Performing Arts events ( AMR events) 2104

Commercial Venue hires 21075

Foyer Gallery Visitors 1500

Cinema Patrons 2824

TOTAL ATTENDANCE – MRCC 2013 27503

Source: Arts Margaret River There are some 34 community based organisations currently using the facility (Table 2.2). Table 2.2 - Current Users of the Margaret River Cultural Centre

Leeuwin college of Performance Montessori School

Outloud Dance academy Margaret River Roller Derby Club

South West academy of Dance Margaret River Boardriders Association

MRSHS - Abseiling Class South West academy of Dance

MRSHS - Year 9 Dance Cinefest OZ

MRSHS - Upper school Dance Arts Margaret River

Margaret River Theatre Group Rotary Club of Margaret River

University of the Third Age Lions - Margaret River District 201W2

Augusta Square Dance Margaret river Dance Club

MRIS Annual Art Auction Swing Dance

AMR Historical society Seniors Recreation - Southwest Branch

MRCCI (Business awards) Margaret River Climate Action Group

Agricultural society (Ag Show) AMR Fillipino Community


of 77

St Thomas More Primary School Bunbury Repertory club

Margaret River Primary School Sahaja Yoga

Karridale Primary school Artzability Inc.

Cowaramup Primary School Margaret River Baptist church

2.6 Planning, Progress and Funding to Date

The Shire commissioned a “Review of Theatre Infrastructure and Equipment,” which was prepared by theatre consultant, Richard Stuart, dated 11 June 2013. A rigorous report was prepared which gives a detailed analysis of the current state of the Cultural Centre’s equipment and infrastructure. The consultant identified $1,177,500 in required improvements, which have been divided into four priority areas. (Table 2.3)

Table 2.3

Ranking Item Cost Estimate

Occupational Health and Safety (Urgent – Counterweight Fly system $180k plus Bio Box /ladder door upgrade $1.5k)

$181,500

Priority 1 Immediate (Stage lighting bars, house curtain, masking curtains, cyclorama, curtain tracks)

$135,500

Priority 2 Short term (Loading Dock $25k reconfiguration etc) $480,100

Priority 3 Medium Term (Acoustic treatments $37,500 etc) $380,400

Total $1,177,500

A successful application was lodged with Lotterywest in 2014 for a funding package of approximately $355,500 to enhance the community’s use of the facility. Under the funding package the urgent replacement of the Counterweight fly system for 16 counterweight lines is being actioned ($180,000) as the Priority 1 action from the above table. Additional Priority 1 items being actioned also include a $135,000 spend on stage and house curtains and curtain tracks ($54,500), Cyclorama cloth ($4,000), Stage lighting bars and motorized winches ($77,000), new Main PA Speakers ($32,000) and radio microphones ($8,000). Funding contributions are being made by the Shire ($120,000 + $30,000 for power upgrading), the SWDC ($40,000), Arts Margaret River ($10,000) and the balance from Lotterywest ($185,000). That will leave $822,000 outstanding from the list of identified improvements in the Stuart report which form an important component of this business case for Royalties for Regions funding. This amount has been included in the QS estimates for Stage 2 of the project.


of 77

3. POLICY AND STRATEGIC FRAMEWORK

3.1 Alignment to the Royalties for Regions Policy Objectives

This business case supporting the investment of Royalties for Regions funding is informed by over $200,000 of Supertown SWDC and Shire studies and is compelling on the grounds of social, economic and environmental factors. The project is included in the Margaret River Supertown Growth Plan adopted by the SWDC and WAPC in 2012 and informed by the Community Reference Group and the Technical Steering Group. Council adopted the HEART Project Stages 1 & 2 as the 4th ranked Supertown transformational project. The project has now become the 3rd highest ranking priority after the Perimeter Road and Main Street and the Gloucester Park Precinct now that the Surfers Point project has been completed. The project meets all of the Royalties for Regions objectives summarised as follows:

Building capacity in regional communities The project will improve tourist infrastructure and improve capacity to host a wide variety of events including community meetings, business and association conferences, performances and movies. Community management will enhance local governance capacity, increase volunteerism and event management capacity. The venue will continue to be the Town Hall and will provide community training programs. Wardandi culture and heritage will be acknowledged and become a feature of Centre activities. Retaining benefits in regional communities The Margaret River HEART Project will attract additional visitors and retain tourism benefits for the region. Local businesses will be able to access the regional price preference provisions of the Local Government Act 1995 creating more jobs in the Town and Region Improving services to regional communities The Margaret River HEART will be able to attract and host a wide range of events and productions enriching the community and cultural life of the residents. An additional high class premium cultural and business events venue will add to the Region’s network of events venues and showcase the business and creative sector opportunities in the region. Attaining sustainability The Margaret River HEART project will extend the life of existing facilities through a major refurbishment and redevelopment. Toxic asbestos cement sheeting will be removed and safely disposed of eliminating an environmental hazard and financial burden for future generations of Shire residents and visitors. Solar panels will generate approximately 26% of the required energy and gardens will be watered by recycled water. Storm water will be filtered through nutrient stripping settling ponds before entering the ground water. Financial sustainability will be achieved by community and commercial participation in the management of the HEART complex and setting aside funds from a commercial lease and hire fees for future refurbishment.

Expanding opportunity The Margaret River HEART project will substantially increase business and community opportunities in the commercial, tourism, arts and creative industries and capitalise on the potential of the region to attract in-migration, investment and income related to this project.


of 77

Growing prosperity It is expected that increased domestic and international visitation will generate considerable additional economic activity within the Margaret River Region creating jobs in the construction phase and permanent jobs in the longer term. (See economic benefits section)

3.2 Alignment with SWDC Regional Investment Blueprint

The SWDC Draft Regional Investment Blueprint (March 2014) lists the Margaret River HEART project as a high priority in the 3-15 year timeframes under Tourism Infrastructure and Supertowns. (Pgs. 76 & 78)

SWDC Investment Blueprint Regional Priorities

Objectives Actions

Tourism Increase tourism’s economic contribution through increased visitation from interstate and overseas markets Develop tourism infrastructure in core South West experiences of wine and food, art and culture, events, Aboriginal Noongar experiences and landscapes

Increase the number of high quality international events in the region Improve the quality of visitor experiences by providing a range of high quality and memorable experiences Create vibrancy and activation in the region’s main tourism centres focused on main streets Improve the quality of iconic attractions within the South West to support both local and international visitation incorporating nature-based and marine tourism

3-15 Years Build convention facilities at Margaret River and Busselton and incorporate into an international convention marketing strategy (Pg. 76)

SuperTowns Leverage existing State Government investment in Supertowns to generate private sector growth and renewal

Margaret River Position Margaret River as a regional centre for expanded premium wine production and tourism based on landscape, sea and surf, wine, food and prestige experiences

3-15 Years Build a multipurpose cultural events and conference facility venue in the town centre to support South West international conference visitation (Pg. 78)

3.3 Alignment with WAPC Southwest Regional Planning and Infrastructure Framework

The WAPC Draft SW Regional Planning and Infrastructure Framework (March 2014) outlines the key economic infrastructure projects and initiatives for the Region including the Leeuwin-Naturalist sub region. The HEART project is included as a priority project within the Framework.


of 77

Leeuwin−Naturaliste sub-region Project

Description/ Objective

Benefits to region/subregion

Cultural and Events Centre in Margaret River (LN 13 pg. 38 & 77)

Redevelopment of the Margaret River Cultural Centre to provide a multi-purpose facility for cultural events, gallery display, community support and large conferences

Existing Cultural Centre is aging and there is a lack of sufficiently sized and serviced conference facilities. A well located facility of this nature in proximity to significant accommodation has the potential to increase visitor numbers and provide corresponding benefits, particularly to address the seasonal effects of tourism.

3.4 Alignment with State Cultural Infrastructure Directions Policy 2012-14 and the Regional Arts and Culture Action Plan 2014-2018

The HEART project closely aligns with and is informed by the Department Culture and the Arts Cultural Infrastructure Directions Policy 2012-14. The thrust of the policy is that infrastructure cannot be seen in isolation and must be seen in the context of the participation of people and technology in the equation to create Public Value in terms of creativity and engagement. The Margaret River HEART project already has the active participation of a strong stakeholder base with significant demonstrated community support. Technological needs have been identified by the Stuart Report. These ingredients support a major refurbishment and redevelopment of the Centre to serve the community’s needs over the next 30 years.


of 77

The Margaret River HEART project will also embrace and enact the principles of the Regional Arts and Cultural Action Plan 2014 -2018 being

Creativity: In supporting the development of our unique cultural personality, we will give priority to projects and programs that demonstrate imagination and innovation, and contribute to the development of artists and arts experiences in WA.

Engagement: Engagement in culture and the arts has the capacity to enrich and transform individuals, communities, environments and the state as a whole.

Access and participation: Regional communities need access to the state’s cultural organisations and institutions, and the ability to participate fully in their own cultural life.

Arts Margaret River Inc. is the organisation that has been funded by the Shire to a level of $230,000 p.a. for three years and appointed to manage the existing facility. Arts Margaret River attracts $3 for every $2 provided by the Shire in additional revenue from box office, State grants, fund raising and other sources generating approximately $575,000 in expenditure annually. Arts Margaret River also receives DCA’s Country Arts WA’s Core Arts Fund as a peak arts body in the Southwest Region. This collaborative commitment to the Arts in the region demonstrated by both the Shire and DCA is strong evidence that the Arts and Cultural policies and programs of the WA State and the Shire are firmly in alignment in progressing this project. In practical terms, the project will enact the principles of supporting creativity, engagement and access and participation by:

Promoting the culture of the traditional owners of the land, the Wardandi people, through “Welcome to Country” acknowledgements, indigenous arts and cultural activities, historical displays and the inclusion of traditional bush tucker in food and wine events;

Providing a quality performing and visual arts venue for the showcasing of high quality touring shows and exhibitions;

Hosting state and national movie premieres such as through the annual Cinefest Oz Film Festival;

Increasing the significant economic benefits generated from arts and cultural activity including employment and other opportunities for engagement with the community;

3.5 Alignment to Western Australian Regional Development Trust Themes

The project aligns with the WARDT’s themes closely as follows: Water: regional wastewater, reuse and urban water opportunities The project is located within the Gloucester Park Civic, Cultural and Recreation precinct and all external landscaped areas are reticulated with recycled water from the Watercorp Sewerage Treatment Works north of the Margaret River townsite and distributed on the Shire’s waste water recycling scheme infrastructure. Storm water run-off from the buildings will be managed in a series of rain gardens and nutrient stripping swales before entering a compensating basin to the east of the Recreation Centre facilities. Regional and rural human capacity building: further investment in job-creating activities, particularly investment targeted at Aboriginal workforce participation It is proposed to link the Centre with the programs run by the South West Institute of Technology and the MR Education Campus to provide work experience for students undertaking hospitality and event management activities. Wardandi people such as the


of 77

award winning Koomal Dreaming group will be able to participate in welcome to country, indigenous cultural and arts activity and bush tucker experiences. Regional land and food strategy and planning The Cultural Centre was used for an official satellite event by Brand Events during the 2014 Gourmet Escape – The Gourmet Food Trivia Quiz hosted by Matt Preston and A.A. Gill. Leveraging off events such as the Gourmet Escape and with more attractive facilities the HEART will be able to host regional wine and tourism events, trade fairs and conferences and seminars relating to regional land and food strategy. Investment in regional strategic corridors The Margaret River Region is the most visited region for visitors to WA outside of the Perth Metropolitan Area. Investment in the MRR will provide a venue as part of a network of performing arts spaces in the South West and Great Southern for touring shows and also provide an attractive venue for hosting business events for outside business tourism. Retaining aged populations in the country The Cultural Centre already attracts through Arts Margaret River over 100 community volunteers many of whom are senior citizens. Under the HEART project the attraction and retention of volunteers will continue and is predicted to increase. The Shire has ensured that the current performance based Management Agreement for the running of the Centre already includes a mandatory component related to the provision of seniors’ events and activities. Regional business and industry innovation and support The HEART project was developed in response to the MRCCI’s request for the Shire to become involved in the provision of a convention centre to host conferences and MICE activities. With a range of 26 accommodation businesses providing 1544 beds within 10 minutes walking distance of the facility the participation of accommodation businesses, commercial caterers and food and beverage providers will be a feature of the project management. The Perth Convention Bureau, the Augusta-Margaret River Tourism Association, Chambers of Commerce and the Margaret River Wine Industry Association and the Shire itself will assist in attracting business to the Centre. Energy supplementation The current facilities have no climate control apart from limited heating from wall mounted gas heaters. This makes the theatre cold and uninviting during the long winter months. Air conditioning systems will be designed to be able to close off different sections of the complex when not in use minimizing power costs. The HEART project proposes an initial installation of 160 PVC solar panels on the north facing gable roof of the Cultural Centre auditorium building and basketball court number 3 to supplement power needs. The cost of the panels is approximately $60,000. The panels will conservatively produce 53,000 kwh of power annually meeting approximately 26.5% of the HEART’s expected 200,000 kwh pa electricity needs. This is a saving in electricity of approximately $13,000 per annum from an anticipated total cost of $52,000 pa leaving a $39,000 cost annually for power at current prices ($0.26 p/kwh unit exc. GST) a modest increase of $24,000 from the 2014-15 budget.

3.6 Alignment with State Government Strategy for Tourism in WA 2020

The Strong HEART for Margaret River project will assist the achievement of the stretch targets enshrined in the State 2020 Tourism Strategy focusing on the Strategic Pillars of business travel, regional travel, events, Asian markets and Aboriginal participation.


of 77

Figure 3 – WA’s 2020 Potential Target ($m) vs Current Rate of Growth

Source : State Government Strategy for Tourism 2020 – Tourism WA Specifically the HEART project will:

Create quality, strategically located infrastructure to deliver Experience Extraordinary events in the Margaret River Region;

Encourage greater private sector investment in the accommodation and hospitality sectors in Margaret River following the public expenditure;

Grow the conference/MICE sector and foster pre and post event stays in the Region;

Grow the events calendar in the Margaret River Region particularly off season events out of the prime tourist visitation months when accommodation occupancy rates are below 50%, and

Encourage Asian visitation to events and business meetings and pre and post event and feature Wardandi Aboriginal participation such as the award winning Koomal Dreaming group in Welcome to Country, cultural awareness raising and bush tucker experiences.

3.7 State Aboriginal Tourism Strategy

The SATS has two goals:

1. To ensure sustainable Aboriginal participation in the tourism industry

2. To see Aboriginal people having ongoing opportunities to add cultural and

commercial value to the WA tourism industry, for mutual benefits.


of 77

A feature of the HEART will be the inclusion of the local Wardandi people and in particular the award winning Koomal Dreaming Group from Yallingup in welcome to country, cross cultural awareness raising, bush tucker experiences and Aboriginal arts and cultural displays.

The Shire recently sponsored the Kambarang SW Aboriginal Gourmet Experience which was a fringe event held in conjunction with the SW Institute of Technology t at the Margaret River Education Campus on Friday 21 November. That is the style of event that the Shire will support at the HEART complex.

3.8 Alignment with the State Planning Strategy 2050

The State Planning Strategy identifies Economic Development and Social Infrastructure as key Strategies. Tourism and Cultural particpation are key planks in the achievement of the goals of liveable, strong and resilient communities, globally competitive and sustainable communities in the regional context. Numerous strategies, actions and aspirational statements in the Strategy strongly support the development of the HEART Centre. A selection of the key supportive statements are presented as follows:

“Tourism, supported by strong investment in, and development of, Western

Australia’s cultural features and activities, helps build the State’s identity and

to generate a sense of place.”

“Western Australia has a unique range of experiences to offer that includes

the celebration of Aboriginal culture, iconic landscapes and biodiversity and

major festival events. The infrastructure that supports these activities is an

important contributor to the State’s economy.”

“Where potential exists, it enables a region to capitalise on its competitive

advantage in terms of the unique experiences it affords. These experiences

include iconic landscapes, spectacular environments, surfing and marine

activities, fine wines and dining, local produce, and outback adventures.

These experiences support the cultural identity of a place and also the

region.”

“The Meetings, Incentives, Conferences and Events sector provides

significant revenue to the State, particularly for small and medium-sized

businesses. For example, the attraction of high-profile screen productions to

film in Western Australia has economic benefits for tourism operators and

local businesses, especially in regional areas. The subsequent cinema

release or television broadcast can be leveraged to promote the State as a

place to live, work and visit.”

“The Principles - Economy: Facilitate trade, investment, innovation,

employment and community betterment. An important aspect of this is the

contribution of culture and the arts, including creativity, to economic

development and diversification.”

“The Strategic Goals 3. Sustainable communities will be enhanced by

investment in infrastructure and social capital”


of 77

“Liveability is a key determinant of the State’s ability to attract an

internationally mobile workforce, which depends, in part, on the cost of

living, adequate social services (including schools and hospitals) and

amenity in key regional centres.”

“Adaption of buildings for new uses makes an important contribution to

sustainable communities. It both limits the requirement for new materials and

reduces the amount of demolition waste. Adaptive reuse of heritage buildings

also provides continuity for the community and helps to maintain its identity in

the face of ongoing change.”

“Infrastructure planning and coordination. This coordination reaches beyond

‘hard’ infrastructure such as airports, roads, railways, seaports, green

networks and cycling and pedestrian links to include ‘soft’ infrastructures such

as education, health and cultural services, and cultural, science and arts

programs. The combination of both ‘hard’ and ‘soft’ infrastructure is

fundamental to achieving healthy, active and liveable communities.”

“Education, training and knowledge transfer : Creative industries include:

music and the performing arts; film, television and radio; advertising and

marketing; software development; writing; print and digital media; graphic

design and visual arts. Planning for these industries is important because

they contribute significantly to the State’s economy by providing a major new

source of employment.

“Social infrastructure improves liveability, encourages social inclusion,

diversifies the economy by building social capital and is an essential

ingredient for creating sustainable communities.”

“Social infrastructure is the interdependent mix of facilities, places, spaces,

programs, projects, services and networks that maintain and improve the

standard of living and quality of life in a community.”

“Social infrastructure has both ‘hard’ and ‘soft’ elements. ‘Hard’ elements

include health facilities and centres, education facilities, nursing homes,

recreation grounds, police stations, prisons, fire and emergency service

buildings, art and cultural facilities, and other government buildings.”

“Ensuring good quality design outcomes within these elements is important

for maximising their potential benefits to the community and value for money

outcomes.”

“‘Soft’ elements may include programs, resources and services, as well as

public art and cultural events, that complement these ‘hard’ elements and

contribute to the formation of a community. ‘Hard’ elements do not work

successfully unless the ‘soft’ elements accompany them.”


of 77

“The provision of well-designed buildings, movement corridors, public opens

spaces and civic places improves the safety, health, cohesion and economy

of the State’s communities.”

“Spaces and places are public areas which reflect a community’s need,

purpose and identity. Planning for spaces and places focuses on the local

economy, identity, social inclusion, connectivity, accessibility, liveability and

the diversity of the community.”

“The provision of public art, heritage, cultural events, support networks,

lighting and street furniture, improves a communities level of comfort and

interaction.”

Key relevant facts listed in the SPS are

94% of people in Western Australia believe it is important for school children

to access arts and cultural activities as part of their education

Western Australia’s household expenditure on cultural goods and services

was $2,011 million in 2009-10, averaging $44.65 per week.

Over a third (37%) of children in Western Australia, or 104,600 children, were

involved in cultural activities outside of school hours, including playing

musical instruments, singing dancing and drama in the 12 months to April

2009

Eight out of ten people in Western Australia (81%) attended or participated in

arts and cultural activities at least once in the past year.

3.9 Alignment with other SW Regional and Federal Government Strategies

SW Regional

Regional Development Australia SW Plan highlights need for conferencing facilities in the Margaret River Region

Capes Regional Cultural Facilities Needs Assessment (Peter Alexander 2011)

Australia’s South West list the provision of conference facilities as a high priority for the Shire in their 2010-15 priorities list

Federal

Tourism 2020 National Strategy – The HEART project will align to Tourism 2020’s strategic areas: Building industry resilience, productivity and quality, Grow demand from Asia and Increase supply of labour, skills and indigenous participation

National Cultural Policy – The HEART project will support the Creative Australia – Pathways for Action, namely:

Co-operation, partnering and support between all levels of government

Regional development through and social dividends through community-based arts and cultural programs

Creative industries, commerce and the creative economy


of 77

Cultural exchange and diplomacy to drive stronger deeper and broader international engagement

The centrality of Aboriginal and Torres Strait Islander cultures in Australian life

Restaurant Australia Campaign – The HEART complex will be well positioned to host food and wine events which promote Australian food and tourism experiences

Margaret River Region is the Western bookend of National Landscapes Great SW Edge

3.8 Project Deliverables

Outputs (What is being delivered? What will be

physically done?)

Performance Measure (What are you measuring?)

Performance Measure method

(How are you measuring it?)

1

Stage 1 Multi-Purpose Facility (See Gantt Chart) Tender for architectural and technical consultancy services and contract most advantageous architectural firm and technical services Complete detailed architectural drawings Tender for building services and appoint most advantageous supplier Remove asbestos and replace with colorbond to roof and wall areas of squash courts, basketball court & rear change rooms Construct new connecting foyer including commercial kitchen and bar/servery functions Refurbish toilet facilities and install new unisex toilet facility Create new rehearsal/breakout room Construct covered walkway to rear car-park

Tenders evaluated and appointment made by Council resolution for architects, consultancy services and builders Asbestos removed and replaced Construction completed

Tender evaluation committee reports to Council. The appointed on site supervisor (Coordinator Building Services) will oversee the builders on a day to day basis and report to the Project Control Group (PCG). Quarterly reports provided to DLGRD and Council. Audited statements of expenses provided as required. Performance measured by project being on-time and within the budget, or with explained variations

2

Stage 2 – Cultural Centre Refurbishment (See Gantt Chart) Architects, consultants and builders appointed prior to commencing Stage 1 Asbestos removed from Fly Tower, Auditorium and toilet areas and replaced with colorbond. Foyer and toilet block roofs removed and foyer demolished. New foyers and northerly facade constructed. Auditorium refurbished with demolition of side and rear first floor galleries, acoustic panelling on walls, installation of permanent seating, technical fit out, modification of access stairs from foyer, installation of disabled access lift to the

Asbestos removal and replacement completed Demolition completed Construction completed

The appointed on site supervisor (Coordinator Building Services) will oversee the builders on a day to day basis and report to the Project Control Group (PCG). Quarterly reports provided to DLGRD and Council. Audited statements of expenses provided as required. Performance measured by project being on-time and within the budget, or with explained variations


of 77

Outputs (What is being delivered? What will be

physically done?)

Performance Measure (What are you measuring?)


(How are you measuring it?)

stage, lighting platforms and sound and light control booth. Toilets refurbished with new pans, urinals, construction of new unisex disabled/parenting facility, new office area conversion from old kitchen. Re-configuration of the loading dock and new flooring installed back of house

Outcomes

Performance Measure


RfR Outcomes

1

Increased participation in cultural and community events and business events

Increased attendances at new and existing events

Number of events Attendance (locals and visitors) Financial return Economic impact

Build capacity Retain benefits Improve Services Expand opportunity Grow prosperity

2 Host new exhibitions New visual and performing arts exhibition

Number of exhibitions Attendance (locals and visitors) Financial return Economic impact


3 Cater for social and business functions in new Foyer

Catered functions

Number of functions Catering revenue Financial return Economic impact


4 Accommodate Arts Margaret River and Creative Industries

Provision of office space and volunteering opportunities

Space utilisation Number of volunteers

Improve Services Expand opportunity Grow prosperity Social capital Capacity building

3.9 Stakeholder Engagement

Strongly Demonstrated Community Support for the Project Extensive community consultation has occurred indicating strong support for the project particularly from the Business and Arts sectors. The variety of engagement strategies has included: 1. The Supertown Growth Planning Community Reference Group (CRG) process, made up of stakeholders from the Augusta Margaret River Tourism Association, the Augusta and


of 77

Margaret River Chambers of Commerce, the Margaret River Wine Industry Association, Margaret River Senior High School and community representatives. 2. Community and stakeholder consultation was conducted by consultant Peter Alexander consultant for the Capes Regional Arts Facilities Needs Analysis 2011 who concluded that there was a strong need for a major redevelopment of the Margaret River Cultural Centre facilities. 3. The Council by resolution formed a Cultural Centre Redevelopment Working Group on 22 August 2012 which has met regularly over the past two years. A wide cross section of community stakeholders including the SWDC, Arts Margaret River, Margaret River Theatre Group, the Augusta Margaret River Tourism Association, Margaret River Chamber of Commerce and Industry, Marketrade Tourism Research Services, Peter Alexander – Theatre Consultant, three local architects, a local events coordinator, local artists and community members have participated in the working group. 4. The Supertown Transformational Project Application Process with the elected Council ranked the project as one of the top 4 projects for Supertown funding. As a mandatory component of the Supertown program the 9 identified Councils were each required to submit a list of 4 transformational projects for funding consideration. In determining the projects for funding they were assessed on the basis

Economic Benefit & Population Growth Potential (40% weighting)

Project readiness and viability (30% weighting)

Ability to Leverage of additional funds (30% weighting)

The elected members of the Augusta Margaret River Shire Council nominated the proposed Margaret River HEART project as the fourth highest ranking transformational project after the Perimeter Road & Main Street Upgrade, the Surfers Point Project and the Gloucester Park Sporting Precinct Upgrading project. Funding was received to complete the Surfers Point project and to partly fund stage 1 of the Perimeter Road and Main Street project. Having completed the Surfers Point project the Cultural Centre is now the 3rd highest Shire priority for funding. 5. Comprehensive Community Satisfaction Surveys in 2009 and 2013 have rated the Cultural Centre redevelopment project in the top 5 Shire wide major capital works projects. The Shire contracted independent research company Advantage Communications to conduct community satisfaction surveys on a triennial basis. Ratepayers were asked to rank 12 major capital works projects in order of importance from 1 to 12. The HEART project was rated in the top 5 for the whole Shire and third most important for Margaret River projects. 6. The CEO has made presentations to the MRCCI, Industry Leaders Group Meetings, the Rotary Club of Margaret River, the Supertown Growth Plan launch by the Hon Terry Redman, the CEO of Tourism WA, the DG and staff of the Department Culture and the Arts, the DG and Director of the Department Regional Development, the CEO of Country Arts, the CEO of Arts on the Move, the CEO of Perth Convention Bureau, the Hon Nola Marino, the former State Treasurer the Hon Troy Buswell, Stuart Hicks Chair and Don Punch of the SWDC, the Hon Colin Holt, the Hon Nigel Hallett, the Hon Adele Farina, Charles Jenkinson CEO of RDASW, and other significant community members. 7. The Shire advertised the project in a fortnightly “Community Update” Page whereby a half page was published on 11 September 2013 in the widely circulating Augusta-Margaret River Times providing information on the staged project and potential funding sources and seeking feedback by 4 October 2013. No submissions were received at the time.


of 77

8. The Cultural Centre Community Usage Policy was advertised to the community on 28 February for 28 days and was adopted on 23 April, 2013 without objection. 9. The Culturally Active Community Policy and the Creative Blueprint Cultural Plan which included the major refurbishment and redevelopment of the Cultural Centre were advertised Shire wide for community feedback for 28 days ending Friday 4 July 2014. Community feedback was incorporated into the final documents and Council adopted the Policy on 27 August 2014. 10. Letters of Support for the Project’s TIRF and RDAF applications were received from and are expected to be received for the RfR application from the Hon Barry House, the Hon. Terry Redman, Tourism WA, Perth Convention Bureau, Australia’s South West, South West Development Commission, Australian Trade Commission – TradeStart, Regional Development Australia SW, Margaret River Chamber of Commerce and Industry, Margaret River Wine Association, Augusta Margaret River Tourism Association, Surfing Western Australia, Gourmet Escape - Brand Events, Cinefest Oz, Tim Duffy, Writer and Producer of the movie Drift, , Creative Corner, Arts Margaret River, Morries Restaurant, Darby Park Serviced Residences, Margaret River Hotel, Margaret’s Forest Holiday Apartments. The Business Case for retaining Squash facilities

An informal group of squash players are currently making greater use of the squash court

facilities in 2014-15 and will be negatively impacted by the closure of the squash courts

unless alternative courts are provided. Records show the courts have been little used since

the mid 1990’s and were largely used as storage space when the CEO commenced in 2008.

This observation is supported by the fact that the hire of courts has only realised revenue of

$3,000 in 2012/13 and $4,400 to the Shire in 2013-14. This year has seen greater use. A

few members of the group have recently written letters to the Augusta-Margaret River Times

protesting about the proposed project, but Council will always need to make decisions in the

best interests and for the maximum benefit of the whole community.

The need for the space currently used by the squash courts to be converted to a multi-

purpose space can be summarised in the following dot points:

The creation of a comfortable high quality main theatre with permanent seating will

require a space with wooden floors for dance classes, cinema, dinners, cabarets,

weddings, parties and other functions to be provided in another nearby location much

in the same way as a lesser hall is used in traditional Town Hall complexes.

The courts are located adjacent to the Cultural Centre and that close proximity

makes it logical and convenient to join the two areas together with a new larger foyer

that can be used as a gathering space and a central location for pre and post event

functions.

The courts and the adjoining wet areas are badly degraded, are roofed and clad with

asbestos cement sheeting, present poorly from an architectural viewpoint and are in

dire need of a major redevelopment and refurbishment. Developer Contributions and

a specific Royalties for Regions Regional Arts Centres funding program provide a

clearly identified funding stream for the redevelopment of these areas as opposed to


of 77

their continued use as squash courts which have a low capacity to attract external

funding for the required major redevelopment of the entire SE corner of the complex.

The appearance of the courts and surrounding buildings detract from an aesthetic

and architectural viewpoint from the $11.2 million investment made by the Shire in

the new award winning Civic and Administration Centre. The redevelopment will

complete and present the Civic, Cultural and Recreation Precinct to a high standard

in keeping with the status of the Shire as the Number 1 regional destination for

interstate and overseas tourists.

Although new construction at the front of the Cultural Centre would be cheaper the

project is designed to simultaneously meet triple bottom line objectives and the

problems which require to be fixed such as asbestos replacement and the major

refurbishment of wet areas would not have been addressed.

Shire planning indicates that there will be future redevelopments and expansion of the Recreation Centre. Squash players are strongly encouraged to work together and with Shire Management to demonstrate that squash is a sustainable sport in Margaret River into the future. In doing so they would need to mount a strong business case in support of future funding being allocated to building one or more new courts in any future redevelopment of the Rec Centre with the potential of realising funding from the Community Sport and Recreation Facilities Fund (CSRFF) program on a one third, one third, one third basis. Squash players would be expected to contribute to fund raising efforts like other sports in the community to achieve CSRFF grants.


of 77

4. ECONOMIC, FINANCIAL AND RISK ANALYSIS

4.1 Critical Assumptions

The need for redevelopment and replacement of existing buildings within the site has been widely recognised by the Council and the community in the interests of the economic, social and environmental well-being of current and future residents and visitors to the Shire;

The Margaret River HEART project enjoys broad government, business and community support and the relevant stakeholders have been engaged throughout the design and re-development process to date (see section 3.9);

The project will result in increased participation by local artists & performers, improved event experiences for the local community and visitors, greater vibrancy within the creative industries, enhanced capacity to attract business events and additional tourism attraction, awareness and visitation

There is a growing market for Arts, Tourism and Business Events in the South West Region;

A purpose-built centre is needed in the region, as currently capacity is limited to 200 persons (theatre style) and not purpose-built to cater for sponsors booths, break out sessions, exhibitions and expos and audio-visual simulcasting;

Sufficient accommodation within walking distance of the proposed centre is currently available;

There is unanimous support from the business and arts community for the centre;

There is a need to diversify the visitor market to the Shire, and reduce reliance on the pleasure/holiday market alone and attract winter off season visitation;

There is a need in the community for comfortable community event and performance spaces;

There is a need to improve the aesthetic appeal of the buildings adjacent to the new Shire building;

Flexible meeting spaces allows for community as well as business event use.

In preparing the financial analysis the following assumptions have been adopted:

Zero debt servicing from the ratepayer as the Shire’s financial contribution to the

Centre will be funded from a WA Treasury Corporation loan repaid from developer contributions on new development;

Inflation of 3.0% pa for the Centre’s thirty year life;

Arts Margaret River operating the centre, with the management fee of $230,000 adjusted for inflation;

Five-year programmed refurbishment to maintain the operating integrity of the centre for its thirty year life;

Commercial market-based rental-hire rates adjusted for inflation;

Fixed overhead expenses of property maintenance [7%] and utilities [5%], expressed as a percentage of revenue adjusted for inflation;

Depreciation of the AV equipment, furnishings-fixtures and kitchen at 16.6% p.a. over six years;

The centre will have capacity to host 310 delegates;

The Centre will operate as a full-service, independent property and be appropriately accredited with Australian Convention-Events standards;

Cost of goods, salaries and wages of 70% of gross revenue and gross profit of 30% of gross revenue, adjusted for inflation.


of 77

4.2 Economic and Financial Analysis

This section of the Business Case was prepared by Dr Jack Carlsen, Director Tourism Research Services, Cowaramup, WA.

The Augusta-Margaret River Tourism Economy The tourism industry is important to the entire South West region. As highlighted in a recent Tourism Research Australia Report1, the South West is one of the seven largest tourism regions in Australia, based on tourism expenditure. About 25% of all overnight visitors to the South West region visit the Shire of Augusta-Margaret River, making it one of the key destinations within the region. Locally, tourism is a key industry for the economy with over 700,000 people visiting the region last year (a 24% increase from 2009). Tourism drives many local industries including retail, accommodation and food services. Additionally, the tourism sector is very important for the wine industry, another key industry sector for the local economy. Both the wine and tourism industries were cited in the Supertown Economic Development Strategy as foundation industries for Margaret River, highlighting their significant importance to the local economy. However, the tourism sector in Margaret River is very narrow, focused almost exclusively on leisure/holiday tourists, which make up over three quarters of all visitors (according to the Tourism Research Australia). This concentration on the leisure market has developed an over reliance on this market segment and considerable volatility between peak and non-peak times, with accommodation occupancy rates fluctuating between 40.5% and 67.1% from 2005, according to the ABS. As highlighted in the Economic Development Plan, there is a distinct need to diversify the existing tourism market if Margaret River is to grow its economy and transform into a Supertown. For economic modelling purposes the online analytical tools REMPLAN was used under

special licence to undertake economic impact modelling. REMPLAN has offices in Vioctoria and Queensland. REMPLAN has estimated output generated by tourism for Augusta-Margaret River Shire is $157 million making tourism the third highest contributor to Output (10.1%) (Table 1). Significantly, the tourism sector is the highest employer in the Shire, generating some 644 jobs, or 13.7% of all jobs (Table 2). Tourism is the second highest generator of wages and salaries, providing $32 million per annum or 10.1% of total wages and salaries in the Shire.

Table 1 – Output by Sector

Augusta-Margaret River (S) (Oct 2014)

Industry Sector $M %

Manufacturing $447.453 28.6 %

Construction $170.725 10.9 %

Tourism $157.185 10.1 %

Agriculture, Forestry & Fishing $135.483 8.7 %

Ownership of Dwellings $88.195 5.6 %

Retail Trade $67.338 4.3 %

1 Economic Importance of Tourism in Australia’s Regions 2011


of 77


Industry Sector $M %

Education &Training $43.422 2.8 %

Sub-Total $1,109.800 71.0 %

Table 2 – Employment by Sector


Industry Sector Jobs %

Tourism 644 13.7 %

Manufacturing 592 12.6 %

Retail Trade 555 11.8 %

Agriculture, Forestry & Fishing 521 11.1 %

Construction 412 8.8 %

Sub-Total 2,723 57.9 %

Economic Impact of the HEART Project – Construction Phase The Margaret River HEART project budget will generate direct expenditure in the construction phase of $5.475 million for the Construction sector of the economy plus an additional $525,000 for the Professional, Scientific and Technical Services sector of the Shire economy. Under this scenario Gross Regional Product is estimated to increase by $4.224 million (0.58%) to $733.135 million. Contributing to this is a direct increase in output of $6.000 million, 15 additional jobs, $0.996 million more in wages and salaries and a boost in value-added of $1.936 million. From this direct expansion in the economy, flow-on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $3.619 million, 10 more jobs, $0.840 million more paid in wages and salaries, and a gain of $1.45 million in terms of value-added.

These industrial effects represent the following Type 1 economic multipliers:

Impact Type 1 Multipliers

Output 1.603

Employment 1.667

Wages and Salaries 1.843

Value-added 1.749

The increase in direct and indirect output and the corresponding creation of jobs in the Shire economy are expected to result in an increase in the wages and salaries paid to employees. A proportion of these wages and salaries are typically spent on consumption and a


of 77

proportion of this expenditure is captured in the local economy. The consumption effects under the scenario are expected to further boost output by $1.478 million, employment by 6 jobs, wages and salaries by $0.334 million, and value-added by $0.838 million. Under this scenario, total output in the Shire is expected to rise by $11.096 million. Corresponding to this is anticipated increases in employment of 31 jobs, $2.170 million wages and salaries, and $4.224 million in terms of value-added. The total changes to economic activity represent the following Type 2 economic multipliers:


Output 1.849

Employment 2.067


Value-added 2.182


of 77

Economic Impact of the HEART Project – Operational Phase

The redevelopment will also host local cultural, arts and performance events, visual arts and exhibitions, cinema screenings and movie premieres, indigenous and multicultural events and displays as well as adding value to existing major events such as the Margaret River Pro surfing event, Gourmet Escape, Cinefest Oz and the Margaret River Readers and Writers Festival. As these are existing events in the venue, their economic impact is not included in the operational phase impacts stated below. However, there is considerable scope to add-value to these well-established events that are already generating significant benefits for the Shire and the Region. For example, CinefestOZ attracts some 18,000 attendances across six venues in the South West over the 4 day/5 night film festival. A number of film screenings, film industry meetings, workshops and networking events occur in the current facility and there is considerable scope for more film industry trade related events and film related investment opportunities. It is estimated that the event attracts some 5000 overnight and day visitors to the South West, contributing $1.283 million to GRP through a direct increase in output of $1.667 million, 8 additional jobs, $0.384 million more in wages and salaries and a boost in value added of $0.759 million. From this direct expansion in the economy from CinefestOZ related tourism, flow on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $0.660 million, 2 more jobs, $0.134 million more paid in wages and salaries, and a gain of $0.264 million in terms of value added. Across the South West, total output increases by $2.797 million from hosting CinefestOZ. Corresponding to this is anticipated increases in employment of 12 jobs, $0.624 million wages and salaries, and $1.283 million in terms of value added. In terms of generating new business events, three scenarios for the operational phase of the redevelopment are envisaged as follows:

6 business events per year of 250 plus delegates: 80% from within Australia (domestic delegates), 12% from overseas (international delegates) and 8% from within the Shire (local delegates).



Further, it is assumed that domestic delegates would have an average length of stay of 3 nights and average daily expenditure of $283 (domestic delegates) and $191 (international delegates). Corresponding average expenditure levels (excluding airfares) associated with domestic and international delegates is estimated to be $850 per domestic delegate and $574 per international delegate. The expenditure of local delegates is not included in the


of 77

economic analysis, nor is there any estimate of accompanying spouses that could be expected to boost visitor numbers and expenditure. Using these direct in-scope expenditure estimates for convention delegates in Western Australia, the following direct, indirect and total benefits of the hosting of 6, 12 and 18 annual events in the Margaret River HEART are detailed below. Scenario One – Six Annual Business Events Under this scenario Gross Region Product is estimated to increase by $0.905 million (0.12 %) to $729.816 million. Contributing to this is a direct increase in output of $1.253 million, 7 additional jobs, $0.300 million more in wages and salaries and a boost in value-added of $0.546 million. From this direct expansion in the economy, flow-on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $0.435 million, 1 more job, $0.095 million more paid in wages and salaries, and a gain of $0.179 million in terms of value-added.


of 77



Output 1.347

Employment 1.143


Value-added 1.327

The increase in direct and indirect output and the corresponding creation of jobs in the economy are expected to result in an increase in the wages and salaries paid to employees. A proportion of these wages and salaries are typically spent on consumption and a proportion of this expenditure is captured in the local economy. The consumption effects under the scenario are expected to further boost output by $0.318 million, employment by 2 jobs, wages and salaries by $0.072 million, and value-added by $0.180 million. Under this scenario, total output is expected to rise by $2.005 million. Corresponding to this are anticipated increases in employment of 10 jobs, $0.467 million wages and salaries, and $0.905 million in terms of value-added. The total changes to economic activity represent the following Type 2 economic multipliers:


Output 1.601

Employment 1.429


Value-added 1.657

Scenario Two – 12 Annual Business Events

Under this scenario Gross Region Product is estimated to increase by $1.810 million (0.25 %) to $730.721 million. Contributing to this is a direct increase in output of $2.505 million, 14 additional jobs, $0.599 million more in wages and salaries and a boost in value-added of $1.092 million. From this direct expansion in the economy, flow-on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $0.870 million, 3 more jobs,


of 77

$0.190 million more paid in wages and salaries, and a gain of $0.357 million in terms of value-added.



Output 1.347

Employment 1.214


Value-added 1.327


of 77



Output 1.601

Employment 1.357


Value-added 1.657

Scenario Three - 18 Annual Business Events Under this scenario Gross Region Product is estimated to increase by $2.714 million (0.37 %) to $731.626 million. Contributing to this is a direct increase in output of $3.758 million, 21 additional jobs, $0.899 million more in wages and salaries and a boost in value-added of $1.638 million. From this direct expansion in the economy, flow-on industrial effects in terms of local purchases of goods and services are anticipated, and it is estimated that these indirect impacts would result in a further increase to output valued at $1.305 million, 4 more jobs, $0.285 million more paid in wages and salaries, and a gain of $0.536 million in terms of value-added.


of 77



Output 1.347

Employment 1.190


Value-added 1.327



Output 1.601

Employment 1.381


Value-added 1.657


of 77

Summary of Economic Benefits The Margaret River HEART project will yield positive economic benefits for the Shire and the South West during both the construction and operation stages. During the construction phase in 2015/16 the estimated from the direct expenditure of $5.475 million for the Construction sector and an additional $525,000 for the Professional, Scientific and Technical Services sector of the Shire economy will result in a total increase in output of $11.1 million. Corresponding to this is anticipated increases in employment of 31 jobs, $2.2 million wages and salaries, and $4.2 million in terms of value-added (see table below). A net benefit of $5.1 million and a cost-to-benefit ratio of 1.85:1 is estimated after direct, indirect and induced effects are taken into account during the construction phase.

Shire level Impact Summary

Direct Effect

Industrial Effect

Consumption Effect

Total Effect

Type 1 Multiplier

Type 2 Multiplier

Output ($M) $6.000 $4.268 $1.792 $12.059 1.711 2.010

Employment (Jobs)

12 11 6 29 1.917 2.417

Wages and Salaries ($M)

$1.040 $0.934 $0.404 $2.379 1.898 2.286

Value-added ($M)

$1.987 $1.642 $0.989 $4.619 1.826 2.324

At the South West level of economic impact, total output, including all direct, industrial and consumption effects is estimated to increase by up to $12.059 million for the South West Region. This represents a net benefit of $6.1 million and cost-to-benefit ratio of 2:1 for the South West economy. Employment, wages and salaries and value-added effects at the South West level are tabulated below.

South West Level Impact Summary

Direct Effect

Industrial Effect

Consumption Effect

Total Effect

Type 1 Multiplier

Type 2 Multiplier

Output ($M) $6.000 $4.268 $1.792 $12.059 1.711 2.010

Employment (Jobs)

12 11 6 29 1.917 2.417


$1.040 $0.934 $0.404 $2.379 1.898 2.286

Value-added ($M)

$1.987 $1.642 $0.989 $4.619 1.826 2.324

At the WA State level, total output, including all direct, industrial and consumption effects is estimated to increase by up to $15.136 million. This represents a net benefit of $9.1 million and a cost-to-benefit ratio of 2.52:1.


of 77

WA State Level Impact Summary

Direct Effect

Industrial Effect

Consumption Effect

Total Effect

Type 1 Multiplier

Type 2 Multiplier

Output ($M) $6.000 $5.736 $3.400 $15.136 1.956 2.523

Employment (Jobs)

12 14 11 37 2.167 3.083


$1.032 $1.272 $0.765 $3.069 2.233 2.973

Value-added ($M)

$1.978 $2.259 $1.760 $5.997 2.142 3.032

Under the three scenarios of 6, 12 and 18 events hosted in the venue per annum, the increase in total output associated with increased event tourism visitation from intra- and inter-state as well as overseas has been estimated using the REMPLAN tourism impact model. Under the 6 annual events scenario, total output is expected to rise by $2.005 million. Corresponding to this are anticipated increases in employment of 10 jobs, $0.467 million wages and salaries, and $0.905 million in terms of value-added. Under the 12 annual events scenario, total output is expected to rise by $4.010 million. Corresponding to this are anticipated increases in employment of 19 jobs, $0.933 million wages and salaries, and $1.810 million in terms of value-added. Under the 18 annual events scenario, total output is expected to rise by $6.015 million. Corresponding to this are anticipated increases in employment of 29 jobs, $1.400 million wages and salaries, and $2.714 million in terms of value-added.

4.3 Financial Analysis

The main sources of operating revenue for the Margaret River HEART will flow from the scenarios of 6, 12 or 18 annual business events and associated revenue from:

Day Delegate Revenue (includes Room and Audio visual Equipment Hire and Other services)

Food and Beverage (Morning/afternoon teas, lunches and dinners)

Business event centres in Western Australia provide delegate per day rate (DDR) package for prospective clients of between $60 and $100, depending on the standard of the venue facilities, audio visual equipment and other services. Taking an average DDR of $80 and an average business event of three days provides the following estimates of total revenue under the three scenarios: 6 annual business events: 1500 delegates x 3 days @ $80/day = $360,000 12 annual business events: 3000 delegates x 3 days @ $80/day = $720,000 18 annual business events: 4500 delegates x 3 days @ $80/day = $1,080,000 Food and beverage revenue per delegate is based on morning/afternoon teas and lunches (3 days) and a conference dinner. Based on current costing for equivalent functions, food and beverage per person charges of $15 for morning/afternoon tea ($30/day x 3 days =


of 77

$90), $30 for lunch ($30/day x 3 days = $90) and $90 for one dinner (including beverages) total food and beverage revenue is estimated as follows: 6 annual business events: 1500 delegates x $270 per delegate = $405,000 12 annual business events: 3000 delegates x $270 per delegate = $810,000 18 annual business events: 4500 delegates x $270 per delegate = $1,215,000 Thus, estimated total revenue under the three scenarios is as follows: 6 annual business events: $765,000 12 annual business events: $1,530,000 18 annual business events: $2,295,000 The main costs relate to the levels of utilisation and are based on fixed overhead costs of property maintenance [7% of revenue] and utilities [5% of revenue ] and operating costs of $230,000 annually allocated to Arts Margaret River to manage the venue (including marketing, administration and insurance). Under scenario one, fixed overhead costs are estimated at $43,200 and operating costs (Arts Margaret River funding) at $230,000, making total costs of $273,200. An additional $536,000 is allocated for food and beverage staff and cost of goods. Under scenario two, fixed overhead costs are estimated at $86,400 and operating costs at $230,000, making total costs of $316,400. An additional $1.07mn is allocated for food and beverage staff and cost of goods. Under scenario three, fixed overhead costs are estimated at $129,600 and operating costs at $230,000, making total costs of $359,600. An additional $1.61mn is allocated for food and beverage staff and cost of goods. An additional allowance for refurbishment costs at five-year intervals are based on the fit-out costs provided by Wilde and Woollard as follows: Bar fit-out; $35,000 Kitchen fit-out: $85,000 Auditorium seating: $154,000 Flooring: $13,000

Total $287,000


of 77

Tables – Trading Analysis Under Different Scenarios The trading analysis under the 6 annual business events scenario is tabulated below:

The trading analysis under the 12 annual business events scenario is tabulated below:



of 77

Summary of Financial Analysis

Under the assumptions stated above and the mid-range scenario of 12 annual business events over the 30-year operating life of the venue and allowing for refurbishment and depreciation, the Margaret River HEART should realise an annual cash surplus in every year of operation ranging from $170,358 p.a. in the first five years of operation to $342,651 p.a. in years 26 to 30 of operation. The financial model is based on zero debt servicing requirements from the rate base, an average of 3% p.a. CPI increase in revenue and costs and the realisation of revenue from 12 business events annually. (End of this section of the Business Case was prepared by Dr Jack Carlsen, Director Tourism Research Services, Cowaramup, WA. )

4.4 Discounted Cash Flow Analysis

A discounted cash flow (DCF) analysis has been undertaken by the Manager Finance to determine the net present value (NPV) of previously presented four scenarios for the use of the Centre. This analysis has used as its basis the financial projections prepared by Dr Jack Carlsen in the previous section with some amendments to incorporate possible additional revenue streams, the annual Management Fee payment to Arts Margaret River, loan principal and interest repayments and alternative calculations for depreciation and interest. The following table outlines the assumptions used.

Area Assumption

Revenue Income from Business events is in accordance with Financial Analysis provided by Dr Jack Carlsen presented in the previous section.

Income stream is expected to be received from additional hires for events such as parties, weddings, etc.

Estimated income stream is included for hire of commercial kitchen.

Income streams are escalated by 3% per annum.

Part of electricity cost is paid by Arts Margaret River in accordance with agreement.

Expenditure Indexed contribution of $230,000 to Arts Margaret River is included.

Food and beverage costs and staff costs for events are in accordance with report provided by Dr Jack Carlsen.

Electricity costs vary according to the number of business event hires.

Rebate for electricity represents the amount of electricity expected to be generated by solar power.

Fixed overheads such as cleaning and general maintenance are estimated to be 7% of total revenue.

Majority of expenditure items are escalated by 3%.

Depreciation is fixed for the life of the building and rates are based on the components of building (1%) and fit-out (4%).

Refurbishment allowance is in accordance with report provided by Dr Jack Carlsen. These funds will be transferred to a Reserve and the refurbishment carried out in years 6, 11, 16 , 21, etc, depending upon usage and condition.

The amount of refurbishment allowance for each scenario is the same although the amount of refurbishment actually required will vary depending usage.

The refurbishment allowance increases annual expenditure but ensures the


of 77

community asset is renewed.

Loan Loan of $1 million is sourced from WATC and is for a term of 15 years at a fixed interest rate of 4.13%.

Loan repayments are assumed to be fully repaid from funds obtained through the Developer Contributions Plan.

Discount Rate Is the rate used to discount future year cash flows to obtain their present value.

5% has been used to recognise that project risk is higher than the current average rate of return on investments of 3.5%.

NPV Has been applied against the annual estimated cash flows, excluding depreciation which is a non-cash item.

A positive NPV indicates the project’s cash flows have achieved its rate of return.

The result of this analysis is shown in the following chart. In summary, an almost breakeven NPV position may be achieved if the fourth scenario of holding 10 business events during a year is achieved. The detailed spreadsheets for this analysis are provided as attachments.

The following graph show how the current Cultural Centre and a future HEART complex compare to other services in term of annual subsidization by Council in the operating budget.

Scenario -0 events

Scenario1 - 6

events

Scenario4 - 10events



Accumulated Net Result(including depreciation) for 20

years(8,831,714) (5,032,845) (2,062,278) (701,943) 3,709,573

Accumulated Cash Flow(excluding depreciation) for 20

years(6,965,714) (3,166,845) (196,278) 1,164,057 5,575,573

Net Present Value of CashFlows

(3,945,864) (1,783,595) (94,248) 679,724 3,188,658

(10,000,000)

(8,000,000)

(6,000,000)

(4,000,000)

(2,000,000)

0

2,000,000

4,000,000

6,000,000

8,000,000

$'s

Cultural Centre Redevelopment Scenario Results


of 77

It can be seen from the graphs above produced by the Shire’s Manager Finance that the required subsidization of the Cultural Centre is currently $300,800 pa compared to the Libraries ($740,000 pa), the Aquatic Centre ($726,379 pa) and Indoor Sports ($191,349). In fact, under the conservative 6 event scenario the Cultural Centre Redevelopment will actually reduce its operating subsidy from Council by one third to $203,300 pa. The difference in the HEART project is that even under the conservative 6 events scenario an estimated economic benefit of $2 million will occur as the result of attracting 6 events. This spending will benefit accommodation and meal providers and tourism in general as opposed to other services which require heavy subsidies but do not have such a strong economic benefit. 4.5 Assessment of Options

It is evident that a growing market exists for a new events centre in Margaret River, based on the increasing trends in national and international business events in Australia and Western Australia since 2009. It is also evident that no comparable centre exists within the A-MR Shire, and the nearest comparable centre is Abbey Beach Resort, Busselton and there is marquee style meeting space at Bunker Bay Resort. However, neither of these is purpose built, yet still enjoy high rates of utilisation. The Margaret River Convention Centre at the Quality Inn does offer two meeting rooms with a combined space for 200 theatre style seats, but does not have the required break-out rooms for simultaneous smaller meetings and sessions. In terms of market pre-feasibility there are a number of trends in the business events, incentive and trade shows/exhibition market at the national, state and regional level that will have a bearing on the performance of the Centre over its thirty year life. Nationally, the business events/incentive and exhibition market has recovered well following declines in

IndoorSports

Aquatic

Centre

FitnessCentre

Augusta

Recreation

GloucesterPark

BeachLifegua

rds

Libraries

Cultural

Centre

Cultural

Centre- 6

Eventsscenari

o

Revenue 317,395 240,000 310,000 34,000 57,200 0 27,200 14,400 815,000

Expenditure 508,744 966,379 372,010 106,582 127,550 138,527 767,201 315,200 1,018,30

Net Operating Result (191,349 (726,379 (62,010) (72,582) (70,350) (138,527 (740,001 (300,800 (203,300

(1,000,000)(800,000)(600,000)(400,000)(200,000)

0200,000400,000600,000800,000

1,000,0001,200,000

$'s

2014-15 Recreation and Culture Budgets compared to 6

Business Events Scenario


of 77

2008 due to the Global Financial Crisis, and both arrivals and total value of the market is increasing at a faster rate than any other travel market segment, including pleasure/holiday. At the WA state level, the proportion of international delegates attending business events is increasing and previous surveys indicate that they have higher levels of expenditure and pre-and post-business events touring activity than Australian delegates. Within the Augusta-Margaret River Shire, there is a need to diversify the visitor market from the traditional domestic pleasure/holiday visitors (mainly from Perth) to the more lucrative and higher spending business events, incentive and exhibition travel market, especially international markets. Furthermore, Margaret River has the existing capacity to cater for and accommodate this growing market based on the proven track record in hosting successful business events and the extensive range of accommodation options available within a ten minute walk of the Cultural and Business Events Centre site. In terms of economic impact, the direct and indirect benefits that flow from increased delegate expenditure on business events/incentive/exhibition related travel (transport, tours, accommodation, food and beverage, retail and registration) have been found to be

substantial (AEC group 2010). Based on estimates of increased event tourist expenditure under the three scenarios, the Margaret River HEART project the annual increases in output, employment and gross value-added are positive and substantial. The financial risk to the Shire of incurring operating losses will be mitigated by:

Not underwriting or entrepreneuring any events which could incur losses.

Contracting out of management of the Theatre to Arts Margaret River or other provider in the future by competitive tendering.

Leasing out the commercial kitchen and food and beverage services to a commercial operator with the proceeds to be used for future refurbishment.

Ensuring that hire fees particularly for commercial users fully cover the cost of power, cleaning and any staffing plus a component for future refurbishment.

The management fee and any subsidization for running the Centre needs to be considered within the overall positive economic benefits for Shire under all three scenarios, as outlined above.

Financial viability is also a function of the level of debt servicing and it is planned that there will only be modest Shire borrowing of $1 million with no debt servicing from the rate base if the capital and interest payments can be met through developer contributions. In summary, based on the analysis of market trends, economic benefits and financial projections the preferred option to proceed with Stages 1 and 2 is feasible. The importance of effective branding, marketing and management of the Margaret River HEART is recognised and a full business plan will be prepared and implemented during the first five years of the operational phase of the project and revised on an annual basis. The staging of this project will allow for continuous use of the facility with minimum disruption of the performances, meetings, events and functions currently booked for the theatre. Stage three construction of a new conference facility is planned for future development, subject to proven demand and viability and being able to attract funding for expansion.

4.6 Funding Strategy

It is proposed that the Shire will contribute $1 million by taking a WA Treasury Corporation loan at a fixed interest rate over 15 years. The principal and interest repayments will be met by developer contributions levied under the Shire’s Local Planning Scheme.


of 77

The principles and considerations of Developer Contributions are outlined under State Planning Policy 3.6. In essence the expected capital expenditure on infrastructure, new or additional assets, or assets of increased capacity resulting from the effects of new development should be supported by that development. Population in the Shire of Augusta Margaret River is growing at a relatively rapid rate for a regional Local Government. The Shire traditionally services existing residents, this growth in population and a significant ‘transient’ population through the following sources:

(Primarily) rate revenue;

Fees and charges; and

Grants.

It is evident that much of the increase in the demand for services provided by the Shire arises from increase in use of limited facilities as a consequence of population growth. While traditional sources of funding are relevant for continued operation and maintenance of facilities, it is also relevant that new growth fairly contributes to demand for new or improved infrastructure that result from increased use or demand for new facilities. It is appropriate that a proportion of this growth related demand is satisfied through the payment of development contributions. Development Contributions are normally charged through subdivision and can be applied upon initiation of a Scheme Amendment to introduce the specifics of contributions. As there is a reasonable level of subdivision activity occurring it is prudent to initiate an Amendment to the Local Planning Scheme at the earliest opportunity to ensure there is no loss in potential contributions revenue. For Margaret River the priority community infrastructure projects are the Cultural Centre Redevelopment, the Gloucester Park Master Plan, the Margaret River Foreshores Plan and the Margaret River Skate Park. At its Council meeting on 17 December 2014 Council considered a Developer Contributions Plan incorporating the Cultural Centre Redevelopment Project as a regional facility. The Shire in terms of industry benchmarks and financial ratios has relatively low debt servicing ratios and the capacity to prudently borrow. A November 2014 quote on the Indicative Rates Schedule from the WA Treasury Corporation provides for a loan amount of $1million at 4.13% repaid in 30 semi-annual payments of $45,333.67 or $90,667.34 annually. This amount can be fully funded from the Developer Contributions Plan and impose no additional burden on ratepayers. A Shire contribution of that $1million can then be used to hopefully leverage a further $5 million dollars of Royalties for Regions funding making a significant capital project such as the Margaret River HEART project achievable without burdening the ratepayer. It is hoped to attract $3 million out of the $9 million available under the Regional Art Centres Sustainability Initiative. A further $2 million will be sourced from other RfR funding sources. An application for matching funds of $1 million will be made to the second round of funding under the National Stronger Regions Fund. If successful the amount required under the RfR program will be reduced accordingly. NSRF Round 2 applications close on 31 July 2015 and will be announced in December 2015. The project will assist in tackling the Shire’s infrastructure backlog and will result in savings to future ratepayers of approximately $826,000 in asbestos removal and re-roofing costs as well as a further approximately $2 million in other major refurbishment works on the existing,


of 77

dilapidated facilities. The positive is creating a comfortable multi-purpose venue which will not only benefit the local community but will also help to attract income generating events that will generate new business to the Shire and help to even out the seasonality of tourism by attracting conferences and business events in the winter months when tourist visitation is traditionally low and hotel occupancy rates are under 50%.

4.7 Total Budget

The project budget is summarized as follows:


of 77

Indicative cost estimates based on the Willcox and Associates Concept Drawings have been produced by Wilde and Woollard (WA), Unit 1 / Ground Floor, 1008 Wellington Street West Perth, WA 6005

Item of Expenditure

Budget ($)

Source of Funds

Quality of estimates

Has the Funding been Secured?

Stage 1 Multi use Space Squash Court Conversion

$1,350,000 including technical fitout, conference tables, chairs

Royalties for Regions - $850,000 Shire - $500,000

Wilde and Woollard Preliminary Cost Indication October 2014

WA Treasury Corporation Loan approved on application

Stage 1 Multi use Space Connecting Foyer, kitchen and bar

$1,328,000 including additional kitchen/bar fit out

Royalties for Regions


Subject of this application

Stage 1 Multi use Space Wet areas, green room, Break-out Room & new exit

$772,000 Royalties for Regions



Stage 1 Multi use Space Architects, Consultants and Project Management Fees


10% of Wilde and Woollard QS Estimates


Stage 1 Total $3,770,000

Stage 2 Auditorium and Foyer, wet area upgrade plus solar panels and fit out

2,170,000

Royalties for Regions and borrowings - $1,524,000 Shire - $500,000 Other sources $146,000*


WA Treasury Loan approved on application *See below

Architects, Consultants and Project Management Fees


10% of Wilde and Woollard QS Estimates


Stage 2 Total $2,376,000

Total Budget 6,146,000

NB: It is envisaged that $146,000 will be raised from other sources including grants, donations, philanthropic and community contributions. Arts Margaret River have applied to become Deductable Gift Recipients as an arts organisation and will be able to attract grants towards the project. Potential sources are “buy a Seat” funding whereby businesses and community members buy a seat at $500 per seat or arrow of seats, naming rights whereby businesses and community members can have rooms in the complex named after


of 77

themselves for a period of time. Potential donors include fly in and fly out mining companies operating out of the Busselton airport, the Foundation for Rural and Regional Renewal, wealthy local residents and property owners who are philanthropists in the arts field. The target is considered achievable. Royalties for Regions Funding Amount

Item of Expenditure 2015/2016 $MN

2016/17 $

Total 2015 to 2016 $MN

Pre-construction Phase Detailed Architectural Drawings and bill of quantities to go to tender for building works for Stages 1 and 2

$420,800 80% of architects and consultants fees of $526,000 for stages 1 & 2 = $420,800 September 2015

$420,800

Stage 1 $2,950,000 Fees 1% = $52,600 Jan-June 2016

$3,002,600

Stage 2 $1,524,000 Fees 1% = $52,600 July – Dec 2016

$1,576,600

Total $3,423,400 $1,576,600 5,000,000

4.8 Sustainability and Ongoing Viability

An allocation ranging from $300,000 for the first five years of operation ($60,000 p.a.) to $500,000 for years 26 to 30 of operation ($100,000) will cover maintenance and refurbishment of the facilities. Sufficient funds will be set aside in each year of operations to meet these costs and ensure ongoing financial viability while maintaining high quality facilities and services. Under the proposed operating model the proceeds from the lease of the kitchen and catering facilities plus a component of commercial hire fees will be used to fund the refurbishment and maintenance of the complex. Alternatively, the trading analysis based on 12 annual business events of 250 delegates produces surpluses ranging from $300,000p.a. to $500,000 p.a. and a proportion of these funds in profit sharing arrangements between the lessees and Council will enable funds to be set aside for maintenance and refurbishment. In both of the funding strategies outlined above, there is a reduced risk to the ratepayers and provided that funds are transferred to reserves on an annual basis for maintenance and refurbishment there is a reduced probability that the project will ever impose a debt burden on current and future ratepayers.


of 77

4.9 Project Timeframe and Key Milestones

Main Activities / Milestone Milestone Date Responsibility

Tender for Architectural Services July-Sept 2015 CEO Tender Evaluation Panel Council

Tender for Building Services October-December 2015

CEO Tender Evaluation Panel Council

Construction Stage 1 Jan-June 2016

Project Control Group Coordinator Building Services Director Infrastructure Services CEO

Construction Stage 2 July – Dec 2016

Project Control Group Coordinator Building Services Director Infrastructure Services CEO

See Gantt Chart next page


of 77

Gantt Chart of Key Milestones and Project Scheduling


of 77

4.10 Risk Analysis

The risk of doing nothing and maintaining the status quo needs to be canvassed as an option with inherent risks associated with it. The main risks associated with the construction phase of the project are:

Failure to secure the full amount of funding from Royalties for Regions Programs

Cost escalation during removal of asbestos and construction

The main risks associated with the operational phase are:

Failure to attract the projected 12 annual business events

Non-implementation of the Developer Contribution Plan and realisation of revenue for debt servicing

Failure to realise the full daily delegate rate and having to provide free facilities and audio visual equipment and support

Risk: Do Nothing – Maintain the Status Quo The risks associated with doing nothing can be summarised as follows:

Failure to deal with $826,000 of asbestos removal and replacement at this time will leave a carcinogenic material in already 30 year old deteriorating roof sheeting and wall cladding in an area of high community utilisation as a financial and community health liability to be dealt with by future Councils;

The sub-optimal comfort and ambiance of the Centre will continue to impact negatively on audience experience and numbers and the variety of functions that can be held at the centre;

There will be a lost opportunity to attract and host major business and tourism events in Margaret River particularly in winter when accommodation occupancy rates are below 50%;

There will be a lost opportunity to diversify the local economy which is highly dependent on the recreational tourist market;

Damage to the Shire’s and Margaret River brand reputation by providing sub-standard facilities for premier events such as Cinefest Oz and the Gourmet escape.

Risk: Failure to Secure Full RfR Funding With regards to funding shortfalls, it is possible to increase the level of borrowings to $1.25 million which will create an annual principal and interest expense of $113,334 an additional $22,700 pa. The projected revenue from the DCP and/or the trading surplus of the Margaret River HEART will be sufficient to service this level of debt or failing that the loan repayments from the DCP could be topped up by rate payer funds if required. Risk: Cost Escalation Similarly, should there be an unanticipated cost escalation hypothetically of $250,000 (approximately 5% of project costs) the scope of works would need to be reduced to accommodate the shortfall possibly by reducing the amount of asbestos removal from the Basketball Court Number 3 building rear area and reducing the technical fit out. This would be the preferred contingency to imposing a greater debt burden on ratepayers. Risk: Failure to Attract 12 Events With regards to operations, the trading analysis for six annual business events indicates a smaller annual surplus ranging from $86,200 in years 1 to 5 of operation to $132,826 in years 26 to 30 of operation. This ensures that the operational surpluses would be of


of 77

sufficient levels to cover the costs of maintenance and refurbishment during the life of the facility. (An alternative would be to lease out the commercial kitchen and catering facilities to a commercial contractor and use the lease fees for maintenance and refurbishment supplemented by profit sharing arrangements for event catering and a % of hire fees for commercial usage.) Risk : Failure to Implement the Developer Contributions Plan Non-implementation of the DCP would mean the debt-servicing requirement of an average of $90,000 p.a. would need to be met through the operating surpluses of the facility or through the rate base as anticipated in the 2014 Long Term Financial Plan which included borrowings against the rate base of $850,000 for the Cultural Centre and Skate-ramp. In addition an average allocation of $60,000 p.a in the short term and $100,000 p.a. in the latter years would be required for maintenance and refurbishment which would need to be met through operating surplus. In order to realise a total of $200,000 surplus to cover both loan repayments in the event of no funding coming from the DCP and maintenance /refurbishment a minimum of 9 annual business events and a total of 2,250 delegates would need to be hosted at the facility.

Thus, 9 annual business events and 2,250 delegates represents the breakeven number of business event delegates that would be needed to ensure the facility remains viable in the absence of DCP contributions and in the case of increased borrowing requirements due to a shortfall in funding or an escalation in costs (i.e. the worst case scenario)

Risk: Failure to Achieve Projected Day Delegate Rates The main sources of operating revenue for the Margaret River HEART will flow from the scenarios of 6, 12 or 18 annual business events and associated revenue from: Day Delegate Revenue (includes Room and Audio visual Equipment Hire and Other services) Food and Beverage (Morning/afternoon teas, lunches and dinners) The third risk canvassed is the failure to realize the full day delegate rates and having to provide a 100% discounted room hire, audio visual hire and technical support relying solely on food and beverage sales. Business event centres in Western Australia provide delegate per day rate (DDR) packages for prospective clients of between $60 and $100, depending on the standard of the venue facilities, audio visual equipment and other services. In a highly competitive environment where venue hires are waived and taking an average DDR of $80 for food and beverage only and an average business event of three days provides the following estimates of total revenue under the three scenarios: 6 annual business events: 1500 delegates x 3 days @ $80/day = $360,000 12 annual business events: 3000 delegates x 3 days @ $80/day = $720,000 18 annual business events: 4500 delegates x 3 days @ $80/day = $1,080,000 The main costs relate to the levels of utilisation and are based on fixed overhead costs of property maintenance [7% of revenue] and utilities [5% of revenue]. Cost of goods estimates are based on 70% or gross revenue and 30% gross profit margin. An additional allowance for refurbishment expense at five-yearly intervals is based on the fit-out costs provided by Wilde and Woollard as follows: Bar fit-out; $35,000 (not inc. stainless steel surfaces which do not require replacement) Kitchen fit-out: $85,000 (not inc. stainless steel surfaces which do not require replacement)


of 77

Auditorium seating: $154,000 Flooring: $13,000 Total $287,000 Under the minimum daily rate assumptions stated above and the three scenarios of 6, 12 and 18 annual business events over the 30 year operating life of the venue and allowing for five-yearly refurbishment and depreciation, the Margaret River HEART would incur an annual deficit under the 6 business events scenario and realise an annual cash surplus under the 12 and 18 business events scenarios. The financial model is based on zero debt servicing requirements from the rates base and an average of 3% p.a.CPI increase in revenue and costs. The financial analysis indicates that the Margaret River HEART would realise a surplus by hosting between 10 and 12 annual business events annually. (See appendix 1 for the trading analysis under these scenarios. It is also important to recognise that financial risk to the Shire can be reduced or eliminated through contracting out the operation of the venue to a ‘preferred’ commercial caterer that could generate a revenue stream through hosting of events such as wedding receptions during the periods when the venue is not booked for business events. In this way any deficits incurred can be offset through hosting of additional events and outside catering. Also, the kitchen, bar and venue facilities will have higher rates of utilisation than just the 18, 36 and 54 days for under the three scenarios of 6, 12 and 18 three-day business events. This income stream has not been calculated at this stage. As previously stated, there is no comparable venue in the Shire with respect to both meeting room capacity and co-location with accommodation therefore the Margaret River HEART does not present unfair competition with existing venues. On the contrary the accommodation providers will benefit from greater occupancy rates from events held at the venue and will be able to book the facility for private functions at commercial rates.


of 77

5 IMPLEMENTATION STRATEGY

5.1 Communication Plan

Communications External The HEART project will be delivered by the Shire of Augusta-Margaret River which has a proven track record of successful project delivery. Council personnel will maintain ongoing communication throughout the project planning and delivery stages. Standard Council governance and project management processes will be used throughout. The Shire will adhere strictly to the Royalties for Regions Marketing, communications and Acknowledgements policy. The stakeholder engagement process adopted by the Shire of Augusta-Margaret River will entail utilising a range of communication methods to ensure that the community, government, key stakeholders, potential users and other parties are kept well informed throughout the planning and implementation stages. Several communication formats will be employed to ensure broad community coverage and are likely to include, but not be limited to:

Oversight of Public Relations and Media Management by the Shire Marketing and Events Officer Amanda Russell

A dedicated blog and regular Information Updates on the Augusta-Margaret River Shire website

Regular updates in the fortnightly Community Update page in the Augusta-Margaret River Times

Quarterly formal written reports to Council advising of project progress and financial management to date

Regular media releases and radio/TV opportunities

Progress reports in the SWDC Bulletins

Updates to the Industry Leaders Group, CAPEROC, Cultural Centre Redevelopment Working Group and other meetings

Direct discussions and on-site meetings

Public advertising of work schedules in local newspapers

On-site meetings with potential contractors for construction works or commercial operators seeking to lease facilities

Communications Internal

Internal communications to Councillors in the bi-monthly Councillors Bulletin, Council reports and via email communication and Councillor Briefings

Information to staff via the staff newsletter, email and all of staff meetings and Executive and Senior Leadership Team meetings.

5.2 Project Management

Project Control Group A project control group will be formed to oversee the Margaret River HEART project. The following table shows the persons who will form the PCG and their relevant skills set:

Name Position Role in PCG

Gary Evershed CEO/Chairman Project Director

Annie Riordan DCCS/Deputy Chair Community Engagement


of 77

Financial Management

Andrew Ross Manager Financial Services Financial Management

David Gunn Coordinator Building Assets Project Supervisor

Hal Martin Theatre Operations Manager

Arts Margaret River Representative

Phil Bebb Theatre Technical Manager Arts Margaret River Representative

Johan Louw Director Infrastructure Services

Engineering Expertise

Chris Whenham Building Surveyor Building Management

Richard Stuart External Theatre Consultant Technical Advisor

Paul Gravett Manager Community Devt and Safety

Executive Officer for PCG

Meetings of the PCG will be minuted and accepted at subsequent meetings and quarterly reports provided to council.

Project Supervision The works will be supervised by David Gunn the Shire’s Coordinator Building Assets who is a qualified building surveyor with experience overseeing projects in the private sector.

Project Technical Advice Technical advice on the project will be sought from Richard Stuart (Theatre Consultant), Chris Willcox and Associates Pty Ltd (Margaret River Cultural and Business Events Concept Planning Architects) and Phil Bebb (Arts Margaret River, Manager Technical Services)

Project Scheduling The works will commence as soon as practical after funding is announced. Stage 1 will be completed before Stage 2 is commenced to allow for the uninterrupted operation of the Cultural Centre functions. Some works will need to be scheduled when there is the best window of opportunity between bookings to minimize the impact on operations. The Shire will work with Arts Margaret River Inc. who manage the Centre to determine the best available time for the works to be carried out. Asbestos removal will take place in January when the adjacent Primary School is on vacation as an additional safeguard to school students. The following Gantt Chart is an indicative schedule of activities.

Also see Gantt Chart in Attachments

Financial Management Financial management will be carried out in accordance with the Shire Purchasing Procedures. Tenders and Requests for Quotations will be carried out in accordance with Purchasing Procedures. Auditing will be carried out by Council’s auditors UHY Haynes Norton.


of 77

Project Governance

The elected Council of the Shire of Augusta-Margaret River is responsible under the Local Government Act 1995 for directing and controlling the affairs of the Local Government. The Council will approve budgets and the allocation of financial resources and receive monthly statements of expenditure and a quarterly report from the project manager and the Project Control Group (PCG) chaired by the CEO. The Shire’s Auditors UHY Haynes Norton will provide audited statements of income and expenditure in compliance with the reporting requirements of Council and the Department Regional Development. The Project Control Group (PCG) outlined in the previous section will oversee the project and the work of the Project Manager (Mr David Gunn, Coordinator Building Services). The PCG will meet monthly or more frequently when required and will provide quarterly reports to Council. Additional technical expertise will be sourced from Mr Richard Stuart, respected Theatre Consultant, in relation to the refurbishment of the theatre auditorium and the technical fit out of the theatre. Additional project management and site supervision expertise will be sourced when required during the peak times in the project. Works will be carried out in accordance with Australian Standards. Asbestos removal and disposal will be carried out by licensed operators with the appropriate relevant current licenses. Contractors will be required to meet all Shire OSH standards and legislative requirements. As a local government constructing buildings on its own property a Development Approval is not required. The Shire will obtain a building license from an external provider to ensure its plans are independently verified in meeting the building license requirements under the BCA. Fire safety provisions will be assessed by DFES. The Shire has worked diligently to ensure that all of these requirements will be in place when funding is approved.

Procurement Strategy

A Tender Assessment Panel (TAP) will be formed to oversee procurement. The following table shows the persons who will form the TAP and their relevant skills set:

Name Position Role in TAP

Annie Riordan DCCS Financial Management

Andrew Ross Manager Finance Financial Management

David Gunn Coordinator Building Assets Project Supervisor

Johan Louw Director Infrastructure Services

Infrastructure & Asset Management

Richard Stuart* Theatre Consultant External technical advice

Appointed Architect* Theatre Consultant External Technical Advice

Fred Affleck Chair of Arts Margaret River Tender Panel Member

NB: *Participation as required. The TAG will undertake the evaluation of tenders for works over $100,000 as required under the Local Government Act 1995 and prepare a report recommending a preferred tenderer for the CEO’s decision under delegated authority for tenders up to $200,000 and for over


of 77

$200,000 for Council decision. They will also evaluate and award contracts for services under $100,000 after calling for Requests for Quotation from up to 3 suppliers as required under the Shire procurement procedures. The Shire’s Buy Local (Regional Price Preference) will apply. In accordance with the Local Government Act 1995 Tenders when specified can be awarded to suppliers within the Shire of Augusta-Margaret River with up to 10% price variation all other selection criteria being equal. The Shire’s aim will be to support quality local suppliers to maximize the retention of RfR funds in the Shire and SW Region. Required Procurement It is planned to conduct the procurement by way of one tender for the supply of architectural services including sub-contractors by way of a fixed price contract. Building Services and material supply tenders will be sought. These will be done in accordance with Council policy (See extract below) and in compliance with the WALGA Procurement Handbook. Council’s Procurement Policy will Apply to Purchases The following criteria and policies will be adhered to under the Procurement Plan: Value For Money Value for money shall be an overarching principle governing purchasing. Compliance with the specification shall be considered more important than obtaining the lowest price, particularly taking into account user requirements, quality standards, sustainability, life cycle costing, and service benchmarks. An assessment of the best value for money outcome for any purchasing should consider:

All relevant whole of life costs and benefits whole of life cycle costs (for goods) and whole of contract life costs (for services) including transaction costs associated with acquisition, delivery, distribution, as well as other costs such as but not limited to holding costs, consumables, deployment, maintenance and disposal

The technical merits of the goods or services being offered in terms of compliance with specifications, contractual terms and conditions and any relevant methods of assuring quality

Financial viability and capacity to supply without risk of default. (Competency of the prospective suppliers in terms of managerial and technical capabilities and compliance history)

A strong element of competition in the allocation of orders or the awarding of contracts achieved by obtaining a sufficient number of competitive quotations wherever practicable

Where a higher priced conforming offer is recommended, there should be clear and demonstrable benefits over and above the lowest total priced, conforming offer.

Sustainable Procurement The Council is committed to sustainable procurement and where appropriate shall consider minimisation of environmental and negative social impacts as part of the selection process. Sustainable considerations must be balanced against value for money outcomes in accordance with the Shire’s sustainability objectives. Consideration may be given to one or more of the following:

Energy efficiency / and or consumption which can be demonstrated through suitable rating systems and ecolabelling


of 77

Demonstrated sound manufacturing, use, and disposal with a specific preference for products made using the minimum amount of raw materials from a sustainable resource, that are free of toxic or polluting materials and that consume minimal energy during the production stage

Recyclable products

Water efficiency

Fuel efficiency

Demonstrated renewable energy and technologies for new buildings and refurbishments

Purchasing Thresholds Where the value of procurement (excluding GST) for the value of the contract over the full contract period (including options to extend) is, or is expected to be:

Table 1 PURCHASE THRESHOLDS

MINIMUM REQUIREMENTS

Less than $5,000 Two quotations (verbal or written)

$5,000 to $49,999 Three written quotations

$50,000 to $99,999 Obtain at least three written quotations containing price and specification of goods and services (with the procurement decision based on value for money considerations).

$100,000 and above Public tender.

Invitation to quote (excluding tenders) It is not a prerequisite that every possible supplier is requested to quote however the officer is to use previous experience with suppliers and local knowledge to invite suitable suppliers to quote. One of the main aims for multiple quotes is to have a range of quotes to choose from to help determine value for money. Obtaining Written Quotations When obtaining written quotations, those suppliers invited to quote should: All receive the same information Represent a selection of available suppliers Record all enquiries from potential respondents. Where the enquiry requires a change to the request, issue an addendum to the potential respondents. Where potential respondents seek clarification of the specifications, requirements or other matters, this process should be managed in such a way as to not give one respondent an unfair advantage over others. The general principles relating to written quotations are:

Ensure that an appropriately detailed specification effectively communicates the requirements of the Shire

Selection Criteria to be applied to Price Schedule, Conditions of responding, Validity period of offer

Invitations to quote (and any additional information) should be issued simultaneously to ensure equity applies

Responses should be assessed for compliance, then against the selection criteria, and then value for money and all evaluations documented

Where the amount of consideration is expected to be in excess of $49,999, or the nature of the request would reasonably require it, a written specification shall be prepared


of 77

All persons submitting quotes or tenders should be advised of final decisions in a timely manner

Obtaining Verbal Quotations The general principles for obtaining verbal quotations are:

Ensure that the requirement/specification is clearly understood by the Shire employee seeking the verbal quotations

Ensure that the requirement is clearly, accurately and consistently communicated to each of the suppliers being invited to quote

Written notes detailing each verbal quotation must be kept and recorded Less than $5,000 Where the value of procurement of goods or services is less than $5000, purchase on the basis of at least two verbal or written quotations should be obtained. Written records of quotations are to be made and retained in all cases. $5,000 to $49,999 Where the value of procurement of goods or services ranges between $5000 and $49,999 a sufficient number of written quotations (three to five) are to be sought to demonstrate competitive quotations have been sourced. Where this is not practical, e.g. due to limited suppliers, it must be noted within the records made and retained. $50,000 to $99,999 For the procurement of goods or services where the value exceeds $49,999 but is less than $100,000, at least three written quotations or tenders shall be obtained including pricing and product or service information relating to the specification of goods and services being purchased. Comprehensive written records are to be retained in all cases. Panel Contract Where a panel contract has been awarded by Council, distribution of work shall be determined on the basis of the terms of the contract. In any case where a panel contractor was unable, unwilling or unsuited to provide goods or services as specified in such a contract, additional tenders or quotations may be obtained in accordance with the normal requirements of Table 1 above and r.11 of the Regulations. Regulatory Compliance Tender Exemption Public tenders or quotation procedures are not required (regardless of the value of expenditure) only where the circumstances comply with Regulation 11 of the Local Government Functions and General Regulations. Evaluation Panel Criteria for determining the successful tenderer shall be documented on the tender file before tenders are publicly invited. An evaluation panel, consisting of at least three officers, shall be established prior to the evaluation of a tender and include a mix of skills and experience relevant to the nature of the purchase. No Tenders Received Where no compliant tenders have been submitted, procurement may occur (where the specification for goods and/or services remains unchanged) by seeking quotation(s) within 6 months of the closing date as specified in the tender. Tender Evaluation


of 77

Tenders that have not been rejected shall be assessed by means of a written evaluation against the predetermined criteria. The tender evaluation panel shall assess each tender that has not been rejected to determine which tender is most advantageous. Addendum to Tender All addendums shall be distributed equitably and in a timely manner to persons who have been issued with relevant tender documents. Minor Variation A minor variation may be made prior to (or after) entering into a contract. Notification of Outcome Where purchase is via public tender, each tenderer shall be notified of Council’s determination of tenders/quotations. Notification shall include: The name of the person lodging the successful tender or quotation The total value of consideration of the winning offer Terminology In this policy, unless the context requires otherwise the following terms mean: Construction: work including the construction of buildings, housing and other public infrastructure, as well as related services such as architectural, surveying, facilities management and general maintenance Consultancy Services: services provided by a consultant Goods: tangible, quantifiable material requirements usually capable of being moved or transported and that are purchased, rented, leased or hired by a public authority Minor Variation: a variation that will not alter the nature of the goods and/or services to be procured, nor will it materially alter the specification or structure provided for by the initial tender Services or Provision of Services “Services” or “provision of services”: any task, consultancy, work or advice to be performed or provided that is procured by a government agency. Included are services such as management consultancies, outsourcing, maintenance contracts and agreements, cleaning, waste removal, equipment repairs, external auditors, utilities and services acquired by a private sector for a government agency Sustainable Procurement: the procurement of goods and services that have less environmental and social impacts than competing products and services.


of 77

6 SUPPORTING DOCUMENTS

[List any supporting documents that are attached. These may include, feasibility studies, signed letters of support, market analysis, Gantt Charts, design documents, research and evaluation reports, approvals to date, financial reports, policies, procedures, media releases and articles].

To be added

7 SIGNING OFF BUSINESS CASE

7.1 Sign-off

I confirm that the information contained in this Business Case is true and correct.

Business Case Author Signed

Gary Evershed

Shire President Signed

Cr Michael Smart

Completed by Gary Evershed Approved by Council 17/12/2014

Position CEO Position Shire President

Date Date


of 77

Appendix 1 – Conservative Trading Analysis based on delegate Day Rates of $80 pd – see Risk Management Section


Column1 Yrs 1-5 Yrs 6-10 Yrs 11-15 Yrs 16-20 Yrs 21-25 Yrs 26-30

Operating Revenue 1,800,000 2,070,000 2,380,500 2,737,575 3,148,211 3,620,443

Less Operating Expenses 1,260,000 1,449,000 1,666,350 1,916,303 2,203,748 2,534,310

Fixed Overheads 216,000 248,400 285,660 328,509 377,785 434,453

Total Operating Expenditure 1,476,000 1,697,400 1,952,010 2,244,812 2,581,533 2,968,763

Annual Operating Surplus (Deficit) 324,000 372,600 428,490 492,764 566,678 651,680

less 5Y Depreciation 238,210 273,942 315,033 362,288 416,631 479,125

5Y Nett Operating Profit (Loss) 85,790 98,659 113,457 130,476 150,047 172,554

Annual Nett Operating Profit (Loss) 17,158 19,732 22,691 26,095 30,009 34,511

Less refurbishment (yrs 6,12,18,24 and 30) 287,000 330,050 379,558 436,491 501,965 577,260

Cash surplus (deficit) after refurbishment (201,210) ( 231,392) (266,100) (306,015) (351,918) (404,705)

Annual Cash surplus(deficit) after refurbishment (40,242) ( 46,278 ) (53,220) (61,203) (70,384) (80,941)





Fixed Overheads 432,000 496,800 571,320 657,018 755,571 868,906


Annual Operating Surplus (Deficit) 648,000 745,200 856,980 985,527 1,133,356 1,303,359

less 5Y Depreciation 238,210 273,942 315,033 362,288 416,631 479,125

5Y Nett Operating Profit (Loss) 409,790 471,259 541,947 623,239 716,725 824,234



Cash surplus (deficit) after refurbishment 122,790 141,209 162,390 186,748

214,760

246,975

Annual Cash surplus/deficit after refurbishment

24,558

28,242

32,478

37,350

42,952

49,395





Fixed Overheads 648,000 745,200 856,980 985,527 1,133,356 1,303,359


Annual Operating Surplus (Deficit) 972,000 1,117,800 1,285,470 1,478,291 1,700,034 1,955,039

less 5Y Depreciation 238,210 273,942 315,033 362,288 416,631 479,125 5Y Nett Operating Profit (Loss) 733,790 843,859 970,437 1,116,003 1,283,403 1,475,914



Cash surplus (deficit) after refurbishment

446,790

513,809

590,880

679,512

781,439

898,654

Annual Cash surplus/deficit after refurbishment

89,358

102,762

118,176

135,902

156,288

179,731


of 77


of 77

Discounted Cash Flow Spreadsheets to be Attached

MARGARET RIVER NEEDS A STRONG HEART*...business case development and cost estimation have been...

Documents

Transcript of MARGARET RIVER NEEDS A STRONG HEART*...business case development and cost estimation have been...