NURIOOTPA CENTENNIAL PARK AUTHORITY · NCPA Business Case for Future Investment Page 3 of 59 June...

NCPA Business Case for Future Investment of 59 June 16, 2014

NURIOOTPA CENTENNIAL PARK

AUTHORITY

Incorporating

BAROSSA VALLEY TOURIST PARK

BUSINESS CASE FOR FUTURE INVESTMENT


Contents

CONTENTS ......................................................................................................................................................................... 2

1. EXECUTIVE SUMMARY .............................................................................................................................................. 3

1.1 ASSESSMENT OF NCPA CAPITAL EXPENDITURE RECOMMENDATIONS ......................................................................................... 4 1.2 OPTIONS FOR FUNDING THE CAPITAL EXPENDITURE ................................................................................................................ 5 1.3 OPTIONS FOR FUTURE GOVERNANCE / MANAGEMENT............................................................................................................ 5 1.4 RECOMMENDATIONS ........................................................................................................................................................ 6

2. BACKGROUND .......................................................................................................................................................... 9

2.1 HISTORY ......................................................................................................................................................................... 9 2.2 SERVICES ......................................................................................................................................................................... 9 2.3 GOVERNANCE ................................................................................................................................................................ 10 2.4 OPERATIONAL MANAGEMENT ........................................................................................................................................... 10 2.5 FUNDING ...................................................................................................................................................................... 10 2.6 ASSET MANAGEMENT PLAN ............................................................................................................................................. 12 2.7 DEVELOPMENT OF THE BUSINESS CASE FOR INVESTMENT ....................................................................................................... 12

3. ASSET MANAGEMENT PLAN ................................................................................................................................... 14

3.1 TOURIST PARK ............................................................................................................................................................... 14 3.2 SPORTING & RECREATION RESERVES ................................................................................................................................. 18 3.3 COULTHARD RESERVE ...................................................................................................................................................... 19 3.4 OTHER ‘PRECINCT’ ISSUES ............................................................................................................................................... 19

4. FINANCIAL ANALYSIS .............................................................................................................................................. 21

4.1 ASSUMPTIONS ............................................................................................................................................................... 21 4.2 NCPA CONSOLIDATED OPERATING PROFIT & LOSS/CASHFLOW .............................................................................................. 24 4.3 DISCUSSION ................................................................................................................................................................... 29 3.6 RECOMMENDATIONS ...................................................................................................................................................... 30

5. FUNDING MODELS .................................................................................................................................................. 31

5.1 ASSUMPTIONS ............................................................................................................................................................... 31 5.2 OPTIONS FOR FUNDING THE CAPITAL EXPENDITURE ............................................................................................................... 31 5.3 RECOMMENDATIONS ....................................................................................................................................................... 37

6. GOVERNANCE MODELS .......................................................................................................................................... 39

6.1 FUTURE OWNERSHIP OF BVTP.......................................................................................................................................... 39 6.2 OPTIONS FOR FUTURE GOVERNANCE/MANAGEMENT ............................................................................................................ 39 6.3 RECOMMENDATIONS ....................................................................................................................................................... 44

ATTACHMENT A - SWOT ANALYSIS FOR CURRENT NCPA MODEL: .................................................................................... 46

ATTACHMENT B - APPROVED OPERATIONAL BUDGET 2013/14 – RECREATION PARKS ……………………… ........................... 47

ATTACHMENT C - PROPOSED CAPITAL EXPENDITURE ................................................................................................. 49

ATTACHMENT D - PROFIT & LOSS FORECAST – NO NEW CAPITAL EXPENDITURE. ............................................................ 50

ATTACHMENT E - PROFIT & LOSS FORECAST – INCLUDING NEW CAPITAL EXPENDITURE……………………………………………….51

ATTACHMENT F - FUNDING OPTION 1 – NO NEW LOANS ............................................................................................... 52

ATTACHMENT G - FUNDING OPTION 2 – NEW LOAN & FORECAST CAPITAL EXPENDITURE BEYOND 2017/18 ................. 53

ATTACHMENT H - FUNDING OPTION 3 – NEW LOAN & NO FORECAST CAPITAL EXPENDITURE BEYOND 2017/18 ........... 54

ATTACHMENT I - RISK ANALYSIS ................................................................................................................................ 55


1. Executive Summary

The Nuriootpa Centennial Park Authority (NCPA) manages the Nuriootpa Centennial Park precinct on behalf of The Barossa Council as a wholly owned subsidiary under s42 of the Local Government Act 1999. The Barossa Valley Tourist Park (BVTP) is a competitive commercial business and is the key revenue driver for NCPA. BVTP has, to date, provided funding for the ongoing operations and capital reinvestment in the overall precinct (BVTP, significant sporting and recreation facilities and Coulthard Reserve). Recent focus of capital expenditure ($2.16m in the last five years) has been on renewing and refreshing existing aged and outdated infrastructure in BVTP. The NCPA Board of Management has determined that further investment is required to continue to renew, refresh or replace existing infrastructure. New facilities and infrastructure projects have also been identified by the NCPA as required in order for BVTP to remain competitive as a business, maintain its value to the community and continue to provide a strong return on Council’s significant investment. The NCPA Board of Management is seeking endorsement of its strategic direction; and financial commitment from Council for the next five years to enable solid planning for BVTP as a commercial business. The key question for Council is ‘what does it want from the BVTP in the future and how should it be run’? This Business Case sets out three core areas for Council consideration: 1. What Capital Expenditure will be approved for implementation in the next 5 years? 2. How will the approved Capital Expenditure be funded? 3. How will the Nuriootpa Centennial Park precinct be managed / governed in the future? The Business Case provides the following analysis:

An assessment of the recommended capital expenditure; including the flow on impact to forecast profit and loss and cashflow;

Options for funding the capital expenditure, should Council support some or all of the NCPA recommendations; and

Options for future governance of the Nuriootpa Centennial Park precinct into the future. A summary of the results of that analysis follows.


1.1 Assessment of NCPA Capital Expenditure Recommendations Total recommended capital expenditure across the precinct for renewal and replacement of existing assets and infrastructure and for development of new assets and infrastructure is estimated at $2.333m over the next five years. A detailed breakdown of the proposed capital expenditure recommendations are provided in the NCPA Asset Management Plan (supporting document to this business case) which sets out the capital improvement projects staged and prioritised by the NCPA Board of Management. Council Officers, via the Asset Management Working Party (AMWP), have assessed the capital expenditure recommended by NCPA (and associated works) in terms of:

requirement for replacement/renewal of aged and or outdated assets and suitability of recommendations by NCPA;

requirement for new facilities as recommended by NCPA; and

impact of recommended capital expenditure on profit and loss and cashflow forecasts. All items of capital expenditure recommended by NCPA in its Asset Management Plan are supported by the AMWP subject to the following conditions. General comments:

All new assets constructed have approvals in place in relation to Disability Discrimination Act (DDA) and Building Code of Australia (BCA) requirements.

An operational risk assessment is carried out on all new assets. Specific comments:

Cabins: o That an annual review of occupancy levels being achieved is carried out with aim of achieving

occupancy for new cabins of 60%. o Useful life of cabins in Asset Accounting Policy and Asset Management system to be revised. o Market value of cabins on disposal to be determined.

‘Village Green’: o The importance of the creation of the ‘Village Green’ is high. o Specific comment in relation to the swimming pool, multipurpose building, jumping pillow,

play equipment and conversion of barbeque area to camp kitchen: subject to the affordability of ongoing operational costs.

Roadways: o Determination if renewal or upgrade (required).

Sporting Reserves: o Soccer Club lighting and shelter sheds: Concept had already been approved by AMWP. o Netball/Tennis Club court resurfacing: Approved subject to grant and matched funding, both

of which have subsequently been confirmed. o Eastern side Toilet Block:

Subject to determination of whole of life costs. Subject to the results of the competitive neutrality study (benefit for BVTP in having use

for guests of a public toilet block).


Ratio of permanent/temporary toilet facilities to be determined (large events are unlikely to be serviced by permanent facilities only).

Coulthard Reserve: o AMWP agree that a Master Planning process needs to be undertaken.

Overall Capital Investment Program: o Must be flexible enough to accommodate fluctuations in prevailing market conditions and

industry standards. o Program is subject to sustainable financial position; determined as part of annual budget

review with Council as per the NCPA Charter.

1.2 Options for Funding the Capital Expenditure Options presented include:

Option 1 – No new loans - Cash from NCPA net operating cash balance only and repayment of existing loan from Council

Option 2 – New loan and forecast capital expenditure beyond 2017/18 - Cash from NCPA net operating cash balance and LGFA Cash Advance Debenture Loan

Option 3 – New loan and no forecast capital expenditure beyond 2017/18 - Cash from NCPA net operating cash balance and LGFA Cash Advance Debenture Loan)

Option 4 – Council Contribution or Full Allocation of Annual Operating Budget for Management of Sporting and Recreation Reserve and Coulthard Reserve

Option 5 – Absorption of NCPA’s net deficit within Council’s overall operations

An analysis of options is provided.

1.3 Options for Future Governance / Management

Options presented include:

Option 1 - Status quo with conditional changes -remain as a wholly owned subsidiary under s42 of the Local Government Act with conditional changes.

Option 2 – Assist in the creation of an independent incorporated body that manages the Nuriootpa Centennial Park Precinct under one head lease with Council.

Option 3 – Direct Council management of the Sporting and Recreation Reserve and Coulthard Reserve and assist in the creation of an independent incorporated body to manage BVTP only.

Option 4 – Create an informal Nuriootpa Centennial Park Advisory Body and direct Council management of the entire precinct – including further option of potentially leasing the tourist park to a private operator.

An analysis of options is provided.


1.4 Recommendations

1.4.1 Capital Expenditure It is recommended that Council approves the proposed capital expenditure set out in NCPA’s Asset Management Plan subject to:

Annual review of capital expenditure recommendations and NCPA financial position by NCPA and Council Officers;

Full review of the NCPA Asset Management Plan every two years to identify future asset renewal, replacement and upgrade requirements;

The achievement of 60% occupancy of available cabin stock prior to commencing additional proposed replacement program; and

The conditions identified in Council’s AMWP assessment of the proposed works being met. 1.4.2 Funding of Capital Expenditure It is recommended that Council approves funding Option 2 – New Loan and Additional Capital Expenditure Forecast Beyond 2017/18 and Option 5 – Absorption of NCPA’s Net Deficit Within Council’s Overall Operations, with the following conditions of approval to ensure that maximum return from Council’s investment is received:

NCPA is to take out an LGFA Cash Advance Debenture Loan to cover cashflow shortfall (after capital expenditure and additional interest) between 2014/15 and 2017/18, with funds only being drawn down as required and as signed off by the Director, Corporate and Community Services. Loan interest charged each year is added to the NCPA’s operating expenditure for that year. Principle repayments are to commence in 2018/19 and conclude in 2022/23. Loan repayments are on cumulative new loan balance and based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.

A new project governance structure is introduced, in the form of a Project Team reporting to the Board of Management (Senior Council Officer to be included on Project Team) to oversee all capital works. The Project Team is to conduct an annual review of the proposed capital works program, monitor capital expenditure against the approved budget and oversee the carrying out of capital works from a project management perspective to ensure attainment of minimum occupancy levels during progression through the investment horizon.

The NCPA Chief Executive Officer is to meet with the Barossa Valley Tourist Park Operations Managers and Business Manager on a regular basis to provide line management support, to clarify the Board’s expectations and strategic direction, and to provide advice and assistance on any issues arising within the day to day operations of the precinct.

The Business Manager is to develop and implement a marketing plan for the park (to be approved by Council) to achieve the following outcomes: o A review and upgrade of the park website; o Establishment of a strategy to increase group bookings & market packages of offerings from

the entire precinct (eg weddings, sporting events, recreation, community, church etc.); and


o Use of third party booking sites such as Wotif and Last Minute to increase occupancy during off peak periods.

A competitor pricing review is to be undertaken by NCPA to ensure that prices are in line with competitors and profitability is maximized.

With assistance from Council staff, a full risk assessment is completed for NCPA operations and policies and procedures reviewed to ensure risks are managed.

The NCPA Board is to consider reviewing the Park Managers salary package on expiry of their contract in October 2014 to provide higher base salary but lower (or capped) commission to reflect greater return on investment for Council from planned capital expenditure and recognise fringe benefits associated with the role.

1.4.3 Future Governance/Management It is recommended that Council approve the ongoing retention of Council ownership of the Barossa Valley Tourist Park. It is recommended that Council approve governance Option 1, with the NCPA remaining a wholly owned subsidiary under s42 of the Local Government Act and continuing to manage and maintain the entire Nuriootpa Centennial Park precinct subject to the following conditions:

The NCPA is to ensure full implementation and compliance with its revised Charter.

The NCPA Board of Management is to undertake training, to be provided by Council’s legal advisers at NCPA cost, regarding the legal compliance requirements of a Section 42 Subsidiary of Council and the impact of ICAC laws on the operations of the Authority.

Following the September 2014 election of board members, a full induction workshop is to be convened with members of the newly formed board, covering Governance, Board Member roles and responsibilities, WHS, Procurement, Financial Management and Asset Management requirements associated with the role. An ongoing induction program is to be implemented for all new members thereafter.

The NCPA Business Manager is to address identified deficits and risks in legislative compliance through the introduction of new governance systems and operational policies and procedures.

With assistance from Council staff, a full risk assessment is to be completed for NCPA operations and policies and procedures reviewed to ensure risks are managed.

The Board of Management is to maintain its Audit Committee on an ongoing basis.

A new project governance structure is to be introduced, in the form of a Project Team reporting to the Board of Management (Senior Council Officer to be included on Project Team) to oversee all capital works. The Project Team is to conduct an annual review of the proposed capital works


program, monitor capital expenditure against the approved budget and oversee the carrying out of capital works from a project management perspective.


On an annual basis, the Chair of the NCPA Board of Management is to submit Audited Financial Statements by the 15th of August and a full Annual Report by the 30th of September to Council’s Audit Committee.

The Chair of the NCPA Board of Management is to provide a quarterly report (by the 15th of Oct, Jan, April and July each year) to Council on progress towards implementation of Council’s conditions of approval (future governance/management), the achievement of project milestones in relation to approved capital expenditure, and the financial status of the capital works program.


2. Background

2.1 History The Nuriootpa Centennial Park land was gifted to the community in 1936 (by William Coulthard MBE) and has been developed and run by the community ever since. Ownership was transferred to Council in 1977. Council contributed annually to park operations until 1987. The Barossa Council established NCPA as a subsidiary of Council in accordance with s42 of the South Australian Local Government Act 1999 (LG Act).

2.2 Services NCPA currently deliver the following services to the community and visitors: 2.2.1 Tourist Park Barossa Valley Tourist Park provides affordable value for money accommodation for visitors to the Barossa including seasonal workers; corporate, sporting and community groups; and independent travelers. Assets and infrastructure include 45 cabins, 150 powered sites, 8 ensuite powered sites, 20 unpowered sites and supporting facilities/amenities (e.g. barbeque areas, camp kitchen, power and wastewater infrastructure etc). There are currently 17 permanent residents who have either paid for the installation of or purchased a dwelling located in the park on an ongoing basis, and that dwelling is their principal place of residence. An analysis of the strengths, weaknesses, opportunities and threats for the park is provided as Attachment A. Context:

BVTP is one of four Tourist (Caravan) Parks owned by Council. Others include: o Williamstown (caravan/camping sites and 4 cabins); o Mt Pleasant (Talunga Park – caravan & camping sites only); and o Eden Valley (Murray Recreation Park– caravan & camping sites only).

The Council owned Tourist Parks vary in size, set up and financial viability and are managed by community committees (either s41 or s42).

Anecdotal feedback indicates that the Tourist/Caravan Parks owned by Council originated from a community desire to find revenue sources to help fund the ongoing operations of the adjacent sporting and recreation reserves in each of the towns.

Whilst all of the Tourist Parks contribute cashflow towards the maintenance of the associated recreation parks, only BVTP (currently) provides net cashflow from operating cash balance to fund the operations of the overall precinct.

It is noted that a Council (broader) Caravan Park policy/strategy (including purpose, governance, service level commitment etc.) is required but is on hold due to limited Council Officer resources.


2.2.2 Sport & Recreation

The Nuriootpa Centennial Park Sport & Recreation Reserve and Coulthard Reserve collectively provide the following facilities for community and visitor use:

Playing fields (football ovals, soccer pitch and tennis/netball courts);

Community and sporting buildings;

Reserves (including Coulthard Reserve and Bush Chapel); and

Supporting infrastructure (roadways, amenities blocks, playgrounds etc). Context:

The Nuriootpa Centennial Park Sport & Recreation Reserve is one of 10 such precincts owned and managed by Council with the remaining parks managed by s41 Committees of Council.

A summary of the net cost to Council of each of these parks including those that also have Tourist Parks, is provided as Attachment B.

Council owns a large number of reserves across the Council region similar to Coulthard Reserve. An analysis of the cost of maintaining each of these reserves has not been undertaken as part of this analysis.

2.3 Governance NCPA is guided by a Board of Management which includes representatives from community groups that use the park facilities (sporting bodies, Scouts, Function Centre), representatives from adjacent properties (Nuriootpa High School and Barossa Bushgardens) and The Barossa Council. Three sub-committees are also in place; Executive Committee, Audit Committee (includes two independent members) and Sports Centre Management Committee (includes independent members).

2.4 Operational Management NCPA employ five full time staff and 8 part-time staff including CEO, Park Managers, Assistant Managers, Grounds person, administration and cleaning staff. The Park Managers are responsible for the day to day operations of the park and work with the NCPA Board of Management to develop and implement plans for improvement. Further details regarding day to day management of the park are provided in the NCPA Business Plan 2013-15 (see supporting documents). (Please note: this plan was last updated as part of the 2013-14 budget process and will need to be updated further following consideration of this Business Case).

2.5 Funding 2.5.1 Cash from Operating Surplus To date Council, via its subsidiary, has predominantly funded overall precinct management using operating surpluses from BVTP. Surpluses have also been used to fund capital expenditure within the


precinct (with approval of Council); estimated by NCPA to be over $4m over the past 25 years (including significant contribution by sporting and recreation bodies). However, the financial demands of maintaining, renewing and replacing infrastructure and assets in the NCPA precinct is now such that profits from BVTP are no longer sufficient to provide required funds. 2.5.2 Council Loan Funding

2008/09: Loan funds (Council funding from existing investments) of $650,000 were utilised to carry out significant capital improvements to park infrastructure (new administration building, Manager’s residence and park entrance).

2013/14: A loan facility of $200,000 (Council funding from existing investments) was originally approved for cabin development in 2012/13 with repayment due in 2014/15. This facility was not utilised in 2012/13 as cabins were purchased from the operating cash balance. As a result, the facility was rolled over for 2013/14 for further cabin development. Based on the current and projected financial position for 2003/14, the NCPA Board of Management has again decided to forgo the uptake of the additional $200,000 loan facility in favour of utilising all available net operating cash balance.

On 16 July 2013 Council endorsed the following recommendation in regards to repayment of these loans by NCPA:

1. Loan Principal:

Balance: The existing loan is for $650,000 and the loan facility approved for 2013/14 is for a further $200,000. As additional loan funds are drawn by Nuriootpa Centennial Park Authority during 2013/14, the additional amount drawn will be added to the existing loan balance of $650,000.

Repayment: Repayment on the total loan balance will commence in 2015/16 and be paid off in equal installments over ten years.

2. Loan Interest: Interest is charged on the loan balance at a cash advance debenture rate as provided by the Local Government Finance Authority. Interest charges only apply to the actual balance drawn and is charged from the date of drawing down.

The Long Term Financial Plan for NCPA has been adjusted in line with this repayment schedule. 2.5.3 Grant Funding Applications have been made on three occasions in the last twelve months for Commonwealth Government Department of Resources, Energy & Tourism grant funding towards capital expenditure for BVTP (replacement of cabins):

Tourism Quality Projects (T-Qual):


In May 2013, NCPA applied for $100,000 (excluding GST) grant funding to be matched by Council loan / cash from operating surplus to purchase 4 x 2 berth cabins. The application was on a ‘reserve’ list however did not proceed to funding.

Tourism Industry Regional Development Fund (TIRF): Following an unsuccessful application for TIRF grant Round One funding in December 2012, NCPA lodged an application for Round Two funding in August 2013 for $245,216 (excluding GST) to be match by Council loan / cash from operating surplus to purchase 2 x 2 berth cabins, 2 x 4 berth cabins and 4 x 6 berth cabins. The Commonwealth Government in November 2013 cancelled this fund and as such all applications became defunct.

At this stage there are no other eligible funds to which NCPA can apply for similar funding.

2.6 Asset Management Plan NCPA have developed an Asset Management Plan (see supporting documentation) for Council consideration. Council’s Long Term Infrastructure and Asset Management Plan (LTIAMP) incorporates the Nuriootpa Centennial Park precinct. Following Council’s consideration of the NCPA Asset Management Plan (via consideration of this Business Case), Council’s LTIAMP will be updated to reflect the approved plans. The predominant focus of the NCPA Asset Management Plan is on BVTP due to the immediate need to replace significantly outdated assets that impact on future financial sustainability. Whilst the immediate needs of the sporting reserves and Coulthard Reserve are outlined in the plan, a more detailed review of the future asset management requirements for those areas will be completed by Council in line with a broader review of such assets and infrastructure. To that end, it is noted that Council has participated in the development of a guiding regional report, Barossa, Light & Lower North Regional Open Space, Recreation & Public Realm Strategy September 2013 which is currently in draft for community and Council consideration. It is further noted that Council is also undertaking a Council area wide Asset Management Strategy Project that will look at the provision of service levels for maintaining existing assets as well as the future investment required for renewal and replacement to sustain those service levels and service outcomes.

2.7 Development of the Business Case for Investment A Working Group was formed of Council Officers, NCPA Executive (including Councillor Roehr), Councilor Lykke and Councilor Milne to develop the NCPA Future Investment Business Case for consideration by Council. The Working Party outcomes to be achieved were to produce:

A detailed Business Plan and Budget: Refer NCPA Business Plan 2013-15 (see supporting documentation) and NCPA Operating & Capital Expenditure Budget 2013/14 (see supporting documentation).

A recommendation to Elected Members for repayment of existing Council Loan: Refer 2.6.2 above.


A base 5 Year Business Plan & Budget: The Business Plan 2013-15, operating and capital expenditure budget 2013/14 and actual performance for 2012/13 has been used to develop a base model from which a range of scenarios have been modeled to inform this Business Case.

A Business Case for recommendation to Elected Members of future investment in the Park. 2.7.1 Context for Council Decision Making 2.7.1.1 Council Owned Tourist/Caravan Parks

It is noted that the three smaller parks owned by Council (and managed by s41 Committees) are operating more in the mode of service delivery (to the community, visiting friends & family, seasonal workers, tourists who have no other option) in response to ‘market failure’ as opposed to BVTP which is a significant commercial, competitive and profitable business. 2.7.1.2 NCPA Future Investment to be Considered in Isolation

Council will consider the NCPA Business Case for Future Investment in isolation due to the unique nature (within Council) of BVTP as a significant business.

Council will defer consideration of further (significant) investment in the other 3 caravan parks until a Caravan Park Strategy is developed. [Council (broader) Caravan Park policy/strategy required (including purpose, governance, service level commitment etc.)].

Council will defer consideration of further (significant) investment in sporting & recreation and reserve facilities pending future (broader) Council wide review of needs.

[In line with discussions around: Barossa, Light & Lower North Regional Open Space, Recreation & Public Realm Strategy

September 2013; and Council (area wide) Asset Management Strategy Project - looking at the provision of service

levels for maintaining existing assets as well as the future investment required for renewal and replacement to sustain those service levels and service outcomes.]


3. Asset Management Plan Total recommended capital expenditure across the precinct for renewal and replacement of existing assets and infrastructure and for development of new assets and infrastructure is estimated at $2.333m over the next five years. A detailed breakdown of the proposed capital expenditure recommendations are provided in the NCPA Asset Management Plan (see supporting documentation) which sets out the capital improvement projects staged and prioritised by the NCPA Board of Management. A summary of proposed capital expenditure is provided at Attachment C. Council Officers, via the Asset Management Working Party (AMWP), have assessed the capital expenditure recommended by NCPA (and associated works) in terms of:

requirement for replacement / renewal of aged and or outdated assets and suitability of recommendations by NCPA;

requirement for new facilities as recommended by NCPA; and

impact of recommended capital expenditure on profit and loss and cashflow forecasts The results of that assessment are provided below. Overall General AMWP Assessment/Comment:

Ensure Disability Discrimination Act/Building Code of Australia approvals in place for any new assets.

3.1 Tourist Park $1,755,900 3.1.1 Capital Investment - New Cabins $1,180,400

3.1.1.1 Replacement of Ageing/Outdated Cabins

The Asset Management Plan sets out a cabin replacement program to replace 19 old and outdated cabins.

Whilst these cabins have been maintained, NCPA indicate they are having a negative impact on the competitiveness and brand value of the Tourist Park due to their age (some over 30 years)and out datedness (e.g. some do not have ensuite bathrooms). Prices charged for these cabins are lower than for newer stock and they are therefore also having a negative impact on park profitability.

NCPA recommend that cabins are replaced within 15 to 20 years so that they remain attractive to guests, have lower maintenance costs and retain a market value on disposal of the asset.

AMWP Assessment/Comment:

Agree subject to: o An operational Risk Assessment on all new assets o An annual review of the accommodation occupancy level of 60% o Capital Investment program being flexible enough to accommodate fluctuations in prevailing

market conditions and industry standards o Useful life of cabins in Asset Accounting Policy and Asset Management System being revised


o Determination of market value on disposal o A sustainable financial position being maintained (requires annual review with Council at

Budget time as per Charter) 3.1.2 Capital Investment - Creation of ‘Village Green’ $575,500 A key aspect of the Western Design Grand Plan for development of the park is the creation of a ‘Village Green’ area to concentrate key recreation facilities in the centre of the park. 3.1.2.1 Demolition of Old Cabins, Meeting Room, Ablution Block B & Cleaners Store (operating

expenditure) ($109,396)

The following assets have been recommended for demolition to create space for development of new modern facilities:

Cabins - NCPA recommend demolition of 15 old and outdated cabins; 8 of which contain asbestos. Per above, these cabins are detrimental to the park brand, have no resale value and should be demolished and removed from the park.

Meeting room - current meeting room is well used but is old (over 30 years), outdated, very basic and does not meet the needs of visitors.

Ablution Block B - this block is currently providing facilities for cabins C1-C8 that do not have ensuite bathrooms; these cabins are recommended for demolition (per above). This building is old and outdated, contains asbestos, is costly to maintain and will not be replaced (as such). Whilst caravan site users in the vicinity also use this block, alternative facilities remain available in Ablution Blocks A and C.

Cleaners’ Store - this building is over 25 years old. Central storage for cleaning goods and equipment is still required however space can be created for this in the new multipurpose building (refer below).


Agree subject to: o An operational Risk Assessment on all new assets o Capital Investment program being flexible enough to accommodate fluctuations in prevailing

market conditions and industry standards o A sustainable financial position being maintained (requires annual review with Council at

Budget time as per Charter)

3.1.2.2 Development of Swimming Pool, Small Playground, Jumping Pillow, Multipurpose TV/Games/Meeting/Pool Plant/Storage Building (capital expenditure) ($519,730)

3.1.2.2.1 Swimming Pool ($153,170)

NCPA has researched facilities offered by competitors and noted feedback from AAA Tourism reports. Feedback gathered by Park Management and staff is that more enquiries received over the phone would be converted to actual bookings if the Park had a dedicated pool within the confines of the Park. Feedback gathered supports the installation of a small to medium sized pool that would be operated for park guests only and opened from October to April.


Research undertaken by BDO (SA) Pty Ltd, (commissioned by NCPA) indicates: Industry research highlighted in section 7(c); 77% of consumers in the 35-49 age bracket indicated that a swimming pool is an important part of their decision making process when deciding to stay.

Whilst there is a public pool in Nuriootpa that is in reasonably close proximity to the tourist park, this is a considerably different offer to having a pool within the park, exclusively for guests, and located close to the park accommodation. Park guests would be paying for use of the pool indirectly via their accommodation fees. NCPA believe that having a pool within the park precinct would increase the overall competitiveness of the park for all guest target markets including group bookings (e.g. significant bookings have been missed due to not having a pool for regional junior sporting group / carnival use). Feedback on use of the existing Nuriootpa town pool by guests at the Park is that if it is not conveniently located within the Park, they will not use it.




Budget time as per Charter) o The affordability of ongoing operational costs

3.1.2.2.2 Multipurpose TV/Games/Meeting/Pool Plant/Storage Building ($296,800)

There are currently a number of small buildings that Western Design has recommended be demolished (refer above) and replaced with one ‘multipurpose’ building as part of the village green area development.

The proposed new building will comprise: o A large multipurpose meeting / TV / games room: New room will have large plasma TV, table

tennis table, pool table and meeting area to better meet needs of users. o Pool plant room o Cleaners storage area o Shower and toilet facilities (minimum 1 shower / family change room and 3 toilets (one

disabled (unisex) and 2 ambulant (one male, one female)) to provide amenities in the village green area.






3.1.2.2.3 Jumping Pillow and Play Equipment ($69,760)

In order to remain competitive as a Barossa accommodation provider as well as within the regional tourist park market, AAA Tourism reports indicate that the provision of additional facilities for children and youth will increase the attractiveness of the park to guests.

NCPA Board of Management are recommending the installation of a small to medium sized jumping pillow and some minor play equipment to add to the attractiveness of the village green area to the family market.





Are there any other types of park play equipment available in the marketplace that may make us a leader in this space? Recommendations from NCPA are based on design plans provided by Western Design who are

specialists in Tourist Park designs.

Other recommended recreational equipment recommended by Western Design was the

children’s zero depth water play area which (whilst supported in concept by NCPA Board) was

not included at this stage due to cost and other higher priorities existing.

Park Managers (who attend industry seminars and network with other caravan parks) have not

suggested any other type of play equipment as being a higher priority.

3.1.2.2.4 Conversion of barbeque area to Camp Kitchen & Existing Camp Kitchen Upgrade ($55,770)

Western Design recommended in the Grand Plan that an additional 2 camp kitchens and new barbeque areas in the village green be developed; as well as recommending an existing barbeque area be demolished to create drive through caravan sites. NCPA considered these recommendations in light of current need, options for development of the village green area and current funding realities.

Rather than installing new camp kitchens at this stage, NCPA recommend that the existing barbeque area in section C will be redeveloped into a camp kitchen to enhance facilities available to guests in that area of the park. The existing camp kitchen has recently been upgraded and NCPA consider that combined, these two camp kitchens will be sufficient to meet existing and immediate future needs.


Agree subject to: o An operational Risk Assessment on all new assets


o Capital Investment program being flexible enough to accommodate fluctuations in prevailing market conditions and industry standards

o A sustainable financial position being maintained (requires annual review with Council at Budget time as per Charter)

o The affordability of ongoing operational costs

3.2 Sporting & Recreation Reserves $115,210 The current modus operandi (and history to date) in terms of development of sporting and recreation facilities within the park precinct is that development is driven by the community and sporting user groups. Funding has tended to be sought by clubs/groups from grant funding with matched funds being sourced equally from the groups themselves and NCPA. Current plans for capital improvements being led by the user groups are as follows:

3.2.1 Soccer Club $10,000

The junior club was recently successful in securing a government grant towards installation of lights on the Hoffman (‘second’) Oval and for two small shelter sheds (estimated spend $71,133). Access to toilet facilities remains a challenge. NCPA board has approved $10,000 of funding towards this project with the remainder to be funded by the Soccer Club $10,000 and grant funds $51,133. Note: This project was approved as a second quarter adjustment within the 2013/14 budget, however NCPA has now requested that this funding commitment be carried over to 2014/15 as the works will not commence until next financial year. AMWP Assessment/Comment:

Concept has already been approved at AMWP.

3.2.2 Netball/Tennis Clubs $105,210 The courts are in need of upgrade (resurfacing) due to cracking and are considered an injury risk to players. The cost of the required works is estimated at $79,500. The Nuriootpa Tennis Club was successful in attaining State Government Office for Recreation & Sport (ORS) grant funding to the value of $27,500 towards the resurfacing of the courts. The Tennis Club was also successful in securing a second grant of $25,000, with the remaining funds to be provided by NCPA, Nuriootpa Tennis Club and Nuriootpa Netball Club (with potential rebate from Tennis Australia). In addition to the courts, some of the perimeter fencing will also need to be replaced. Note: $20,000 NCPA contribution towards this project is included in the approved capital expenditure budget 2013/14, however NCPA has now requested that this funding commitment be carried over to 2014/15 as the works will not commence until next financial year. AMWP Assessment/Comment:

Agree subject to: o An operational Risk Assessment on asset o The affordability of the proposed works and available funding


3.2.3 Football/Cricket $ Undetermined

In 2017 Nuriootpa Football Club will host the Barossa Light Gawler football Grand Final. In 2016 the club plans to have the oval laser leveled and given a fine top dressing to provide a perfect level playing surface. With the move to the Adelaide Oval, some fixtures will become available from AAMI stadium. The football club has contacted the SANFL re more seating for the grand stand and globes to improve the lighting on the oval for night football games and 20/20 cricket.


Agree subject to: o An operational Risk Assessment on assets o The availability of fixtures

3.3 Coulthard Reserve $ Undetermined The draft Barossa, Light & Lower North Regional Open Space, Recreation & Public Realm Strategy September 2013 identifies Coulthard Reserve as a regionally significant open space for community and visitor use. There may be an opportunity in the future to develop the Barossa Valley Tourist Park in the area where it abuts Coulthard Reserve to capitalise on the natural assets of the reserve to create a unique point of difference to attract visitors to the tourist park. Following the outcome of this Business Case, it is recommended that a Master Plan for development of Coulthard Reserve be undertaken. NCPA has over the last eighteen months carried out maintenance and improvement works to replace outdated and aged outdoor furniture and barbeques. Council’s Works & Engineering department inspected the road quality in Coulthard Reserve and works were carried out in late 2013. AMWP Assessment/Comment:

It is agreed that a Master Planning process needs to be undertaken.

3.4 Other ‘Precinct’ Issues $421,370 3.4.1 Toilet Facilities $272,500 3.4.1.1 Sporting Reserves There is a need for additional toilet facilities to be added to the sporting reserves to service the large groups of people that attend the park for sporting and community events. Regular annual events include the regional junior netball and football carnival using all 3 ovals and all facilities with over 2000 people attending. Normal weekly use of the park (particularly during football season) coupled with regular one-off event bookings of the reserves put the existing facilities under pressure.

Western Design recommended a significant scoreboard/meeting room/amenities block be added on the Eastern side of the main oval adjacent to the tourist park (and the demolition of Ablution Block B


in the tourist park to allow for development of the ‘Village Green’). Whilst the NCPA support this as a concept, the priority is for increased public toilet facilities on the eastern side of the main oval with disabled access. This can then be used by both the public and visitors staying at the Tourist Park. Currently there is only one public toilet in the park (on the Western side). It has no disabled access and does not meet current user needs (let alone future needs).

Current funding realities support the recommendation for installation of a new toilet block in a suitable location near the main oval (on the Eastern side). The scoreboard proposal could potentially follow in future years as a joint project with sponsors and sporting bodies. It is noted that there is also a registered need for toilet facilities to service the soccer oval and the Soccer Club continue to consider potential options for development. AMWP Assessment/Comment:

Agree subject to: o An operational Risk Assessment on all new assets. o A sustainable financial position being maintained (requires annual review with Council at

Budget time as per Charter). o Determination of whole of life costs. o Results from Competitive Neutrality Study. o Need to accommodate for DDA and BCA requirements. o Determination of ratio of permanent/temporary toilet facilities. Large events are unlikely to be

serviced by permanent facilities only. 3.4.1.2 Coulthard Reserve It is noted that the existing toilet facilities (based on current usage and layout) are not ideally located. It is also noted that a master plan is required to determine future development (refer above) and as such the requirement for further toilet facilities will be addressed at that point. AMWP Assessment/Comment:

It is agreed that a Master Planning process needs to be undertaken. 3.4.2 Roadways $148,870 $25,000 has been provided for in the 2013/14 budget for internal roadworks within the park. It is envisaged that a further $25,000 will be required for further works in 2014/15 and $50,000 in both 2016/17 and 2017/18. AMWP Assessment/Comment:

Agree subject to: o Determination if renewal or upgrade. o An operational Risk Assessment on all assets. o A sustainable financial position being maintained (requires annual review with Council at

Budget time as per Charter). o Results from Competitive Neutrality Study.


4. Financial Analysis Recommended capital expenditure has been input into financial models to determine potential impact on NCPA forecast profit and cashflow. Please note: AMWP provided comments and suggestions that have been taken on board to formulate the following analysis.

4.1 Assumptions 4.1.1 Opening Cash Balance/Cash Balance Buffer 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects NCPA Board of Management decision to use all available cashflow to fund capital expenditure in 2013/14 and not take up the additional $200k loan approved by Council. From 2015/16 onwards, an estimate of $100k has been used as a minimum 'buffer' to be maintained as working capital. 4.1.2 Existing Loan Interest & Repayments The existing loan balance is $650k. It is assumed that the further $200k advance approved in the current budget will not be drawn down during 2013/14. Loan interest will be charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 years starting from 2015/16. 4.1.3 Approved Tariff Increases In line with industry practice, accommodation tariffs are reviewed by NCPA Board of Management in July each year with increases effective from 1 January the following year. Following are details of increases in BVTP tariffs approved and applied by NCPA for the last few years:

Tariffs for 2014 (set in July 2013) increase of 4%

Tariffs for 2013 (set in July 2012) increase of 10% + $1

Tariffs for 2012 (set in July 2011) increase of 5%

Tariffs for 2011 (set in June 2010) increase of 8%

Tariffs for 2010 (set in Sept 2009) were increased by $2 for cabins and $1 for sites 4.1.4 Future Tariff Increases For the purposes of modeling, tariff increases have been applied from 1 July each year (rather than 1 January) and have only been applied to cabins and permanent residents; with all other accommodation types (caravan sites, ensuite caravan sites and tent sites) held at 2014/15 budgeted revenue (price and occupancy) levels. For cabins, the following tariff increases have been applied:

2013/14: Revenue calculations are based on current advertised rate for 2013 (the base daily rate for a couple has been used so that figures represent a conservative base line).

2014/15 onwards: A minimum annual increase of 4% has been applied (compounding).


4.1.5 BVTP Caravan Site Fees Forecast base is budget for 2013/14. Assume no growth in site fees (in line with trend toward preference for cabin accommodation).

4.1.6 BVTP Permanent Residents Revenue An annual increase of 4% p.a. has been modeled to be in line with increases in operational costs. 4.1.7 General Operating Expenditure A CPI increase estimate of 2.5% p.a. has been applied to forecast base from 2014/15 onwards; other than expenses where it is anticipated that higher than CPI increase will be likely (e.g. electricity and water). 4.1.8 Wages An additional amount of $40k was provided in the 2013/14 budget for a part-time (0.6 FTE) business manager resource. This position has recently been recruited with a planned commencement date of 2 June 2014. The budget increase for 2013/14 has been left at $40k and an additional $60k allowed from 2014/15 onwards (i.e. up to $100k p.a. including on-costs). 4.1.9 Support Services Allocation No allowance has been made in forecast - will be assessed as part of competitive neutrality analysis. 4.1.10 Cabin Revenue 4.1.10.1 Impact of New Cabins on Existing Cabin Occupancy NCPA predict (based on knowledge of the business) that the upgrade/replacement of cabins will not have a negative impact on current occupancy levels being achieved for existing cabins of that type i.e. current occupancy levels for each cabin will (at least) remain at current levels. On this basis, average occupancy figures have been used in preparing business case financial projections to provide a realistic scenario for the financial position and loan requirements of the NCPA to fund the planned capital expenditure. 4.1.10.2 Impact of Capital Expenditure on Cabin Revenue Revenue for new cabins has been calculated based on current occupancy levels being achieved for each type of cabin (ie average occupancy). As per the above assumption regarding impact of new cabins on existing cabin occupancy, revenue for existing cabins has been calculated based on the maintenance (at least) of current occupancy levels for each cabin type. Revenue for cabins to be demolished has been removed in line with timeline for demolition.


Future special events and known group bookings are not reflected within financial forecasts so that figures represent a conservative base line. Impact of timing of installation of new cabins/demolition of old cabins: Other than 2013/14 (where cabins are to be installed during the final quarter of the year) assumption made that for year in which cabins are installed, they will only be available for three quarters of the year. Full year of occupancy is then applied for subsequent years. 4.1.10.3 Increased operating expenses from Capital Expenditure 4.1.10.3.1 Cabins The impact on operating expenses has been calculated per below based on average occupancy levels modeled for new cabins and a decrease in expenses has been applied for cabins to be demolished.

Cleaning: Budget for 2013/14 used as a base with annual CPI increase applied (est. 2.5%). Additional cleaning costs have been calculated based on occupancy being achieved to calculate total room nights and a cost of $17 per room night for smaller cabins and $29 per room night for larger cabins (assumes rooms turned over daily hence conservative estimate).

Power: Budget for 2013/14 used as a base with 5% annual increase applied (in line with forecast potential increase). Additional power costs based on average occupancy being achieved to calculate total room nights and a cost of $20 per room night as an estimated cost.

Managers Commission: As part of their current salary package, Managers earn a generous commission based on operating revenue (lease fees, recreation park fees & tourist park fees). Additional commission has been calculated based on the difference between the forecast revenue including the impact of cabin capital expenditure and the base forecast revenue without cabin capital expenditure.

4.1.10.3.2 Swimming Pool An estimate of $15,000 annual operating expenses for the pool has been factored in (in line with timing for installation) and annual CPI increase applied (cleaning supplies $10k and additional wages $5k). 4.1.10.3.3 Depreciation Expense has been forecast using the following assumptions:

Cabin estimated life: NCPA recommend replacing cabins before they are 20 years old at which point they will have a residual value.

New assets: Depreciation has been calculated based on estimated cost, estimated useful life and forecast timing.

Refurbishment/upgrade of assets: Depreciation has been calculated based on estimated cost (i.e. for modeling purposes, treated as a new asset), estimated useful life and forecast timing.

Disposal of assets: Depreciation on assets to be removed or demolished has been deducted from the year that disposal is forecast.

Annual depreciation expense for 2018/19 onwards has been estimated based on amount calculated for 2017/18 plus annual increase (compounded) of 2.5% for the purposes of modeling.


4.1.10.3.4 Remaining Capital Expenditure It is assumed that any impact of the remaining items of capital expenditure on operating revenue and expense will be covered in annual increases applied (minimum CPI) in the forecasting model (e.g. insurance). Modeling of the impact of capital expenditure on forecast NCPA profit and loss has been undertaken in line with the above assumptions.

4.2 NCPA Consolidated Operating Profit & Loss/Cashflow 4.2.1 Analysis of Past Performance To date, Barossa Valley Tourist Park has provided sufficient operating surplus to fund the maintenance and management of both the Sporting and Recreation Reserve and Coulthard Reserve (refer below). Operating Surplus /

(Deficit) Before Capital Amounts

(net of depreciation)

Tourist Park Sporting Reserves Coulthard Reserve Total Consolidated

FY 2012/13 $419,809 $(245,055) $(53,986) $120,768

FY 2011/2012 $300,123 $(209,209) $(48,993) $35,587

FY 2010/2011 $369,822 $(244,182) $(70,424) $55,216

FY 2009/2010 $280,029 $(205,951) $(60,409) $13,669

FY 2008/2009 $280,990 $(173,671) $(57,543) $49,776

FY 2007/2008 $300,678 $(198,977) $(54,921) $46,780

FY 2006/2007 $311,715 $(157,640) $(50,320) $103,755


4.2.2 Analysis of Profit & Loss - No New Capital Expenditure (Do Nothing) A base forecast Profit & Loss without any new capital has been produced and used as the starting point for scenario modeling. The base has been developed using the approved 2013/14 budget, 2014/15 draft budget and 2012/13 actuals (see Attachment D). Operating Surplus /




FY 2013/14 $385,887 $(299,752) $(54,666) $31,469

FY 2014/15 $215,798 $(218,782) $(55,017) $(38,876)

FY 2015/16 $339,926 $(316,274) $(56,716) $(33,064)

FY 2016/17 $351,281 $(326,389) $(58,470) $(33,578)

FY 2017/18 $360,301 $(336,813) $(60,279) $(36,791)

FY 2018/19 $369,847 $(347,557) $(62,147) $(39,856)

FY 2019/20 $379,945 $(358,629) $(64,074) $(42,759)

FY 2020/21 $390,622 $(370,042) $(66,063) $(45,483)

FY 2021/22 $401,910 $(381,806) $(68,117) $(48,012)

FY 2022/23 $413,838 $(393,933) $(70,236) $(50,331)

FY 2023/24 $426,438 $(406,435) $(72,424) $(52,420)

FY 2024/25 $439,744 $(419,325) $(74,682) $(54,262)

FY 2025/26 $453,791 $(432,615) $(77,014) $(55,837)

FY 2026/27 $465,528 $(446,319) $(79,421) $(60,212)

**FY 2038/39 $682,419 $(648,676) $(115,241) $(81,497)

4.2.2.1 Specific Assumptions 4.2.2.1.1 Capital Expenditure No impact of capital expenditure applied other than approved capital expenditure budget 2013/14 and associated loan funding. 4.2.2.1.2 Cabin Revenue Revenue forecast has been calculated based on estimated average occupancy and prices for 2013/14 (were increased on 1 January 2013). CPI increase est. of 4% p.a. applied from 2014/15. 4.2.2.1.3 Depreciation Expense For the purposes of the base model, depreciation expense budget for 2013/14 has been used as the forecast base with 2.5% p.a. increase in future years.


4.2.2.2 Analysis 4.2.2.2.1 Consolidated Profit & Loss Modeling suggests that without additional funding of income producing capital expenditure from 2014/15 onwards, the current operational funding model is subject to cost pressures and forecast to produce a consolidated deficit i.e. the profits from BVTP are no longer sufficient to totally support the operational funding (including depreciation) of the sporting and recreation reserve and Coulthard Reserve. Estimated consolidated deficit is forecast to grow from $38k in 2014/15 to $81k in 2038/39, with combined deficits over this period equaling $1,518,477.

4.2.2.2.2 Net Cashflow

2013/14 - Net cashflow from operations (based on funding total approved budgeted capital expenditure of $433k from available operating cash balance) is forecast to produce a balance of $990, therefore no net cashflow shortfall.

2014/15 onwards - Net cashflow from operations (based on zero capital expenditure) ranges from a positive cash balance of $149k in 2014/15 to $325K in 2026/27 (with cash balances between 2014/15 and 2018/19, where the largest capital expenditure is proposed, equaling between $149k and $212K p.a.).

4.2.2.2.3 Funds for Capital Expenditure

2013/14 - Forecast cashflow is sufficient to meet approved capital expenditure budget (based on closing cash balance buffer of $900).

2014/15 onwards - Based on the operating cash balance forecast, should no other funding be made available, restricted capital expenditure will be possible over the forecasted period.


4.2.3 Analysis of Profit & Loss - Including New Capital Expenditure (New Investment) A Profit & Loss Forecast including new capital expenditure has been produced and used for scenario modeling based on average occupancy levels. The forecast has been developed using the approved 2013/14 budget, 2014/15 draft budget and 2012/13 actuals plus revenue and expense projections associated with the proposed capital investment (see Attachment E). Operating Surplus /




FY 2013/14 $385,887 $(300,252) $(54,666) $30,969

FY 2014/15 $276,587 $(221,295) $(55,017) $275

FY 2015/16 $276,891 $(318,849) $(56,716) $(98,674)

FY 2016/17 $352,972 $(329,029) $(58,470) $(34,527)

FY 2017/18 $316,581 $(344,061) $(60,279) $(87,760)

FY 2018/19 $339,587 $(354,985) $(62,147) $(77,545)

FY 2019/20 $361,218 $(366,243) $(64,074) $(69,100)

FY 2020/21 $383,626 $(377,846) $(66,063) $(60,283)

FY 2021/22 $407,642 $(389,805) $(68,117) $(50,280)

FY 2022/23 $433,371 $(402,132) $(70,236) $(38,997)

FY 2023/24 $460,924 $(414,840) $(72,424) $(26,339)

FY 2024/25 $478,117 $(427,939) $(74,682) $(24,504)

FY 2025/26 $495,137 $(441,445) $(77,014) $(23,322)

FY 2026/27 $510,003 $(427,939) $(79,421) $(24,788)

**FY 2038/39 $779,789 $(660,849) $(115,241) $3,700

4.2.3.1 Specific Assumptions 4.2.3.1.1 Impact of Capital Expenditure The impact of the recommended capital expenditure has been applied to the base P&L forecast (refer above) to demonstrate the impact of capital expenditure within an average occupancy model. 4.2.3.1.2 Depreciation Expense Depreciation has been calculated using 2013/14 budgeted expenses as a base and by adding in depreciation for new/replacement assets. Depreciation expenses for assets to be demolished have been deducted. For simplicity, all of the increases in depreciation expenses due to capex have been allocated to Depreciation - Buildings. The total depreciation expense has been indexed each year from 2014/15 by 2.5% to reflect the annual estimated increase due to revaluation.


4.2.3.2 Analysis 4.2.3.2.1 Consolidated Profit & Loss Based on average occupancy of new cabins, modeling suggests that there will still be insufficient profit to totally cover operational costs (including depreciation) for the precinct, however net loss declines from around $98k p.a. in 15/16 to making a small surplus of $3.7k in 38/39. The combined deficit over this period equals $824,755.

4.2.3.2.2 Net Cashflow From Operating Surplus

2013/14 - Based on use of all available net cashflow from operating profit and opening cash balance (cash on hand) rather than taking additional $200k loan approved by Council, modeling indicates no cashflow shortfall (however cash balance buffer for carryover to 2014/15 is less than $1k).

2014/15 - With requested capital expenditure of $460k and no other funding than cashflow from operating cash balance, modeling indicates a cashflow shortfall of $272k.

2015/16 - With requested capital expenditure of $444k, loan repayment of $65k and no other funding than cashflow from operating cash balance, modeling indicates a cashflow shortfall of $297k.



2018/19 onwards - With annual loan repayments of $65k and no other funding than cashflow from operating cash balance, modeling indicates capacity for annual expenditure to steadily increase to approximately 80% of the depreciation value for the given year.

4.2.3.2.3 Funds for capital expenditure For the four years following 2013/14, additional funding would be required for recommended capital expenditure. Cashflow balances from operations are positive from 2018/19 onwards making self-funding of additional capital expenditure feasible.


4.2.4 Summary Comparison of Consolidated P&L Position - ‘No New’ versus ‘New’ Capital Expenditure

The above comparison shows the impact of investing in income producing capital expenditure versus ‘doing nothing’, with the consolidated deficit following capital investment reducing over time and producing a surplus in 2038/39 and the deficit forecast with no capital expenditure growing over the same period. Over the forecast period, should council choose to ‘do nothing’, effectively restricting capital expenditure, it will produce a consolidated deficit of $1,518,477, which is $693,722 more than the consolidated deficit forecast ($824,755) should Council approve funding of the proposed new capital expenditure.

4.3 Discussion Whilst the Tourist Park is a profitable commercial entity, the annual net surplus it generates is no longer sufficient to offset the consolidated costs of the Sport & Recreation Park and Coulthard Reserve. On this basis, the operations of the NCPA are no longer self-sustaining and will require cuts to expenditure or subsidies in the form of funding from within Council’s primary operations.

It should be noted that the allocation of expenditure between the Tourist Park, Recreation Park and Reserve (particularly wage and contractor costs) has not been reviewed for some time, therefore the current cost structure (with significant deficits forecast for the Recreation Park in particular) may not accurately reflect the actual cost of delivering the community components of NCPA’s core business. A review of actual costs, via a zero based budgeting assessment, will provide greater clarity on operational expenses associated with each component of the precinct and a more accurate indication of the extent of the net deficit associated with delivering the community components of the NCPA precinct’s offerings.

($120,000)

($100,000)

($80,000)

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

Base - ExcludingNew CapitalExpenditure

Forecast -Including NewCapitalExpenditure


Despite the need to review the cost structures highlighted above, Council Officers acknowledge that the recording of a net deficit for both Coulthard Reserve and the Nuriootpa Sport & Recreation Park is consistent with the deficit based funding models in place for the remaining 11 recreation parks that Council funds (see Attachment B). Council’s Long Term Financial Plan (LTFP) provides for the absorption of net losses associated with the delivery of existing recreation park service levels for all Parks other than those managed and funded directly by the NCPA.

Whilst the operations of the community elements of the NCPA precinct are consistent with the non-self-sustaining nature of Council’s other recreation parks, the key difference between NCPA and the alternate parks is that it is the net deficit carried by the NCPA that balances out the financial benefits received by NCPA’s commercial operations as a result of its relationship with Council. The above point is important for NCPA in demonstrating competitive neutrality under National Competition Policy. The LGA released a National Competition Policy in 2013, the principles of which have been incorporated into the NCPA’s revised Charter. Following approval of the Charter, Council will be required to quantify the current level of support (or benefit) NCPA receive from Council that they do not pay for, therefore providing them with a competitive advantage over comparable businesses. The results of that assessment will further inform the level of net liability from the community components of the precinct that Council and NCPA feel is unacceptable for NCPA to be carrying under the current operating model. Given that the commercial operation of the Tourist Park is no longer able to offset the net losses recorded by the Recreation Park and Coulthard Reserve and the NCPA does not have an alternate revenue source to draw upon to offset these costs (ie rates revenue), the Authority requires consideration to be given to investment in income producing capital improvements to increase Tourist Park revenue in future years. Due to the length of time forecast to produce an adequate return on investment to address the consolidated net deficit (ie 2038/39), existing expenditure funding arrangements for the community based components of NCPA’s operations need to be reviewed to identify opportunities to offset the consolidated net deficit forecast. Possible options for addressing this issue are explored in Section 4 of this Business Case and may include absorption of the net deficit within Council’s overall operations or ongoing council contribution/allocation to NPCA of annual operating budget for management of the sporting and recreation reserve and Coulthard Reserve.

3.6 Recommendations

3.6.1 It is recommended that Council approves the proposed capital expenditure set out in NCPA’s Asset Management Plan subject to:

Annual review of capital expenditure recommendations and NCPA financial position by NCPA and Council Officers;

Full review of the NCPA Asset Management Plan every two years to identify future asset renewal, replacement and upgrade requirements;

The achievement of 60% occupancy of available cabin stock prior to commencing additional proposed replacement program; and

The conditions identified in Council’s AMWP assessment of the proposed works being met.


5. Funding Models 5.1 Assumptions 5.1.1 Grant funding For the purposes of modeling, it is assumed that no government grants will be achieved throughout the period of the development. Grant funding will be pursued if opportunities arise with any grant funds received strengthening the return on investment. 5.1.2 Occupancy The Average occupancy scenario modeled above has been used as the base for modeling the various funding options.

5.1.3 Opening Cash balance

2013/14 opening cash balance reflects actual closing balance 30/6/2013.

Based on NCPA’s decision to use all available cashflow to fund capital expenditure in 2013/14 and not take up the additional $200,000 loan approved by Council, the cash balance buffer for 2013/14 is reduced to $990. This results in the opening cash balance for 2014/15 being only $990 and the subsequent requirement to generate the $100,000 cash buffer being transferred to 2014/15 borrowings.

From 2015/16 onwards, an estimate of $100k has been used as a minimum 'buffer' maintained as working capital.

5.2 Options for Funding the Capital Expenditure In addition to the funding options below, a number of alternate funding options were also explored in the preparation of this business case, including council forgiving of NCPA’s existing loan and Leasing of Cabins. Based on an analysis of these funding and resource options, Council Officers have determined that the options presented below are the only sustainable options for both Council and the NCPA. 5.2.1 OPTION 1 - NO NEW LOANS (Cash from NCPA Net Operating Cash Balance Only and Repayment of Existing Loans from Council - Interest Charged at LGFA Cash Advance Debenture Rate – Refer Attachment F) 5.2.1.1 Assumptions

Base Profit & Loss: Forecast base without impact of any capital expenditure used.

Capital Expenditure: Restrict capital expenditure to maximum available based on forecast profit & loss and resultant net cashflow i.e. Restrict funding to self-sustaining.

Loan Interest & Repayments: Current balance $650k. Interest charged at 4.75% (current debenture rate). Loan repayments are on current balance, paid off over 10 years starting from 2015/16.


5.2.1.2 Financial analysis 5.2.1.2.1 Funds Available for Capital Expenditure

The forecast cash available for capital expenditure is sufficient in 2013-14 ($434,285 – partly due

to the carrying forward of a less than $1000 cash buffer as a result of NCPA decision not to take up

additional $200k loan in 2013/14), however it falls to more modest levels between 2014-15 and

2017/18 (between $148k and $207k), which is insufficient to fund the full scope of proposed

capital expenditure.

The total shortfall in capital expenditure funding between 2014/15 and 2017/18 is $1,144,377.

5.2.1.3 Discussion

Whilst the model illustrates scope to deliver on a portion of the proposed capital expenditure

between 2014/15 and 2017/18, the Asset Management Plan will need to be revisited to further distil,

prioritise and re-phase capital expenditure over a much longer period should Option 1 be adopted.

This ‘continue as is with no future investment’ approach may result in:

Further deterioration of already ageing infrastructure (and increased safety and financial risks)

Potential loss of facilities 4 star AAA rating and 3 star accommodation rating

Potential community concern regarding lack of support for community built asset

Reduction in visitation/occupancy levels for Tourist Park and resultant reduction in revenue

Devaluation of a significant Council asset

Potential for failure to meet yet to be defined service level commitments.

5.2.2 OPTION 2 – NEW LOAN & FORECAST CAPITAL EXPENDITURE BEYOND 2017/18 (Cash from NCPA Net Operating Cash Balance and LGFA Cash Advance Debenture Loan – Refer Attachment G)

5.2.2.1 Specific Assumptions

Impact of Capital Expenditure: Model assumes that new cabins will achieve average occupancy. The forecast profit & loss and net cashflow figures from that model have been used as the base for assessing funding options.

Capital Expenditure: Figures for 2013-18 are as per Asset Management Plan. For the five years between 2018/19 and 2022-23, an estimate of $50k p.a. has been used to fund road works and minor replacement/renewal only. In 2023/24 $150,000 has been forecast (based on surplus cashflow) to fund additional road works or minor replacement/renewal only. From 2024/25 approximately 80% of the depreciation value for the given year has been phased to cover replacement and renewal of the existing asset pool and the upgrading or introduction of new assets.


Loan Interest & Repayments: a) Current: Balance $650k. Interest charged at 4.75% (current debenture rate). Loan repayments

are on current balance, paid off over 10 years starting from 2015/16. b) Additional: LGFA Cash Advance Debenture Loan is taken out to cover cashflow shortfall (after

capital expenditure) between 2014/15 and 2017/18, with funds only being drawn down as required. The forecast includes no repayments of principle over the first four years of the loan, whilst additional amounts are being drawn down. Loan interest is charged at 4.75% (current cash advance debenture rate) with interest charged each year added to the NCPA’s operating expenditure for that year. Principle payments will commence in 2018/19 and conclude in 2023/24. Loan repayments are on cumulative new loan balance and repayments based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.

5.2.2.2 Financial Analysis

The following analysis reflects new borrowings only, it does not include NCPA’s existing loan

borrowings from Council as provision is already made within the base financial model for the servicing

of the existing loan facility.

The total cash shortfall between 2014/15 and 2018/19 is $1,115,117.

The total cost of the loan over the lend period equals $1,412,795 (principle and interest).

The loan will be taken over 10 years, with first draw down in 2014/15 and final repayment in

2023/24.

Over the life of the loan, total interest paid will be $297,678.

Capital expenditure has been phased within the financial model for Option 2 from 2018/19. The

addition of this capital expenditure, which reduces NCPAs net cashflow from 2018/19 and

resulting capacity to increase principle repayments, will result in only an additional $25,969

interest being applied to the loan compared to Funding Option 3.

5.2.2.3 Discussion The NCPA Board of management has unanimously provided in principle support for the pursuit of loan funding to finance the implementation of the proposed capital expenditure. Of particular note, previous discomfort expressed by board members at the prospect of incurring debt to finance capital expenditure has been replaced by an acceptance of the fact that the scale of capital works proposed cannot be supported by the Authority’s forecast cash and operating position. The flexibility of the LGFA’s Cash Advance Debenture Loan Facility, in terms of being able to draw down funds only as required, has afforded the Authority with greater confidence in their ability to adjust loan borrowings to a more conservative figure should the park perform better than the average occupancy forecast detailed in this business case. Option 2 is the NCPA Board of management’s preferred funding option, based on the provision of some funds for the first five years beyond 2018/19 whilst also servicing the NCPA’s loans, to support


recurrent capital expenditure for, at minimum, road works and minor replacement and renewal across the precinct. It is acknowledged that this short term restriction of capital expenditure phasing will not meet full asset replacement and renewal requirements over the five year period. As a result, a comprehensive asset maintenance plan will be required to maintain existing stock. It is expected that Council will be in a position to provide this maintenance plan in 2014/15. In addition, it should be noted that the financial modelling used to prepare this business case has built in a healthy cash buffer of $100,000 per annum which can be used to supplement any urgent replacement and renewal requirements and NCPA will have capacity to service a new loan for any new or upgrade capital expenditure both during the repayment period of the existing loan and in later years. From 2024/25 approximately 80% of the depreciation value for the given year has been phased to cover replacement and renewal of the existing asset pool and the upgrading or introduction of new assets, which is consistent with a sustainable asset management model. As per the above analysis, uptake of this option will result in the addition of $25k to the loan when compared with Funding Option 3. 5.2.3 OPTION 3 - NEW LOAN & NO FORECAST CAPITAL EXPENDITURE BEYOND 2017/18 (Cash from NCPA Net Operating Cash Balance and LGFA Cash Advance Debenture Loan – Refer Attachment H)


Impact of Capital Expenditure: Model used for capital expenditure funding options is that new cabins will achieve average occupancy. The forecast profit & loss and net cashflow figures from that model have been used as the base for assessing funding options.

Capital Expenditure: Figures for 2013-18 are as per Asset Management Plan. The forecast capital expenditure beyond 2018/19 has been removed to determine its impact on the sustainability of the funding model and NCPA’s ability to service its existing debt.

Loan Interest & Repayments: (a) Current: Balance $650k. Interest charged at 4.75% (current debenture rate). Loan repayments are on current balance, paid off over 10 years starting from 2015/16. (b) Additional: LGFA Cash Advance Debenture Loan is taken out to cover cashflow shortfall (after

capital expenditure) between 2014/15 and 2017/18, with funds only being drawn down as required. The forecast includes no repayments of principle over the first four years of the loan, whilst additional amounts are being drawn down. Loan interest is charged at 4.75% (current cash advance debenture rate) with interest charged each year added to the NCPA’s operating expenditure for that year. Principle payments will commence in 2018/19 and conclude in 2022/23. Loan repayments are on cumulative new loan balance and repayments based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.



The total cash shortfall between 2014/15 and 2018/19 is $1,115,117.

The total cost of the loan over the lend period equals $1,386,826 (principle and interest) – These

figures are reflective of new borrowings only, they do not include NCPA’s existing loan borrowings

from Council.

The loan will be taken over 9 years, with first draw down in 2014/15 and final repayment in

2022/23.

Over the life of the loan, total interest paid will be $271,709 ($25,969 less interest than Funding

Option 2).

5.2.3.3 Discussion As per Option 2, the NCPA Board of management has unanimously provided in principle support for the pursuit of loan funding to finance the implementation of the proposed capital expenditure. Of particular note, previous discomfort expressed by board members at the prospect of incurring debt to finance capital expenditure has been replaced by an acceptance of the fact that the scale of capital works proposed cannot be supported by the Authority’s forecast cash and operating position. The flexibility of the LGFA’s Cash Advance Debenture Loan Facility, in terms of being able to draw down funds only as required, has afforded the Authority with greater confidence in their ability to adjust loan borrowings to a more conservative figure should the park perform better than the average occupancy forecast detailed in this business case. The payment of higher principle repayments over the life of the loan within Option 3 (due to the stripping out of forecasted capital expenditure beyond 2018/19) will result in the saving of $25k in interest but will not materially improve the net cashflow balance compared to Option 2. In terms of future capital investment, the model shows the closing cash balance in 2022/23 as $274k

and increasing net cash balance in future years. This will afford NCPA with an opportunity to start

preparing budget bids to re-commence capital expenditure in accordance with its asset management

plan. The 5-year hiatus in capital expenditure (and resulting reduction in upgrading/renewal of the

asset pool), is not considered a realistic or sustainable option given the age of the existing asset pool.

In summary, the NCPA will be able to achieve minor interest savings but not generate a return on

investment and subsequent healthy closing cash balance any earlier than Option 2, by servicing

accumulated debt at a higher rate from 2018/19 and restricting capital expenditure between 2018/19

and 2022/23.

Note – whilst the financial modelling for both Options 2 and 3 show a sustainable cash position for the

BVTP, they do not address the consolidated net deficit forecasted for the NCPA over the period. As a


result, consideration should also be given to the following options for addressing the ongoing funding

of the community based components of NCPA’s operations.

5.2.4 OPTION 4 - COUNCIL CONTRIBUTION OR FULL ALLOCATION OF ANNUAL OPERATING BUDGET FOR MANAGEMENT OF SPORTING & RECREATION RESERVE AND COULTHARD RESERVE


Current annual net operating cost to NCPA of maintaining Sporting & Recreation and Coulthard Reserves is around $355,000p.a. (Including depreciation).

Council could allocate the full or a portion of the forecast net operating cost to NCPA each year (as a grant) to address the consolidated net deficit and allow the net cashflow from operating for BVTP to be reinvested back into NCPA (including BVTP) assets and infrastructure.

Note – the impact of increased revenue for the operation of NCPA’s community based components, via an annual Council contribution, and subsequent increase in operational net cashflow balance, has not been factored into the funding options analysed above.


Significant funds would be required from Council to fund the full net cost of operations of Nuriootpa Sport & Recreation Park and Coulthard Reserve (between $355k in 2013/14 up to $665k in 2034/35).

Should Council opt to make an annual contribution to NCPA, a suitable figure will need to be determined based on either operational equity with other Recreation Parks within the Council area (ie on a like for like basis) or based on some other agreed formula.

5.2.4.3 Discussion Regardless of the value of funds allocated to NCPA under this option, Council would have to redirect funds from delivery of existing services, defer alternate capital expenditure or increase its debt levels, which will impact on the Long Term Financial Plan (LTFP) and Council’s financial sustainability ratios. Both Council and NCPA would also need to be cognisant of the impact of an annual contribution to operating costs on the competitive neutrality of NCPA’s commercial operations. In addition, whilst the consolidated net deficit for the precinct would be addressed under this model, even if Council allocated the full net cost of operations of the community components of the precinct, NCPA would still require loan borrowings to fund the planned level of capital expenditure. 5.1.5 OPTION 5 – ABSORPTION OF NCPA’s NET DEFICIT WITHIN COUNCIL’S OVERALL OPERATIONS 5.2.5.1 Specific Assumptions

The NCPA’s forecast annual net operating deficit could be absorbed within Council’s overall operations (as per its broader recreation park management model) to address the consolidated net loss.

Under this model, there would not be a tangible transfer of grant funds to the park, instead the deficit would be absorbed upon consolidation of the park’s financial figures into Council’s overarching financial figures.


Note – the proposed absorption of NCPA’s annual net operating deficit would not change the cash position reflected within the funding models presented.


Based on average occupancy of new cabins, modeling indicates that the NCPA will record a consolidated net deficit from 2015-16 onwards. The size of this deficit fluctuates between the proposed funding models depending on loan and interest variables; however it is never more than $100k p.a. and reduces to below $50k from 2026/27.

5.2.5.3 Discussion Whilst this model requires less of a financial commitment from Council than Option 4, Council would still have to redirect funds from delivery of existing services, defer alternate capital expenditure or increase its debt levels, to absorb the consolidated deficit. However, the impact on the Long Term Financial Plan (LTFP) and Council’s financial sustainability ratios will be less than Option 4. Further, whilst this option will mitigate NCPA’s liability for the consolidated deficit forecast per annum, it will not improve their overall cash position or provide increased capacity for revenue generated by the BVTP to be redirected back in to the BVTP or to fund capital improvements across the broader NPCA precinct.

5.3 Recommendations

5.3.1 It is recommended that Council approves funding Option 2 – New Loan and Additional Capital

Expenditure Forecast Beyond 2017/18 and Option 5 – Absorption of NCPA’s Net Deficit Within Council’s Overall Operations, with the following conditions of approval to ensure that maximum return from Council’s investment is received:

NCPA is to take out an LGFA Cash Advance Debenture Loan to cover cashflow shortfall (after capital expenditure and additional interest) between 2014/15 and 2017/18, with funds only being drawn down as required and as signed off by the Director, Corporate and Community Services. Loan interest charged each year is added to the NCPA’s operating expenditure for that year. Principle repayments are to commence in 2018/19 and conclude in 2022/23. Loan repayments are on cumulative new loan balance and based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.

A new project governance structure is introduced, in the form of a Project Team reporting to the Board of Management (Senior Council Officer to be included on Project Team) to oversee all capital works. The Project Team is to conduct an annual review of the proposed capital works program, monitor capital expenditure against the approved budget and oversee the carrying out of capital works from a project management perspective to ensure attainment of minimum occupancy levels during progression through the investment horizon.

The NCPA Chief Executive Officer is to meet with the Barossa Valley Tourist Park Operations Managers and Business Manager on a regular basis to provide line


management support, to clarify the Board’s expectations and strategic direction, and to provide advice and assistance on any issues arising within the day to day operations of the precinct.

The Business Manager is to develop and implement a marketing plan for the park (to be approved by Council) to achieve the following outcomes: o A review and upgrade of the park website; o Establishment of a strategy to increase group bookings & market packages of offerings

from the entire precinct (eg weddings, sporting events, recreation, community, church etc.); and

o Use of third party booking sites such as Wotif and Last Minute to increase occupancy during off peak periods.

A competitor pricing review is to be undertaken by NCPA to ensure that prices are in line with competitors and profitability is maximized.

With assistance from Council staff, a full risk assessment is completed for NCPA operations and policies and procedures reviewed to ensure risks are managed.

The NCPA Board is to consider reviewing the Park Managers salary package on expiry of their contract in October 2014 to provide higher base salary but lower (or capped) commission to reflect greater return on investment for Council from planned capital expenditure and recognise fringe benefits associated with the role.


6. Governance Models

6.1 Future Ownership of BVTP During the preparation of this business case, consideration was given to alternate options to Council ownership of the BVTP, including ownership by an incorporated body representing the Nuriootpa Community or a private operator. At its December 2013 Workshop, Council discussed the ongoing ownership (or otherwise) by Council of BVTP. Discussion noted anecdotal feedback regarding community sentiment for the asset to be retained by Council and the NCPA Board of Management’s preference for the retention of the BVTP. Whilst no formal decision has been made by Council regarding future ownership, based on clear stakeholder support for the retention of the BVTP by Council and the likelihood of strong opposition to the sale of the BVTP to a private operator, it has been assumed that Elected Members will endorse ongoing Council ownership of BVTP for the purpose of determining future governance models.

6.2 Options for Future Governance/Management

Assuming that Council resolves that it wants to continue to own the Tourist Park; the key question impacting on future governance and management arrangements is ‘how does it want to run the Tourist Park, Sporting and Recreation Reserve and Coulthard Reserve?’ An analysis of future governance/management options is provided below. 6.2.1 OPTION 1 - STATUS QUO WITH CONDITIONAL CHANGES 6.2.1.1 Assumptions Under this model, the NCPA will remain a wholly owned subsidiary under s42 of the Local Government Act with conditional changes. 6.2.1.2 Analysis A number of risk management challenges have been identified within the current operating model including policy, procedural and general governance compliance, ICAC implications, WHS and Injury Management, volunteer management, competitive neutrality, succession planning and change management (see Attachment I). Council officers are currently working with the NCPA executive to address identified challenges. A key strategy being implemented to improve the Authority’s capacity to respond to these challenges is the recruitment of a part-time Business Manager (reporting to the CEO) to develop and implement business systems to address:

Compliance with legislation (e.g. Residential Parks Act, State Records Act, Local Government Act, WHS Act etc.).

Finance, administration and reporting – transition to online management of payroll, financial accounts, management reports for NCPA Executive Committee etc.


Management of leases.

Records management.

Marketing and business development. The additional wage cost for this role has been included within Business Case financial modelling.

Council has also agreed to assist in the desktop audit of legislative compliance by NCPA by providing a checklist of requirements against which NCPA can assess its compliance (including procurement / budget approval process etc.). It is anticipated that the new NCPA Business Manager will conduct an audit to determine the Authority’s current level of compliance, gaps and work required to become compliant (i.e. updating or development of policies, procedures and processes). Council will assist in this process by providing relevant Council documents and subject matter expertise as a guide. The NCPA Executive Committee plays a large role in the commercial management of BVTP under the existing model, with the group tasked with planning and management of marketing, business operations and setting of strategy. This heavy work load, in terms of operational input, is not considered sustainable. Further to this, the NCPA recently resolved to accept a new Charter which introduces increased standards of governance, the implementation of which will require significant reform in the operation of the Authority. 6.2.1.3 Discussion The risk management challenges identified within the current operating model are shared with Council and are therefore not considered acceptable. In addition, the level of reform required as a result of the adoption of the NCPA’s new Charter will require the transition of this notional commitment to change to the actual implementation of new systems of governance. On this basis, the only way that the current operating model can be feasibly maintained is subject to the following conditions:

The NCPA ensures full implementation and compliance with its revised Charter;

The NCPA Board of Management undertakes training, to be provided by Council’s legal advisers at NCPA’s cost, regarding the impact of ICAC laws on the operations of the Authority;

That following the September 2014 election of board members, a full induction workshop is convened with members of the newly formed board, covering Governance, Board Member roles and responsibilities, WHS, Procurement, Financial Management and Asset Management requirements associated with the role.

The NCPA Business Manager must address identified deficits and risks in legislative compliance through the introduction of new governance systems and operational policies and procedures;

A new project governance structure is introduced, in the form of a Project Team reporting to the Board of Management (Senior Council Officer to be included on Project Team) to oversee all capital works. The Project Team is to conduct an annual review of the proposed capital works program, monitor capital expenditure against the approved budget and oversee the carrying out of capital works from a project management perspective;

With assistance from Council staff, a full risk assessment is completed for NCPA operations and policies and procedures reviewed to ensure risks are managed;

The Committee of Management is to maintain its Audit Committee on an ongoing basis; and

The NCPA Chief Executive Officer is to meet with the Barossa Valley Tourist Park Operations Managers and Business Manager on a regular basis to provide line management support, to clarify


the Board’s expectations and strategic direction, and to provide advice and assistance on any issues arising within the day to day operations of the precinct.

6.2.2 OPTION 2 - ASSIST IN THE CREATION OF AN INDEPENDENT INCORPORATED BODY THAT

MANAGES THE NURIOOTPA CENTENNIAL PARK PRECINCT UNDER ONE HEAD LEASE WITH COUNCIL

6.2.2.1 Assumptions Under this model the s42 subsidiary will be dissolved and Council will assist the existing board of management to transition to an independent incorporated body that manages the existing precinct, inclusive of the BVTP, Coulthard Reserve and Nuriootpa Sport & Recreation Reserve, under a single lease agreement. 6.2.2.2 Analysis As per recent discussions arising from the Redefining Community Committees Project regarding the pros and cons of asset management via an incorporated body, there are a number of benefits and opportunities for the incorporated body managing the assets such as:

No obligations under the Local Government Act / Procedures at Meetings Regulations (in terms of minutes, meetings, elections etc.).

Not directly accountable to Council's policies, processes, general governance requirements.

Opportunity for groups to self-determine their strategic direction, funding priorities etc

WHS - incorporated body only has to meet legislative standards - not standards for self-insurers, i.e. bar is a little lower.

Full control over financial management, budgeting, purchasing and procurement.

Can public fundraise and expend funds at own discretion within the bounds of the legal agreement between Council and the incorporated body.

There are also a number of challenges and implementation considerations for both Council and the incorporated body, including:

All WHS, financial and legislative requirements relating to the operation of the precinct are the responsibility of the new body. Individual members ultimately bear the risk of and responsibility for financial and administrative management including responsibility for any future liabilities or uninsured risks.

The model requires existing volunteers to be willing to continue in current officeholder positions with additional responsibility or recruit new volunteers to the management body.

The new body will be required to abide by the Associations Incorporations Act and various transparency requirements (e.g. constitution, AGM, elections of officers etc.).

The incorporated body will not be indemnified by Council for good faith actions of committee members so must pay for own public liability insurance.

The new body will be a 'Person Conducting Business or Undertaking' (PCBU) under the WHS legislation and therefore must exercise due diligence to ensure it meets WHS obligations.

Should the new body fail to financially sustain the entire precinct, Council will be at risk of both reputational loss in terms of the failure to meet community expectations for sporting and recreation park service levels and financial risk to address any deficit in operational costs not met by the incorporated body.


Council will still retain residual risk associated with asset management from a maintenance and compliance point of view as the assets to be managed by the incorporated body will still remain on Council land.

Transferring ongoing management to an incorporated body will not address identified consolidated net operating deficits without a parallel change in the current funding model (ie Council to contribute towards operational costs of community based components of the precinct).

6.2.2.3 Discussion Should the Section 42 Subsidiary be dissolved in favour of transitioning to an incorporated body that manages the Nuriootpa Centennial Park Precinct under a single lease agreement with Council, Council will still ultimately retain a significant level of residual risk particularly given the existing challenges in the Authority’s governance capability. Whilst the burden of governance requirements associated with being a subsidiary of Council may be mitigated by forming an incorporated body, it is these very requirements that provide Council with safeguards to ensure that this significant body of assets, including a large commercial enterprise, is being managed in accordance with both legislative standards and community expectations. Of particular note, feedback from the NCPA Executive is that there is little appetite within the existing group to pursue transition to an incorporated body to manage the precinct independently of Council. 6.2.3 OPTION 3 - DIRECT COUNCIL MANAGEMENT OF SPORTING & RECREATION RESERVE AND

COULTHARD RESERVE AND ASSIST IN THE CREATION OF AN INDEPENDENT INCORPORATED BODY TO MANAGE BVTP ONLY

6.2.3.1 Assumptions

Under this model the s42 subsidiary will be dissolved, Council will directly manage the Sporting and Recreation Reserve and Coulthard Reserve, and the existing board of management will be assisted to transition to an independent incorporated body to manage BVTP under a lease agreement.

6.2.3.2 Analysis Direct management of the Sporting and Recreation Reserve and Coulthard Reserve by Council will facilitate the management and use of these assets in accordance with Council’s governance, financial and WHS systems, effectively mitigating many of the risks associated with the precinct’s existing operation. It will also facilitate financial independence for the BVTP, mitigating the existing impact of the community components of the precinct on the consolidated net position (ie deficit) and freeing up the BVTP’s operating cash balance for potential reinvestment back into the Park (subject to lease fees and conditions). It is difficult to assess the impact of direct management on the operating costs of the precinct, due to the fact that the current cost structure (with significant deficits forecast for the Recreation Park in particular) may not accurately reflect the actual cost of delivering the community components of NCPA’s core business (see Section 3 of for further detail) and the impact of volunteer effort has not been quantified. Despite this, it is anticipated that direct management may result in increased operational costs to Council due to the removal of community management and subsequent volunteer contribution to and fundraising efforts for the maintenance of the assets.


The transition of the existing NCPA Board of Management to an incorporated body to manage BVTP will be subject to the same benefits/opportunities and challenges highlighted in option 2, however they will solely relate to the operation of BVTP. 6.2.3.3 Discussion Should the Section 42 Subsidiary be dissolved in favour of direct management of the community components of the precinct by Council and transitioning the existing Board of Management to an incorporated body that manages the BVTP under a lease agreement, Council will significantly reduce the level of residual risk it is exposed to despite the existing challenges in the Authority’s governance capability. A particularly challenging consequence of the determination to directly management the community components of the precinct with and incorporated body managing the BVTP will be a potential of loss of connection of the existing volunteer Board of Management with the operation of the community based assets and a broader loss of Council connection to the community using those assets. It is anticipated that there will be significant community concern over such large scale changes to this key community asset, a perceived loss of connection and lack of continuity with the history of the precinct and culture of the broader township. Whilst there may be some governance benefits associated with transition of the existing Board of Management to an incorporated body to manage BVTP under a lease agreement, it is unlikely that the incorporated body will be interested in managing the BVTP independently of the remainder of the precinct due to the fact that the BVTP has always been run as a commercial revenue raising enterprise to help fund the operations of the broader precinct. As stated under option 2, feedback from the NCPA Executive is that there is little appetite within the existing group to pursue transition to an incorporated body to manage the precinct (or parts thereof) independently of Council. 6.2.4 OPTION 4 - CREATE AN INFORMAL NURIOOTPA CENTENNIAL PARK ADVISORY BODY AND

DIRECT COUNCIL MANAGEMENT OF THE ENTIRE PRECINCT (INCLUDING FURTHER OPTION OF POTENTIALLY LEASING THE TOURIST PARK TO A PRIVATE OPERATOR)

6.2.4.1 Assumptions Under this model the s42 subsidiary will be dissolved, Council will directly manage the Sporting and Recreation Reserve, Coulthard Reserve and BVTP, and the existing board of management will be assisted to transition to an informal advisory body with no delegated authority. Under direct management arrangements, Council may elect to lease the BVTP to a private operator. 6.2.4.2 Analysis Direct management of the entire Nuriootpa Centennial Park precinct will facilitate the management and use of these assets in accordance with Council’s governance, financial and WHS systems, effectively mitigating many of the risks associated with the precinct’s existing operation and providing opportunities for the identification of financial savings and efficiencies. The additional option of


leasing the BVTP to a private operator may also facilitate the transfer of financial risk associated with the commercial operations of BVTP to the private operator whilst guaranteeing the collection of annual lease fees to support Council’s general revenue collection. As per the analysis in Option 3, It is difficult to assess the impact of direct management on the operating costs of the precinct, due to the fact that the current cost structure (with significant deficits forecast for the Recreation Park in particular) may not accurately reflect the actual cost of delivering the community components of NCPA’s core business (see Section 3 of for further detail) and the impact of volunteer effort has not been quantified. Despite this, it is anticipated that direct management may result in increased operational costs to Council (for both the community components and BVTP) due to the removal of community management and subsequent volunteer contribution to and fundraising efforts for the maintenance of the assets. 6.2.4.3 Discussion Should the Section 42 Subsidiary be dissolved in favour of direct management of the entire precinct by Council and transitioning the existing Board of Management to an informal advisory body, Council will reduce its exposure to residual risk associated with another entity managing a community asset on its behalf. As per Option 3, a particularly challenging consequence of the determination to directly management the entire precinct will be a potential of loss of connection of the existing volunteer Board of Management with the operation of those assets and a broader loss of Council connection to the community using those assets. Whilst the retention of the board via an informal advisory body would mitigate this risk to some degree, the significant reduction in management authority of this group will likely result in a sense of lack of ownership and ability to directly influence the direction of the precinct. It should also be noted that feedback from the NCPA Executive is that there is little appetite within the existing group to transition to an incorporated body or as extension of that, to continue on in an informal capacity. Due to the geographic layout of the existing precinct, with open access between the sporting and recreation reserves and the BVTP, in addition to the existing sense of community ownership of the BVTP, it is anticipated that the leasing of the tourist park to a private operator will be met with significant community concern. Given that the BVTP has always been run as a commercial revenue raising enterprise to fund the operations of the sporting and community groups, these groups will likely express concern that existing service levels and future needs may no longer be met by Council under an alternate funding model. As per Option 3, it is also anticipated that there will be overall significant community concern regarding such large scale changes to this key community asset, a perceived loss of connection and lack of continuity with the history of the precinct and culture of the broader township.

6.3 Recommendations

6.3.1 It is recommended that Council approve the ongoing retention of Council ownership of the Barossa Valley Tourist Park.


6.3.2 It is recommended that Council approve governance Option 1, with the NCPA remaining a wholly owned subsidiary under s42 of the Local Government Act and continuing to manage and maintain the entire Nuriootpa Centennial Park precinct subject to the following conditions:

The NCPA is to ensure full implementation and compliance with its revised Charter.

The NCPA Board of Management is to undertake training, to be provided by Council’s legal advisers at NCPA cost, regarding the legal compliance requirements of a Section 42 Subsidiary of Council and the impact of ICAC laws on the operations of the Authority.

Following the September 2014 election of board members, a full induction workshop is to be convened with members of the newly formed board, covering Governance, Board Member roles and responsibilities, WHS, Procurement, Financial Management and Asset Management requirements associated with the role. An ongoing induction program is to be implemented for all new members thereafter.

The NCPA Business Manager is to address identified deficits and risks in legislative compliance through the introduction of new governance systems and operational policies and procedures.

With assistance from Council staff, a full risk assessment is to be completed for NCPA operations and policies and procedures reviewed to ensure risks are managed.

The Board of Management is to maintain its Audit Committee on an ongoing basis.

A new project governance structure is to be introduced, in the form of a Project Team reporting to the Board of Management (Senior Council Officer to be included on Project Team) to oversee all capital works. The Project Team is to conduct an annual review of the proposed capital works program, monitor capital expenditure against the approved budget and oversee the carrying out of capital works from a project management perspective.


On an annual basis, the Chair of the NCPA Board of Management is to submit Audited Financial Statements by the 15th of August and a full Annual Report by the 30th of September to Council’s Audit Committee.

The Chair of the NCPA Board of Management is to provide a quarterly report (by the 15th of Oct, Jan, April and July each year) to Council on progress towards implementation of Council’s conditions of approval (future governance/management), the achievement of project milestones in relation to approved capital expenditure, and the financial status of the capital works program.


SWOT Analysis for current NCPA Model: Attachment A Strengths:

NCPA manage the sport / recreation / community facilities with significant input / engagement & financial contribution from user groups.

BVTP produces operating cash surplus which is allocated to maintenance & operation of sport / recreation / community facilities.

Board of management has retained long term members; including their knowledge and ongoing commitment.

Park Managers are operating the park well, are committed to improving operations and increasing visitor numbers.

BVTP has retained overall 4 star AAA rating for facilities.

Co-location of BVTP, sporting & recreation reserves (including function centre) & Coulthard Reserve (including Bush Chapel, adjacent Barossa Bushgardens). Assists in attracting weddings, large (corporate, private and community) functions, regional sporting events, large group accommodation etc.

Barossa brand profile.

BVTP one of only 2 large Tourist Parks in the Barossa.

BVTP approved as a Visitor Information Outlet.

Weaknesses:

Ageing assets and infrastructure

Lack of modern recreational facilities

Insufficient forecast net operating cashflow to fund required current and future capital expenditure.

Majority of board members represents precinct user groups – do not necessarily have required business skills and experience.

Currently have 17 permanent residents on sites that could be good cabin sites for greater return (some only paying $95 per week (but not costing us much) – could be getting greater return (but would have costs associated).

Opportunities:

Leverage the value of the Barossa brand and the current promotional focus from the SA Tourism Commission.

Increase BVTP brand and product awareness:

o Targeted promotion to attract sporting, church and community group events / meetings / conferences etc.

o Website upgrades and search engine optimization.

o Use of social media.

Replace old cabins with more modern units to increase occupancy

Increase pricing to be more in line with competitors and therefore increase profitability

Replace permanent sites with higher return cabin sites.

Threats:

Further degeneration of existing assets and infrastructure resulting in:

o increased WHS and Public risk o decreased AAA Tourism rating and resultant

decrease in occupancy and profitability o decreased return on investment o operating cash surplus from BVTP no longer

sufficient to cover operating costs of sporting and Coulthard reserves

If infrastructure improvements outlined in AAA rating report are not actioned then risk having star ratings drop (& marketability / competitiveness of business also drop).

Volunteer Board of Management may resign (due to frustration).

General downturn in domestic tourism due to high Australian dollar (international travel now less expensive for Australians).


Approved Operational Budget 2013/14 – Recreation Parks (Including Caravan Parks) Attachment B Notes:

Expenses for Nuriootpa include costs for Caravan Park, Recreation Park and Coulthard Reserve

Figures for Lyndoch are a combination of the budget managed by the Lyndoch & Districts Community Committee (s41) (excluding cost of printing for town newsletter) and budget managed by Council Manager Operations (Works & Engineering)

Angas Curdnatta Lyndoch (2)

Moculta Nuriootpa (1)

Stockwell Murray Talunga Tanunda Williamstown Springton

Revenue:

Caravan Park 0 0 0 0 1,477,820 0 25,800 55,573 0 128,950 0

Recreation Park Fees 5,500 7,000 2,343 3,000 16,560 5,000 500 15,500 6,000 6,500 0

Other Income 354 1,200 1,160 6,225 188 0

Swimming Pool 0 0 0 0 0 0 0 0 0 10,000 0

Community Hall Fees 6,800 0 0

Total Revenue 5,854 7,000 3,543 3,000 1,495,540 5,000 26,300 71,073 19,025 145,638 0

Expenses

Wages (including parks, Depot, pool staff etc.) / Commission / Contract Caretaker fees 24,375 16,420 8,123 9,919 493,022 22,500 10,000 41,241 15,460 115,247 2,708

Workers Compensation Insurance 1,047 0 24,800 0 0 0 834 957

Contractors 17,350 5,850 10,616 8,010 207,004 16,140 7,060 6,650 16,200 22,250 6,258

Materials (Direct Purchase) 3,000 4,050 4,024 9,300 78,980 7,450 3,770 16,805 5,600 25,700

Energy costs (Electricity & Gas) 4,597 4,929 9,353 2,117 133,060 7,069 8,009 34,832 17,395 54,143

Water 13,556 1,622 10,903 22,669 48,950 11,469 7,519 17,972 20,098 16,477 3,552

Banking Charges 0 0 9,000 0 0 0 0 687

Interest Expenses 0 0 55,000 0 0 0 0 0

Insurance 11,608 5,150 8,820 4,690 43,360 5,550 4,040 9,820 16,310 18,610 3,720

Advertising & Printing 0 200 60 41,400 200 0 0 200 1,700

Communication Costs (phone, internet) 520 23 16,050 700 0 648 520 1,995

Statutory Expenses (Vehicle registration, emergency services levy etc) 150 188 5,180 363 53 197 237 5,183

Other Misc. Expenses (subscriptions, memberships)

0 21,020 0 0 0 2,165


Total Expenses (Excluding Depreciation & Internal Allocation) 75,533 38,541 52,189 56,976 1,176,826 71,441 40,451 128,165 92,854 265,114 16,238

Gross Profit (Loss) (69,679) (31,541) (48,646) (53,976) 318,714 (66,441) (14,151) (57,092) (73,829) (119,476) (16,238)

Depreciation - Caravan Park 0 0 0 0 143,350 0 3,470 69,980 0 23,750 0

Depreciation - Recreation Park 75,009 22,003 58,057 18,200 107,500 24,794 8,800 116,377 45,925 4,560

Depreciation - Coulthard 0 0 0 0 5,590 0 0 0 0 0

Depreciation - Pool 0 0 0 0 0 0 0 0 0 17,360

Internal Allocations 29,118 3,729 13,621 3,460 18,549 3,460 7,363 7,347 19,473 14,588 4,162

Net Profit (Loss) (173,806) (57,273) (120,324) (75,636) 43,725 (94,695) (33,784) (134,419) (209,679) (221,099) (24,960)

June 16, 2014 of 59

Proposed Capital Expenditure Attachment C

New/Upgraded Assets 2013/14 2014/15 2015/16 2016/17 2017/18 Total 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26

Cabins:

Install 6 new 2 berth cabins Estimated cost per cabin $50,000 installed. Estimate cost for tree removal $6,000. Contingency applied 3%. 350,000 350,000

Install 2 new 4 berth cabins Estimated cost per cabin $60,000 installed. Contingency applied 3%. 123,600 123,600

Install 7 new family cabins Estimated cost per cabin $60,000 installed. Contingency applied 3%. CPI Increase applied 3%. 190,800 254,400 445,200

Install 4 new family cabins Estimated cost per cabin $60,000 installed. Contingency applied 3%. CPI Increase applied 3% - compounded.

261,600 261,600

Multipurpose TV / Games / Meeting Room / Pool Plant Room / Amenities / Cleaners Storage

Estimated cost based on quote received for per sqm construction + furniture & fittings $280k. Contingency applied 3%. Contingency applied 3%. CPI Increase applied 3%. 196,800 100,000 296,800

Small Playground & Shadesail

Children's Playground estimate $30k. Two shade sails (5m x 4m) estimate $10k. Softfall estimate $2.5k. Contingency applied 3%. CPI Increase applied 3% - compounded.

46,325

46,325

Jumping Pillow

Jumping pillow (7.9m x 9m) estimate $14k. Shadesail (5m x 4m) estimate $5k.Softfall estimate $2.5k. Contingency applied 3%. CPI Increase applied 3% - compounded. 23,435 23,435

Swimming Pool (& ancillary equipment / works)

Swimming pool (including accessories & cover) estimate $52k. Fencing $6k. Plant works etc. estimate $20k. Centre post permanent umbrella 5.6m $14k. Nova heavy duty giant umbrellas (3x $3150) estimate $10k. Soil $2.5k. Landscape / outdoor furniture $40k (est.). Contingency applied 3%. CPI Increase applied 3%.

153,170 153,170

Hoffman Oval lights & shelter sheds (2) Contribution to funding (estimated total spend $71,133) towards Soccer Club project (subject to Club successfully gaining the remaining funding of $61,133). 10,000 10,000

Toilet Block (Public) Estimate. Contingency applied 3%. CPI Increase applied 3% - compounded. 272,500 272,500

Replacement/Renewal of Existing Assets

Road works and minor replacement/renewal 50,000 50,000 50,000 50,000 50,000

Out years phasing of 80% of depreciation value to cover replace/renewal and upgrading or new assets 150000 330,000 355,000

Replacement of power lines Completed 21,816 21,816

Roadways & kerbing Estimate. Contingency applied 3%. CPI Increase applied 3%. 23,870 25,000 50,000 50,000 148,870

Convert Barbeque Area to Camp Kitchen Estimate. Contingency applied 3%. CPI Increase applied 3% - compounded.

37,100 37,100

Camp Kitchen - Refurbishment 2 stages 8,670 10,000 18,670

Tennis court resurfacing Grant funding plus $17,535 contrib from NCPA

105,210 105,210

Upgrade Coulthard Reserve Outdoor furniture Completed 12/13 0 0

BVTP Ute Replacement approved via 2nd quarter budget variation 18,939 18,939

Demolition / Disposal (of existing assets): Caravan Park Contractor Operating Costs

C1-C8 (8 cabins)

Cost per cabin: remove asbestos $3,520; demolish and remove materials $3,160. Loss on disposal of asset is estimated at $81,000 (below the line). Contingency applied 3%.

55,043

Demolish 7 old cabins (SE1-4, E9-11)

Cost per cabin: demolish and remove materials $3,160. Loss on disposal of asset is estimated at $71,000 (below the line). Contingency applied 3%. CPI Increase applied 3%. 23,447

Remove E5-8 old bull nosed cabins Proceeds of resale (estimated at $8k each) will cover cost of removal. 0

Demolish Meeting Room Demolition & removal $1888. Contingency applied 3%. CPI Increase applied 3% - compounded. 2,058

Demolish Cleaners Room Demolition & removal $2720. Contingency applied 3%. CPI Increase applied 3% . 2,883

Demolish Ablution Block B Removal of asbestos $7,375. Demolition and removal $13,696. Contingency applied 3%. CPI Increase applied 3% . 25,965

Estimated Contractor Operating Costs (Demolition) 106,513 2,883

Estimated Capital Expenditure 433,295 460,610 443,970 374,160 621,200 2,333,235 50,000 50,000 50,000 50,000 50,000 150,000 330,000 355,000

June 16, 2014 of 59

Profit & Loss Forecast – No New Capital Expenditure (Do Nothing) Attachment D

Assumptions: 1. Opening Cash Balance: 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects use of all available cashflow to fund capex in 2013/14. From 2015/16 onwards, an estimate of $100k has been used as a minimum

'buffer' maintained as working capital. 2. Capital Expenditure: Figure for 2013-14 is the amount approved by Council. Zero capital expenditure has been modeled from 2014/15 onwards to show base forecast cashflows without capital expenditure. 3. Current: loan balance $650k. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 years starting from 2015/16. 4. Cash Balance Buffer (minimum working capital) - refer 1 above Note: Only Depreciation & Loan Interest expenses shown separately below - all other expenditure grouped into Total Expenditure line

Forecast Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate

Description Base 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27

CONSOLIDATED

Total Revenue (1,466,838) (1,469,838) (1,652,075) (1,604,368) (1,645,935) (1,689,164) (1,734,123) (1,780,880) (1,829,507) (1,880,079) (1,932,674) (1,987,373) (2,044,260) (2,103,422) (2,164,951)

Loan Interest - LGFA 30,875 30,875 30,875 30,875 27,788 24,700 21,613 18,525 15,438 12,350 9,263 6,175 3,088 - -

Depreciation Expense - Bldgs 203,636 203,636 208,727 213,945 219,294 224,776 230,395 236,155 242,059 248,111 254,313 260,671 267,188 273,868 280,714

Depreciation Expense - Infrastructure 46,530 46,530 47,693 48,886 50,108 51,360 52,644 53,961 55,310 56,692 58,110 59,562 61,051 62,578 64,142

Depreciation Expense - Equipment 29,860 29,860 30,607 31,372 32,156 32,960 33,784 34,628 35,494 36,382 37,291 38,223 39,179 40,158 41,162

Total Expenditure 1,448,369 1,438,369 1,690,951 1,637,432 1,679,513 1,725,955 1,773,979 1,823,638 1,874,989 1,928,091 1,983,005 2,039,794 2,098,522 2,159,260 2,225,163

Consolidated Net (Surplus) / Deficit (18,469) (31,469) 38,876 33,064 33,578 36,791 39,856 42,759 45,483 48,012 50,331 52,420 54,262 55,837 60,212

Barossa Valley Tourist Park

Total Revenue (1,445,838) (1,448,838) (1,528,400) (1,568,368) (1,609,935) (1,653,164) (1,698,123) (1,744,880) (1,793,507) (1,844,079) (1,896,674) (1,951,373) (2,008,260) (2,067,422) (2,128,951)

Expenditure






Net Barossa Valley Tourist Park (372,887) (385,887) (234,923) (339,926) (351,281) (360,301) (369,847) (379,945) (390,622) (401,910) (413,838) (426,438) (439,744) (453,791) (465,528)

Coulthard Reserve

Total Revenue - - - - - - - - - - - - - - -



Total Expenditure 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014 79,421

Net Coulthard Reserve 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014 79,421

Nuriootpa Sport & Recreation Park

Total Revenue (21,000) (21,000) (123,675) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000)





Net - Nuriootpa Sport & Rec Park 299,752 299,752 218,782 316,274 326,389 336,813 347,557 358,629 370,042 381,806 393,933 406,435 419,325 432,615 446,319

Net - Consolidated NCPA (Surplus) / Deficit (18,469) (31,469) 38,876 33,064 33,578 36,791 39,856 42,759 45,483 48,012 50,331 52,420 54,262 55,837 60,212

Add: Depreciation Expense (non-cash) 280,026 280,026 287,027 294,202 301,557 309,096 316,824 324,744 332,863 341,184 349,714 358,457 367,418 376,604 386,019

Net Cashflow from Operations 298,495 311,495 248,151 261,138 267,979 272,305 276,967 281,986 287,380 293,172 299,383 306,037 313,156 320,767 325,807

Opening Cash balance 122,790 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Loan Repayment - Principal 0 0 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 0 0

Approved Capital Expenditure 433,295 0 0 0 0 0 0 0 0 0 0 0 0 0

Loan Funding Approved

Cash Balance Buffer (minimum working capital) 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Net Cashflow (Shortfall) 0 149,141 196,138 202,979 207,305 211,967 216,986 222,380 228,172 234,383 241,037 248,156 320,767 325,807

Closing Loan balance 650,000 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0 0

June 16, 2014 of 59

Profit & Loss Forecast – Including New Capital Expenditure (New Investment) Attachment E Assumptions: 1. Opening Cash Balance: 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects use of all available cashflow to fund capex in 2013/14. From 2015/16 onwards, an estimate of $100k has been used as a minimum

'buffer' maintained as working capital. 2. Capital Expenditure: Figures for 2013-18 are as per Asset Management Plan. From 2019 onwards, an estimate has been used. 3. Current: loan balance $650k. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 yrs starting from 2015/16. 4. Cash Balance Buffer (minimum working capital) - refer 1. Above Note: Only Depreciation & Loan Interest expenses shown separately below - all other expenditure grouped into Total Expenditure line



CONSOLIDATED

Total Revenue (1,449,701) (1,469,838) (1,746,438) (1,615,854) (1,718,264) (1,792,796) (1,864,448) (1,916,418) (1,970,466) (2,026,677) (2,085,136) (2,145,934) (2,209,163) (2,274,921) (2,343,310)

Loan Interest - LGFA New Loan - - - 12,303 25,702 31,836 50,281 50,281 41,552 32,386 22,382 11,490 -

Loan Interest - Council 30,875 30,875 30,875 30,875 27,788 24,700 21,613 18,525 15,438 12,350 9,263 6,175 3,088 - -





Consolidated Net (Surplus) / Deficit (19,398) (30,969) (275) 98,674 34,527 87,760 77,545 69,100 60,283 50,280 38,997 26,339 24,504 23,322 24,788

Barossa Valley Tourist Park

Total Revenue (1,428,701) (1,448,838) (1,622,763) (1,579,854) (1,682,264) (1,756,796) (1,828,448) (1,880,418) (1,934,466) (1,990,677) (2,049,136) (2,109,934) (2,173,163) (2,238,921) (2,307,310)

Loan Interest - Council Loan 30,875 30,875 30,875 30,875 27,788 24,700 21,613 18,525 15,438 12,350 9,263 6,175 3,088 - -





Net Barossa Valley Tourist Park (373,816) (385,887) (276,587) (276,891) (352,972) (316,581) (339,587) (361,218) (383,626) (407,642) (433,371) (460,924) (478,117) (495,137) (510,003)

Coulthard Reserve

Total Revenue - - - - - - - - - - - - - - -




Net Coulthard Reserve 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014 79,421

Nuriootpa Sport & Recreation Park

Total Revenue (21,000) (21,000) (123,675) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000) (36,000)





Net - Nuriootpa Sport & Rec Park 299,752 300,252 221,295 318,849 329,029 344,061 354,985 366,243 377,846 389,805 402,132 414,840 427,939 441,445 455,370

Net - Consolidated NCPA (Surplus) / Deficit (19,398) (30,969) (275) 98,674 34,527 87,760 77,545 69,100 60,283 50,280 38,997 26,339 24,504 23,322 24,788

Add: Depreciation Expense (non-cash) 261,960 280,526 287,414 310,856 336,735 364,514 373,627 382,967 392,542 402,355 412,414 422,724 433,293 444,125 455,228




Forecast Capital Expenditure 433,295 460,610 443,970 374,160 621,200 50,000 50,000 50,000 50,000 50,000 150,000 330,000 355,000 364,000

Loan Funding Approved

Cash Balance Buffer (minimum working capital) 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Net Cashflow (Shortfall) 0 (271,931) (296,788) (136,952) (409,446) 181,082 198,868 217,259 237,075 258,417 181,386 13,788 65,803 66,440

Closing Loan balance 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0 0

June 16, 2014 of 59

Funding Option 1 – No New Loans Attachment F Assumptions: 1. ‘No New Expenditure’ Profit & Loss Forecast used. 2. Capital Expenditure: Restrict capital expenditure to maximum available based on forecast profit & loss and resultant net cashflow. i.e. Restrict funding to self-sustaining. 3. Opening Cash Balance: 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects use of all available cashflow to fund capex in 2013/14. From 2015/16 onwards, an estimate of $100k has been used as a minimum

'buffer' maintained as working capital. 4. Capital Expenditure: Figures for 2013-18 are as per Asset Management Plan. For the five years between 2018/19 to 2022-23, an estimate of $50k p.a. has been used to fund road works and minor replacement/renewal only. In 2023/24

$100,000 has been forecast (based on surplus cashflow) to fund additional road works or minor replacement/renewal only. From 2024/25 approximately 80% of the depreciation value for the given year has been phased to cover replacement and renewal of the existing asset pool and the upgrading or introduction of new assets.

5. Loan Interest & Repayments: Current: loan balance $650k. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 years starting from 2015/16.

Forecast Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate

Description Base 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26

CONSOLIDATED

Total Revenue (1,466,838) (1,469,838) (1,652,075) (1,604,368) (1,645,935) (1,689,164) (1,734,123) (1,780,880) (1,829,507) (1,880,079) (1,932,674) (1,987,373) (2,044,260) (2,103,422)

Loan Interest - LGFA 30,875 30,875 30,875 30,875 27,788 24,700 21,613 18,525 15,438 12,350 9,263 6,175 3,088 -

Depreciation Expense - Bldgs 203,636 203,636 208,727 213,945 219,294 224,776 230,395 236,155 242,059 248,111 254,313 260,671 267,188 273,868

Depreciation Expense - Infrastructure 46,530 46,530 47,693 48,886 50,108 51,360 52,644 53,961 55,310 56,692 58,110 59,562 61,051 62,578

Depreciation Expense - Equipment 29,860 29,860 30,607 31,372 32,156 32,960 33,784 34,628 35,494 36,382 37,291 38,223 39,179 40,158

Total Expenditure 1,448,369 1,438,369 1,690,951 1,637,432 1,679,513 1,725,955 1,773,979 1,823,638 1,874,989 1,928,091 1,983,005 2,039,794 2,098,522 2,159,260

Consolidated Net (Surplus) / Deficit (18,469) (31,469) 38,876 33,064 33,578 36,791 39,856 42,759 45,483 48,012 50,331 52,420 54,262 55,837

Net (Surplus) / Deficit Barossa Valley Tourist

Park 1,072,951 1,062,951 1,293,477 1,228,442 1,258,654 1,292,863 1,328,276 1,364,935 1,402,884 1,442,169 1,482,837 1,524,935 1,568,516 1,613,631

Net (Surplus) / Deficit Coulthard Reserve 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014

Net - (Surplus) / Deficit Nuriootpa Sport & Rec

Park 320,752 320,752 342,457 352,274 362,389 372,813 383,557 394,629 406,042 417,806 429,933 442,435 455,325 468,615

Opening Loan balance 650,000 650,000 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0

Loan Repayment - Principal 0 0 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 0

Existing Loan - Closing Balance 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0

Add: Depreciation Expense (non-cash) 280,026 280,026 287,027 294,202 301,557 309,096 316,824 324,744 332,863 341,184 349,714 358,457 367,418 376,604

Net Cashflow from Operations 298,495 311,495 248,151 261,138 267,979 272,305 276,967 281,986 287,380 293,172 299,383 306,037 313,156 320,767

Opening Cash balance 122,790 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

NCPA Recommended Capital Expenditure 433,295 460,610 443,970 374,160 621,200 50,000 50,000 50,000 50,000 50,000 150,000 330,000 355,000

Option 1: Forecast Cash Available for Capital

Expenditure 434,285 148,151 196,138 202,979 207,305 211,967 216,986 222,380 228,172 234,383 241,037 248,156 320,767

Cash Balance Buffer (minimum working capital) 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Net Cashflow (Shortfall) 0 0 0 0 0 0 0 0 0 0 0 0 0

Shortfall in Capex Funding 0 (311,469) (247,832) (171,181) (413,895) 161,967 166,986 172,380 178,172 184,383 91,037 (81,844) (34,233)

June 16, 2014 of 59

Funding Option 2 – New Loan & Forecast Capital Expenditure Beyond 2017/18 Attachment G

Assumptions:

1. ‘Including New Expenditure’ Profit & Loss Forecast used.

2. 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects use of all available cashflow to fund capex in 2013/14. From 2015/16 onwards, an estimate of $100k has been used as a minimum 'buffer' maintained as working capital.

3. Capital Expenditure figures for 2013-18 are as per Asset Management Plan. For the five years between 2018/19 to 2022-23, an estimate of $50k p.a. has been used to fund road works and minor replacement/renewal only. In 2023/24 $150,000 has been forecast (based on surplus cashflow) to fund additional road works or minor replacement/renewal only. From 2024/25 approximately 80% of the depreciation value for the given year has been phased to cover replacement and renewal of the existing asset pool and the upgrading or introduction of new assets.

4. Loan Interest & Repayments:

Current: loan balance $650k. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 years starting from 2015/16.

Additional: loans are taken out to cover cashflow shortfall (after capital expenditure and additional interest) for 2013-18. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on combined (additional) loan balance and repayments based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.



CONSOLIDATED

Total Revenue (1,449,701) (1,469,838) (1,746,438) (1,615,854) (1,718,264) (1,792,796) (1,864,448) (1,916,418) (1,970,466) (2,026,677) (2,085,136) (2,145,934) (2,209,163) (2,274,921) (2,343,310)

Loan Interest - New LGFA Loan - - 12,917 27,014 33,519 52,968 52,968 44,367 34,920 24,601 13,340 1,065 - - -

Loan Interest - Council loan 30,875 30,875 30,875 30,875 27,788 24,700 21,613 18,525 15,438 12,350 9,263 6,175 3,088 - -





Consolidated Net (Surplus) /

Deficit (19,398) (30,969) (275) 98,674 34,527 87,760 77,545 69,100 60,283 50,280 38,997 26,339 24,504 23,322 24,788

Net (Surplus) / Deficit Barossa

Valley Tourist Park (373,816) (385,887) (276,587) (276,891) (352,972) (316,581) (339,587) (361,218) (383,626) (407,642) (433,371) (460,924) (478,117) (495,137) (510,003)

Net (Surplus) / Deficit Coulthard

Reserve 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014 79,421

Net - (Surplus) / Deficit Nuriootpa

Sport & Rec Park 299,752 300,252 221,295 318,849 329,029 344,061 354,985 366,243 377,846 389,805 402,132 414,840 427,939 441,445 455,370

Opening Loan balance 650,000 650,000 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0


Existing Loan - Closing Balance 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0 0

Add: Depreciation Expense (non-

cash) 261,960 280,526 287,414 310,856 336,735 364,514 373,627 382,967 392,542 402,355 412,414 422,724 433,293 444,125 455,228



Forecast Capital Expenditure 433,295 460,610 443,970 374,160 621,200 50,000 50,000 50,000 50,000 50,000 150,000 330,000 355,000 364,000

Cash Balance Buffer (minimum

working capital) 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000


Opening loan balance - additional

loans 0 0 271,931 568,719 705,671 1,115,117 934,035 735,167 517,909 280,833 22,416 0 0 0

Additional loans funds required to

fund cash deficit 0 271,931 296,788 136,952 409,446

Interest on additional loan funds -

added to operating expenses for that

year 0 12,917 27,014 33,519 52,968 52,968 44,367 34,920 24,601 13,340 1,065 0 0 0

Loan repayment on additional loans 0 0 0 0 0 181,082 198,868 217,259 237,075 258,417 22,416 0 0

Additional Loan - Closing Balance 0 271,931 568,719 705,671 1,115,117 934,035 735,167 517,909 280,833 22,416 0 0 0 0

Estimated Closing Cash Balance

(excluding working capital) 0 0 0 0 0 0 0 0 0 0 158,969 13,788 65,803 66,440

Summary - Loan Funding:

Total Interest Expense 30,875 30,875 57,889 61,307 77,668 74,581 62,892 50,358 36,951 22,602 7,240 3,088 0 0

Total Loan Repayment 0 0 65,000 65,000 65,000 246,082 263,868 282,259 302,075 267,680 87,416 65,000 0 0


Additional Loan - Closing Balance 0 271,931 568,719 705,671 1,115,117 934,035 735,167 517,909 280,833 22,416 0 0 0 0

Total Loan Funding 650,000 921,931 1,153,719 1,225,671 1,570,117 1,324,035 1,060,167 777,909 475,833 152,416 65,000 0 0 0

June 16, 2014 of 59

Funding Option 3 – New Loan & No Forecast Capital Expenditure Beyond 2017/18 Attachment H Assumptions:

1. ‘Including New Expenditure’ Profit & Loss Forecast used.

2. 2013/14 opening cash balance reflects actual. 2014/15 opening cash balance reflects use of all available cashflow to fund capex in 2013/14. From 2015/16 onwards, an estimate of $100k has been used as a minimum 'buffer' maintained as working capital.

3. Capital Expenditure figures for 2013-18 are as per Asset Management Plan.

4. Loan Interest & Repayments:

Current: loan balance $650k. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on $650k balance, paid off over 10 years starting from 2015/16.

Additional: loans are taken out to cover cashflow shortfall (after capital expenditure and additional interest) for 2013-18. Loan interest is charged at 4.75% (current debenture rate). Loan repayments are on combined (additional) loan balance and repayments based on using all available cashflow net of existing loan repayments and allowing for the $100k cash buffer.



CONSOLIDATED

Total Revenue (1,449,701) (1,469,838) (1,746,438) (1,615,854) (1,718,264) (1,792,796) (1,864,448) (1,916,418) (1,970,466) (2,026,677) (2,085,136) (2,145,934) (2,209,163) (2,274,921) (2,343,310)

Loan Interest - New Loan - 12,303 25,702 31,386 50,281 52,968 41,992 30,058 17,132 3,141 - - - -






Consolidated Net (Surplus) /

Deficit (19,398) (30,969) (275) 98,674 34,527 87,760 77,545 66,725 55,420 42,811 35,495 26,339 24,504 23,322 24,788

Net (Surplus) / Deficit Barossa

Valley Tourist Park (373,816) (385,887) (276,587) (276,891) (352,972) (316,581) (339,587) (361,218) (383,626) (407,642) (433,371) (460,924) (478,117) (495,137) (510,003)

Net (Surplus) / Deficit Coulthard

Reserve 54,666 54,666 55,017 56,716 58,470 60,279 62,147 64,074 66,063 68,117 70,236 72,424 74,682 77,014 79,421

Net - (Surplus) / Deficit Nuriootpa

Sport & Rec Park 299,752 300,252 221,295 318,849 329,029 344,061 354,985 366,243 377,846 389,805 402,132 414,840 427,939 441,445 455,370

Opening Loan balance 650,000 650,000 650,000 650,000 585,000 520,000 455,000 390,000 325,000 260,000 195,000 130,000 65,000 0 0



Add: Depreciation Expense (non-

cash) 261,960 280,526 287,414 310,856 336,735 364,514 373,627 382,967 392,542 402,355 412,414 422,724 433,293 444,125 455,228



Forecast Capital Expenditure 433,295 460,610 443,970 374,160 621,200 0 0 0 0 0 0 0 0 0

Cash Balance Buffer (minimum

working capital) 990 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000


Opening loan balance - additional

loans 0 0 271,931 568,719 705,671 1,115,117 884,035 632,792 360,671 66,126 0 0 0 0

Additional loans funds required to

fund cash deficit 0 271,931 296,788 136,952 409,446

Interest on additional loan funds -

added to operating expenses for that

year 0 12,917 27,014 33,519 52,968 52,968 41,992 30,058 17,132 3,141 0 0 0 0

Loan repayment on additional loans 0 0 0 0 0 231,082 251,243 272,122 294,544 66,126 0 0

Additional Loan - Closing Balance 0 271,931 568,719 705,671 1,115,117 884,035 632,792 360,671 66,126 0 0 0 0 0

Estimated Closing Cash Balance

(excluding working capital) 0 0 0 0 0 0 0 0 0 242,652 331,386 343,788 420,803 430,440

Summary - Loan Funding:

Total Interest Expense 0 43,792 57,889 61,307 77,668 74,581 60,517 45,495 29,482 12,403 6,175 3,088 0 0

Total Loan Repayment 0 0 65,000 65,000 65,000 296,082 316,243 337,122 359,544 131,126 65,000 65,000 0 0


Additional Loan - Closing Balance 0 271,931 568,719 705,671 1,115,117 884,035 632,792 360,671 66,126 0 0 0 0 0

Total Loan Funding 650,000 921,931 1,153,719 1,225,671 1,570,117 1,274,035 957,792 620,671 261,126 130,000 65,000 0 0 0

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Risk Analysis Attachment I

Financial Risks

Risk Consequence(s) Treatment

1 Current funding model unsustainable

BVTP requires significant capital expenditure in the next 5 years to remain competitive and maximise the return on existing investment.

Status quo BVTP cashflow from operating surplus forecast - insufficient to fund both future operation of sporting & recreation / Coulthard reserves and future capital expenditure in the precinct.

Potential annual operational and capital budget impost to Council to maintain the sporting & recreation and Coulthard reserves.

To be determined via this Business Case.

2 Ageing assets and infrastructure not being renewed / replaced in a timely manner

Ageing infrastructure and lack of modern facilities is likely to impact in the short to medium term on the Park’s competitiveness (reduced visitation and reduced return visitation).

Increased risk to public safety and cost to manage that risk.

Reduction in AAA Tourism ratings for park facilities and accommodation.

NCPA Future Investment Project - Cabin demolition and replacement NCPA Asset Management Plan

Development of condition assessments, risk assessments etc to address via asset management plan (currently being conducted)

3 Non-Compliance with Council and LGA purchasing and procurement guidelines

Non-conformance with standard guidelines may result in actual or perceived inability of NCPA to demonstrate that it is conducting purchasing and procurement activity in accordance with statutory requirements resulting in compromised reputation within the community and statutory sanctions.

Need financial risk management system

Following completion of Council Procurement Strategy Project - policy and processes to be implemented with NCPA and training/workshops held with board and relevant NCPA employees

4 Permanent residents – located in key commercial sites within park

Sites occupied by permanent residents are returning around $100 per week per site (at minor direct cost to the park) which is significantly less than income which could be generated via Cabin rentals etc in high visibility/prime location (in terms of proximity to amenities etc) sites within the park.

This arrangement may result in negative public perception in terms of value for money/return on community investment.

To be determined in setting Council Caravan Parks Policy / Strategy.

Seek legal advice re current lease arrangements and develop a strategy for the ongoing management of these sites to ensure the optimum return on investment is achieved.

These dwellings could be replaced by cabins for commercial hire and provide a much higher return (net of associated costs).

5 Audit Committee in abeyance

Risk of non-compliance with probity/due process and legislative requirements due to absence of audit function

Reinstatement of Audit Committee

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Governance / Legal Risks


1 Noncompliance with SA Residential Parks Act 2007

Risk of litigation from tenants of the park.

Risk of prosecution from SA Government.

Review park policy and procedures.

Audit to ensure compliance.

2 No Council Policy on management of Caravan Parks

Inconsistent management of tenants from park to park.

No strategic direction provided to Committees that manage the parks (s41 / s42).

Committees managing parks set their own park rules which may or may not be in line with Council’s strategic direction.

Caravan Park Policy / Strategy required

3 Perceived Ambiguity Re Buyer's Rights Upon Permanent Resident's sale of Property

Permanent Site Agreements indicate that dwellings must be sold on the understanding that ongoing occupation of the existing site by a purchaser at the end of any new agreement cannot be guaranteed and therefore cannot be factored into the sale of the property.

Risk is that this is not made clear to a purchaser by a vendor and new tenant has false expectations

Put in place contractual requirements (ie Site Agreements) for potential buyers to receive a Park Manager briefing prior to Permanent Residents cancelling their permanent site agreement via the sale of their onsite property, to ensure that potential purchasers are aware that they are purchasing the dwelling not the right for it to be located in the park ad infinitum.

4 Non-Compliance with Competitive Neutrality requirements

Potential non-compliance with National Competition Policy and LGA Policy resulting in risk ICAC investigation and prosecution

(Refer legal opinion received re charter)

Analysis to be done re competitive neutrality requirements

Council conducting assessment of costs and benefits borne/received by NCPA by virtue of its status as a subsidiary of Council

Implementation of new Charter detailing competitive neutrality provisions

5 No formal delegations from NCPA to staff

Staff ambiguity regarding delegated authority and may therefore make decisions or authorise use of funds outside of delegated authority.

Implement NCPA delegations instrument

6 NCPA Leases/Hire Agreements not in place for all recreation parks/ community facility user groups

Lack of clarity in agreed scope of park/facility use and roles and responsibilities may result in financial and legal liability ambiguity in the event of a negative event or dispute and disagreements in appropriate service levels.

Audit regular users across precinct & ensure agreements in place.

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HR Risks


1 Lack of Succession planning for NCPA board

High dependency on volunteer roles for strategic management of the business (CEO, Chair, Secretary etc.) – long term involvement by some members who may not want to continue may result in loss of corporate knowledge upon departure of key members of the board.

Risk of inability to ensure adequate number of board members upon exit of aging membership.

Document key tasks / roles and who is doing what.

Work with Board to identify strategies for succession planning where required.

2 Lack of awareness/understanding of WHS & governance requirements by board members and employees

Board member and employee lack of understanding of WHS & governance requirements may result in breaches of applicable legislation/policy and possible litigation.

Risk of injury to staff or board members due to a lack of hazard awareness.

Develop and implement staff and board member induction package

Deliver awareness training/info session on WHS and Governance requirements (eg procurement process etc) on a 1/4ly or bi-annual basis at board members

3 Lack of knowledge management system

Loss of knowledge from key staff / board members should they depart from the board/park.

Loss of business continuity should key personnel become unavailable.

Recruit Business Manager to document processes/draft standard operating procedures or guidelines and business continuity plan (ie develop knowledge management system), and add additional layer of accountability/knowledge retention.

Public Safety & Work, Health & Safety Risks


1 Ageing BVTP permanent residents (park rules for these sites have to date stipulated that occupants must be over 50 years old).

Risks associated with occupation of these dwellings as occupants reach older age and reduced capacity.

Permanent sites are providing an affordable living option for older residents which is a different customer base and purpose than for the remainder of the park - therefore shared park faciltiies may not meet the needs of this alternate demographic

To be determined as part of Council development of Caravan Park Policy / Strategy.

2 Absence of an Injury management/WHS system - including Hazard identification, incident reporting

Risk of non-compliance with current legislation

Potential injury risk and possibility of litigation/civil action by park users or staff/board members

Potential non-reporting of incidents or

WHS system to be updated to ensure compliance (in progress).

Development of risk assessments, Job Safety Assessments, Standard Operating Procedures etc

Training of staff and board members

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and investigation processes, risk assessments, JSAs, SOPs etc.

injury due to lack of reporting methodology/investigation resulting in recurring incidents

to ensure that they are aware of WHS roles and responsibilities and NCPA WHS system.

3 NCPA Precinct Flood/Water Inundation Event

Risk of flood or significant water inundation in the event of a large rain event or rising river levels resulting in evacuation of park and damage to assets

Conduct assessment of flood risk of park as a result of poor drainage/stormwater provisions and flat land aspect

4 Non-Compliance with Electrical Safety Standards

Failure to comply with Tagging & testing requirements for plant & equipment may result in risk of electrocution and injury to public, park users or staff

Implement compliant tagging and testing regime

5 Fire safety non-compliance

Potential non-compliance e.g. with Development Act 1993 SA, Building Code of Australia and 76A Fire Safety Requirements in Caravan Parks & Residential Parks Dec 2007

Conduct Fire Safety Audit to determine non-compliances and develop remediation plan to address issues identified

6 Asbestos Exposure

Potential exposure of Park staff, visitors, public, board members and contractors/workers to asbestos or Asbestos Containing Material.

Conduct Asbestos identification checks to determine presence of asbestos and type (ie bonded, friable etc) to inform development of asbestos register and risk assessment for park buildings/assets.

Make register available to workers conducting maintenance etc on identified buildings to ensure work practices occur in accordance with applicable guidelines.

7 Lack of Risk Based Approach to Event management – functions etc

Potential for event/function attendees, catering staff etc to be exposed to risk of injury due to lack of hazard identification/control of identified risks.

Potential for facilities to fail to meet user requirements/mandated building code service levels (ie ablutions, food standards, safe ingress and egress for vehicles etc) due to failure to conduct function risk assessment,

Risk of damage to NCPA infrastructure/assets due to lack of risk assessment of proposed events/functions.

Prepare standard event/function risk assessment template to guide the conduct of risk assessments by the NCPA prior to board approval of use of the facilities.

8 Lack of Emergency Management Plans and Emergency Control Arrangements (ie Chief Warden etc)

Risk of serious injury or death of staff, recreation facility users or park visitors due to lack of evacuation, first aid, emergency response etc plans and designated emergency control roles (ie Chief Warden, wardens etc)

Develop Emergency management plans for NCPA, including Evacuation Plans, Identification of Emergency Controllers/wardens, fire wardens, ensure First aid training is undertaken by identified persons etc.

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Information & Communications Technology (ICT) & Records Management


1 No commitment to the maintenance & upgrade of Information & Communication Technology (ICT) systems

Software may become out dated and no longer supported resulting in NCPAs information and financial management systems being incompatible with Councils finance/accounting systems

Include ICT maintenance and acquisition in NCPA asset management plan for prioritisation and phasing into the budget

2 Inadequate data backup system in place

Risk of loss of data in the event of a system failure

Implement a back-up system (off-site

3 non-compliant records management

Non-compliance with State Records Act may result in legislative sanctions being placed on NCPA and Council

Implement compliant records management system within NCPA

Utilise new Admin Manager resource to introduce compliant records management practices within the park and NCPA

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