Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5581439

ITEM: E.1

SUBJECT: Riverview Community Centre

AUTHOR: Community Engagement Manager

DATE: 10 June 2019

Executive Summary

This is a report concerning the tenure of Riverview Community Centre located at 138 Old Ipswich Road, Riverview on Lot 3 on SP139403.

RECOMMENDATION

That the Interim Administrator of Ipswich City Council resolve:

A. That the previous decision of Council, as per Item No. 5 of the Governance Committee No.2019(05), 14 May 2019 and adopted at the Council Ordinary meeting of 21 May 2019, be repealed.

B. That Council (Interim Administrator of Ipswich City Council) assume management of the Riverview Community Centre as an interim operating model, with another public Expression of Interest process to be run again on or before 1 July 2020.

RELATED PARTIES

The current Lessee of the Riverview Community Centre is the Riverview Neighbourhood House Association Inc. and its Lease Agreement is due to expire on 30June 2019. The current Lessee has been in occupation of the premises for a period of 11 years. In accordance with the terms of the Lease, the Lessee is required to vacate the Premises on or before 30 June 2019.

Advance Ipswich Theme Linkage

Listening, leading and financial management.

Purpose of Report/Background

The Riverview Community Centre located at 138 Old Ipswich Road, Riverview, described as Lot 3 on SP139403 occupies 6,551 square meters (Attachment 1). The property is improved with an onsite community use building. The purpose of the land is for ‘Community, Recreational and Neighbourhood Centre’.

In accordance with Council’s Community Centre Operating Model Policy (Attachment 2), on 2 March 2019, Ipswich City Council (‘Council’) opened a Request for Expression of Interest (REOI) for the tenure and management of the Riverview Community Centre (‘the Centre’). The intention of the REOI was to establish a partnership with a community organisation whose services aligned with the strategic intent of Council to facilitate the provision of quality social and community outcomes.

Applications to the REOI closed on 2 April 2019 and attracted a total of three (3) expressions of interest. Each response was evaluated by a Panel of Council representatives and a successful respondent was identified. (Attachment 3).

At the Ordinary Council meeting of 21 May 2019, Council resolved:

A. That Council (Interim Administrator of Ipswich City Council) resolve pursuant to section 236(2) of the Local Government Regulation 2012 (the Regulation) that the exceptions under sections 236(1)(b)(ii) of the Regulation apply to the disposal of the leasehold interest located at 138 Old Ipswich Road, Riverview on Lot 3 on SP139403 (“the land”), by way of a leasehold arrangement between Council and Ipswich YUPI Program Inc. for a consideration sum of $1.00 pa ex GST, if demanded.

B. That Council (Interim Administrator of Ipswich City Council) enter into a lease with Ipswich YUPI Program Inc. (“the tenant”) for a period of three (3) years with an option period of an additional three (3) years.

C. That the Chief Executive Officer be authorised to negotiate and finalise the terms of the Lease to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

As a result of the above Council resolution, the Community Engagement Branch began conversations with the successful respondent and provided them with a draft lease agreement and management agreement to review and consider.

At the same time, the current managing organisation and associated community members/organisation wrote several pieces of correspondence to the Interim Administrator articulating their concern about the Council resolution.

Upon further consultation with the community and stakeholders, the Interim Administrator regards Council assuming management of the facility and operations of the centre as the preferred interim model, with another public Expression of Interest process to be run again on or before 1 July 2020.

RISK MANAGEMENT IMPLICATIONS

Legal

The REOI documentation clearly outlines that Council has absolute discretion with regard to the REOI process and, further, that Council does not need to provide any reasons under the REOI for any decision it may make. Accordingly, Council does not have any legal obligation to the successful respondent until such time as a lease agreement and management agreement is executed. This has not occurred.

The REOI process undertaken to select a respondent organisation for the tenure and management of the Centre was undertaken in line with the sound contracting principles articulated in section 104(3) of the Local Government Act 2009, specifically, the process was conducted transparently, open to a number of parties and was accountable. The repeal of the previous decision of Council could be perceived as being inconsistent with that process.

Policy

The recommendations of this report could be perceived to be inconsistent with Council’s Community Centre Operating Model Policy (Attachment 2), which articulates:

“The operating model for Council-owned Community Centres will be a partnership with a third party community organisation whose purpose aligns with the strategic intent of Council to manage the daily operations of the relevant Council Community Centre (the Centre).

The partnering organisation will be selected through an expression of interest process on the basis of its relevance to local community needs and its ability to address key selection criteria.”

However, as Council assuming management of the Riverview Community Centre is an interim operating model, with another public Expression of Interest process to be run again on or before 1 July 2020, this perceived inconsistency is marginal.

Reputational

The REOI process undertaken to select a respondent organisation for the tenure and management of the Centre was in line with the sound contracting principles articulated in section 104(3) of the Local Government Act 2009, specifically, the process was conducted transparently, open to a number of parties and was accountable. There may be some reputational risk for Council in repealing a resolution to enter into lease with the successful respondent, specifically with the third party community organisations who operate in this sector and may be considering future partnerships with Council.

FINANCIAL/RESOURCING IMPLICATIONS

In order for Council to assume management of the facility and operations of the Centre, the following resourcing is being recommended. Four (4) resources are proposed in order to comprehensively manage the Centre:

- Riverview Community Centre Director;

- Riverview Community Centre Community Development Officers (x2); and

- Riverview Community Centre Administrative Officer.

Riverview Community Centre Director

This position will be held by Council’s Community Development Coordinator. This position will provide strategic leadership for the Centre and will be responsible for the development and implementation of a policy and procedure document suite to govern the operations of the Centre.

Riverview Community Centre Community Development Officers (x2)

These positions will be held by two Council Community Development Officers. These positions will work collaboratively and be responsible for the operations and activation of the Centre. These positions will work to ensure that service provision to the local community is maintained and is responsive to community needs and best practice community development methodologies.

Riverview Community Centre Administrative Officer

This position is not able to be filled within the current resourcing of the Community Development Team and will need to be sourced outside of the Community Development Team. This position would be responsible for the administrative aspects of the Centre. That is, managing the reception desk, taking enquiries, etc.

Legal/Policy Basis

The repeal of Council’s decision, as per Item No. 5 of the Governance Committee No.2019(05), 14 May 2019 and adopted at the Council Ordinary meeting of 21 May 2019, is consistent with Council’s Governance Policy as it formalises Council’s decision-making process thereby ensuring the decision being made is done in a rational, informed, ethical and transparent fashion.

COMMUNITY and OTHER CONSULTATION

Council approached organisations through a REOI process to establish a partnership that will facilitate the provision of quality social and community outcomes through the tenure and management of the Centre.

To encourage applicants from the local industry and market, Council advertised the REOI in both the Queensland Times and Courier Mail newspapers and online at LGTenderbox.

At the Ordinary Council meeting of 21 May 2019 Council resolved to enter into a leasehold arrangement with the successful respondent to the REOI process.

Conclusion

This is a report concerning the tenure of Riverview Community Centre located at 138 Old Ipswich Road, Riverview on Lot 3 on SP139403. The current Lessee is the Riverview Neighbourhood House Association Inc. and its Lease Agreement is due to expire on 30June 2019.

In accordance with Council’s Community Centre Operating Model Policy (Attachment 2), on 2 March 2019, Council opened a REOI for the tenure and management of the Centre. Each response received was evaluated by a Panel of Council representatives and a successful respondent was identified. (Attachment 3).

At the Ordinary Council meeting of 21 May 2019, Council resolved to enter into a lease agreement with the successful respondent. Upon further consultation with the community and stakeholders, the Interim Administrator regards Council assuming management of the facility and operations of the centre as the preferred interim model, with another public Expression of Interest process to be run again on or before 1 July 2020.

There are legal, policy, reputational and resourcing matters to be considered by Council when determining the recommendations of this report.

Attachments and Confidential Background Papers

1.	Survey Plan of Lot 3 on SP139403 ⇩
2.	Community Centre Operating Model Policy ⇩
3.	REOI Executed Evaluation Report ⇩

Abbey Richards

Community Engagement Manager

I concur with the recommendations contained in this report.

Ben Pole

General Manager - Community, Cultural and Economic Development

“Together, we proudly enhance the quality of life for our community”

Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5618278

ITEM: E.2

SUBJECT: Disposal of Part of 95A Brisbane Road, Booval described as part of Lot 169 on RP24111 to Swifts Leagues Club Ltd

AUTHOR: Business Accounting and Asset Manager

DATE: 25 June 2019

Executive Summary

This is a report concerning the proposed disposal by Ipswich City Council (Council) of part of 95A Brisbane Road, Booval described as part of Lot 169 on RP24111 to the Swifts Leagues Club Ltd ACN 010 165 045 [ABN 58 010 165 045] (Swifts).

RECOMMENDATION

That the Interim Administrator of Ipswich City Council resolve:

A. That part of Council-owned land at 95A Brisbane Road, Booval (part of Lot 169 on RP24111), being approximately 1.624 hectares, as identified in Attachment 1 as “Proposed Land Disposal” (the Land) to the report by the Business Accounting and Asset Manager dated 20 June 2019, is surplus to Council’s future requirements.

B. That the disposal of the Land and the improvements of the Land is a disposal of a valuable non-current asset.

C. That pursuant to section 236(3) of the Local Government Regulations 2012 (Qld) (Regulations), that the exemption available under section 236(1)(b)(ii) of the Regulations applies to the disposal of the Land and the improvements on the Land to Swifts as a ‘Community Organisation’ (as defined Schedule 8 of the Regulations).

D. That the Land and improvements on the Land can be disposed of other than by tender or auction as required by section 227 of the Regulations.

E. That Council request Swifts Leagues Club to prepare a proposed master plan for the site that reflects their proposal and undertake appropriate community consultation to satisfy Council that their proposal has sufficient community support.

That subject to Council being satisfied with the outcome of the community consultation process and accordingly determining that the sale to Swifts Leagues Club is in the best interest of the community, that Council sell the Land and the improvements on the Land to Swifts Leagues Club Ltd at a purchase price equal to the market value of the Land (including the market value of the improvements on the Land), as determined by a registered valuer, in compliance with section 236(3) of the Regulations.

F. That the Chief Executive Officer be authorised to negotiate and finalise the terms of the sale contract to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

RELATED PARTIES

Swifts Leagues Club Ltd (Swifts) may fund the purchase of the property through their own financial resources however there is a possibility they may be funded by a third party to purchase the Land from Ipswich City Council (Council). The President of the club has advised that they are currently in discussions with potential suitors who may be willing to fund the purchase.

Advance Ipswich Theme Linkage

Managing growth and delivering key infrastructure

Purpose of Report/Background

Cameron Park is Council freehold land located at 95A Brisbane Road, Booval and described as Lot 169 on RP24111 (5.729 ha). Swifts have a twenty (20) year lease with two (2) x ten (10) year options for Lease A in Lot 169 on RP24111 (1.119ha), which commenced on 6 September 2001 for the occupation of the land and facility as a sports and recreation club.

A report was originally presented to Council in relation to Cameron Park – Future Use of Parkland and Facilities on the 29 January 2019. The recommendation was for the disposal of the land directly related to the sports and recreation club to Swifts Leagues Club Ltd at market value. A further report was submitted to Council in May that repealed the previous decision of Council on the 29January 2019, as there were a number of unresolved issues regarding the future use of the property and Cameron Park.

The proposal will result in Council surrendering 1.624 hectares (subject to the final survey plan) of current recreational land. The remaining land area of Cameron Park will be 4.105 hectares (subject to the final survey plan).

Communication and discussions with Swifts have continued in relation to the operations of the property, where a number of these issues have now been addressed.

The three key issues are:

a) What are the options?

In essence, there are four options available:

1) Council can sell the property to Swifts, as has been requested by Swifts

2) Council can publicly offer the property for sale, with Swifts being the incumbent tenant as per their current lease

3) Council can retain the property, undertake any necessary upgrades to the property, and Swifts continue as is

4) Council and Swifts may reach agreement for the lease to be terminated, Swifts cease operations and Council either publicly offer the property for lease to other entities or demolish the buildings and return the area to parkland

Option 2 is considered to be unrealistic. The property requires significant capital investment (further discussed below) which would not be recouped by any realistic rental stream. It is therefore highly unlikely to be a commercial proposition for any third party. The most likely purchaser would be Swifts, and option 1 provides a more effective approach for Council to undertake that transaction.

Options 3 and 4 are both possible, and are further discussed below in the context of exploring option 1; selling the property to Swifts as they have requested.

b) Whether Council can lawfully sell the property to Swifts

This issue was addressed in the 29 January 2019 report to Council. The information presented in that report clearly showed that Swifts are a Community Organisation and Council is legally able to sell the property directly to Swifts, under section 236(3) of the Local Government Regulations 2012 (Qld) (Regulations), that the exemption available under section 236(1)(b)(ii) of the Regulations applies to the disposal of the Land and the improvements on the Land to Swifts as a ‘Community Organisation’ (as defined Schedule 8 of the Regulations).

To further ensure that Council is able to sell the land to Swifts, it has been recommended to Council that the sale be made conditional on the following:

I. Subject to a Council resolution being made by Council’s Interim Administrator giving effect to the sale (once the Interim Administrator is satisfied the sale meets the requirement of the Regulations and subject to a satisfactory outcome of the community consultation process) ; and

II. Swifts are to undertake community consultation and satisfy Council that the transaction is for the benefit of the community and has community support as demonstrated through the community consultation process.

c) Whether Council should sell the property to Swifts.

This is a more complex question, with all the relevant key information either not being available or appropriately presented in the previous two reports to Council to enable this to be adequately and transparently addressed by Council.

There are two aspects to this question:

· What is the best financial outcome for Council? and;

· (More importantly) What is the best community outcome?

The best financial outcome for Council is to sell the property.

Council has recently undertaken a condition assessment of the buildings, which highlighted over $1 million worth of refurbishment work to be undertaken over the next 10 years and an additional $800,000 of upgrades that are required to be undertaken on the kitchen and air-conditioning to keep the current operational requirements of the building. This expenditure however, is to maintain the current configuration of the building which does not meet the club’s desired configuration for a growing club (this is discussed further below).

Council receives annual rent of over $16,000 from Swifts, plus rates of approximately $16,000. This revenue stream will not be sufficient to recoup over time the capital costs that Council would need to incur as identified in the condition assessment report.

An independent professional valuation of the property indicates a market value in the order of $1.4m. In summary, sale of the property represents a financially better result for Council (and hence ratepayers) in the order of $2.4m over retaining the property.

Whilst the financial analysis is important, the more critical question is what is the best community outcome.

Swifts have obtained independent advice from professional club management consultants that verifies that the current configuration of the Cameron Park facilities are inappropriate for the ongoing successful operation of a sports and recreation club with the objectives of delivering community services and facilities. A substantial reconfiguration of the premises is needed for the club to be able to continue to operate successfully.

This requires investment that the club agrees is beyond the scope and responsibility of Council. However, without security of property title, the club is unable to secure funding support needed to make the necessary investment to deliver a contemporary sports and recreation club. Even Council undertaking the $1.8 million refurbishment cited in the condition assessment report will not meet the club’s future operating needs. This is why option 3 above is not a feasible choice for Council.

Closure of the club would result in termination of the facilities and services delivered for Ipswich residents at the Cameron Park facility as well as termination of the financial support of junior rugby league through proceeds from the venue operations. This is not a favourable community outcome.

A key issue raised with Council in regard to community outcomes is whether Swifts would be seeking to substantially increase the number if gaming machines at the site as part of the reconfiguration. Council does not regulate gaming machines; that is the role of the State Government through the Office of Liquor and Gaming Regulation and the Gaming Machine Act 1991 and the Gaming Machine Regulation 2002.

That state regulatory regime includes the need for a ‘community impact statement’ to be prepared for any increase of 20 gaming machines or more. The Office of Liquor and Gaming Regulation has issued Guidelines in regard to these matters; in essence a substantial community consultation exercise would be required to be undertaken by Swifts before any significant increase in gaming machines would be possible. This is a matter for the state government regulators to determine at the time, although Council would be asked for its views as part of any decision by the Office of Liquor and Gaming Regulation.

Swifts representatives advised the Interim Administrator at a meeting on Thursday 20 June 2019 that there is no intention by the club to significantly increase the number of gaming machines as part of the reconfiguration at this stage, and they understood the need for extensive community engagement prior to this position changing.

Another issue raised with Council is, once sold to Swifts, how the community can be assured the site remains as a sport and recreation facility in the future. This is entirely within the decision-making powers of the Council. Any proposed change in use would require a development application under the Ipswich planning scheme and would be subject to the provisions of the planning law and framework. The site is currently zoned recreation and Council would have full authority to refuse any development application for any material change in use such as retail or commercial buildings.

In addition there is a recommendation to Council that any sale contract should contain a restriction on the buyer from selling the property to any “person” that is not a Community Organisation”, and that any transferee is to enter into a deed of covenant obliging them to obtain a similar covenant from any further transferee.

Financial/RESOURCE IMPLICATIONS

If Council adopts the recommendation in this report, the operational and legal costs associated with the sale of property will form part of the project budget, and the net financial benefit to Council is estimated to be in the order of $2.4 million.

RISK MANAGEMENT IMPLICATIONS

There are significant financial and operational risks associated with continuing with the maintenance and refurbishment of the current facility as it presently stands. If the property is sold to Swifts, these risks would be transferred to that organization.

The risk of the property, if sold, being subsequently changed from community services club to other uses (such as residential, retail or commercial developments) is within the control of Council through the development application process and the current zoning of the land as recreation.

The risk of the property, if sold, being converted to a more significant gaming machine venue is within the control of the state government through the Office of Liquor and Gaming Regulation, including the need for a community impact statement that Council would be invited to contribute to.

Legal/Policy Basis

This report and its recommendations are consistent with the following legislative provisions:

Land Act 1994

Planning Act 2016

Local Government Act 2009

Local Government Regulation 2012

COMMUNITY and OTHER CONSULTATION

The report that previously repealed the sale to Swifts recommended that community consultation be undertaken for any future decisions to ensure transparency and accountability. Given this is public land and Swifts have requested to purchase the site, it is imperative that the management and development of the land aligns with the strategic focus for the area and supports the community’s needs into the future. Swifts will be required to supply information outlining the future plans and how the club will continue to develop sport and recreation services for the benefit of the community.

Council may undertake community consultation to ensure that the proposed sale and future plans for the club by Swifts are supported by the community, or at Council’s request Swifts will be required to undertake, manage and finalise the community consultation process.

Conclusion

Council’s ongoing ownership and leasing of the facility to Swifts carries significant financial and operational risk from a future capital investment perspective. The current arrangements are unfavourable to Council and the Ipswich community from a financial perspective.

The current facilities do not meet the requirements of a contemporary sports and recreation club and reconfiguration to meet these demands is beyond the scope and role of the Council to deliver.

The proposal to dispose of the land and its associated improvements offers Council the opportunity to remove the financial burden of the maintenance of the facility, and more importantly will allow a local community sporting group to deliver a more contemporary facility and continue to provide positive community benefits.

Attachments and Confidential Background Papers

1.	Survey Plan ⇩

Shane Gillett

Business Accounting and Asset Manager

I concur with the recommendations contained in this report.

Charlie Dill

General Manager - Infrastructure and Environment

“Together, we proudly enhance the quality of life for our community”

Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5600984

ITEM: E.3

SUBJECT: Transfer of Property and Other Assets of Ipswich City Properties Pty Ltd and associated matters

AUTHOR: Finance Manager

DATE: 16 June 2019

Executive Summary

This is a report concerning the transfer of property and other assets of Ipswich City Properties Pty Ltd (ICP) and other associated matters to Ipswich City Council (Council), in preparation for the wind up of ICP. Other associated matters include:

· the operation of ICP’s retails assets, redevelopment activities and asset valuations;

· preparation of property transfer documents, indemnities and stamp duty exemptions;

· the novation of supplier agreements and related quote or tender consideration plans;

· Ranbury leasing agreement;

· Ministerial Direction for the disposal of leasehold interests;

· approval under the Statutory Bodies Financial Arrangements Act 1982 (SBFA) for a performance guarantee; and

· Deed of Release concerning the transfer of other assets, settlement for property and other assets, compensations, reimbursements, liabilities and debt forgiveness.

At the ordinary Council meeting of 16 October 2018, the Interim Administrator resolved to endorse the winding up and ultimate deregistration of ICP and the integration of the ICP assets and operations into Council.

Following the settlement for the transfer of the property and other assets of ICP via a reduction in the loan between Council and ICP, this report recommends the write-down (forgiveness) of the residual balance of that loan. This is anticipated to be $24.9 million and is materially within the $78.7 million of losses outlined by McGrathNicol in their March 2019 report. All reimbursements, payments, transfer, write-downs etc… cited in the recommendations below reflect costs that were identified as part of the McGrathNicol report. None of these arrangements in terminating ICP represent any new expenditure not previously recognised by McGrathNicol.

Recommendation/s

That the Interim Administrator of Ipswich City Council resolve:

A. That the Chief Executive Officer be authorised to negotiate and finalise the terms of the Deed of Release to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

B. That the total valuation of the property assets of Ipswich City Properties Pty Ltd being $27,795,000 be accepted by Council for the purposes of the property transfers.

C. That the Chief Executive Officer be authorised to negotiate and finalise the terms of all agreements, deeds, indemnities or documents (“all Documents”), for the transfer to Ipswich City Council of the property (both real property and personal property) belonging to Ipswich City Properties Pty Ltd with a total cumulative value of $27,814,565.78 (including chattels of $19,565.78), and for Council to execute all Documents and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

D. That Council note that the decision of the Office of State Revenue in regards an exemption from Stamp Duty under corporate reconstruction remains outstanding and that the approval of the exemption does not impact Council’s intention to approve and enact the transfer of property and other assets of Ipswich City Properties Pty Ltd before 30 June 2019.

E. That Council reimburse Ipswich City Properties Pty Ltd, as outlined in the Deed of Release, for costs incurred in relation to planning, design, engineering and construction of the retail assets of Ipswich City Properties Pty Ltd to the value of $2,300,127.95.

F. That Council reimburse Ipswich City Properties Pty Ltd, as outlined in the Deed of Release, for costs incurred in relation to planning, design, engineering and construction works that were intended to be acquired by Council under a development agreement to the value of $16,875,657.28.

G. That Council note the request for an approval under the Statutory Bodies Financial Arrangements Act 1982 for the provision of a performance guarantee in relation to the Crown lease for the Bremer Street Ramps has been lodged with the Department of Local Government, Racing and Multicultural Affairs.

H. That Council pay $4,699,035.11 to Ipswich City Properties Pty Ltd in accordance with the Deed of Release as the GST component of the property and other assets transfer.

I. That the anticipated loan repayment of $750,000.00 by Ipswich City Properties Pty Ltd, be noted.

J. That subsequent to all the reductions in accordance with recommendations C, E, F and I and in accordance with the Deed of Release excluding clause 6, the balance of the loan between Ipswich City Council and Ipswich City Properties Pty Ltd at close of business on 27 June 2019, estimated to be $24,925,371.15, in accordance with clause 6 of the Deed of Release, be written‑down to zero.

K. That subject to the loan between Ipswich City Council and Ipswich City Properties Pty Ltd being written‑down to zero, the loan agreement between Ipswich City Council and Ipswich City Properties Pty Ltd be terminated.

L. That the Chief Executive Officer be authorised to negotiate and finalise the terms of any other agreement, deed, indemnity or document associated with or in conjunction to the transfer of the other assets of Ipswich City Properties Pty Ltd, in accordance with the Deed of Release, to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

RELATED PARTIES

Ipswich City Properties Pty Ltd

Ranbury Management Group Pty Ltd

Ranbury Property Services Pty Ltd

Advance Ipswich Theme Linkage

Strengthening our local economy and building prosperity

Purpose of Report/Background

Subsequent to Council’s endorsement of the winding up of ICP, McGrathNicol were engaged to support and coordinate with Council officers the actions required to transfer the property, other assets and operations of the ICP to Council, allowing the subsequent wind up of ICP.

In addition to Council’s Legal Service Branch, King and Wood Mallesons (KWM) were engaged to advise Council and Clayton Utz were engaged to advise ICP.

In this report Council and ICP may collectively be referred to as the Group.

Deed of Release

A Deed of Release (Attachment 1) has been prepared to finalise financial and related matters between ICP and Council, including residual asset transfers, any residual liabilities of ICP, settlement transactions and Council's forgiveness of certain debt owed by ICP to Council (detailed further in this report).

Payments for the transfer of property and other assets (excluding GST) is proposed under the Deed of Release to be via a reduction to the loan account between Council and ICP.

Valuations

Jones Lang LaSalle Advisory Service Pty Ltd (JLL) were engaged to provide valuations for the property assets of ICP. The current land and buildings of the Ipswich City Square Shopping Centre, the Commercial Hotel site (Murphys Pub) as well as 2 Bell Street have been valued for the purpose of transfer between related parties. The collective valuation of these ICP assets totals $27.8 million and remains unchanged from the valuation undertaken to support the 2017‑2018 financial statements. A separate independent valuation by Council was not undertaken in this instance and Council will need to rely upon the ICP valuation for the purposes of the transfer.

Property Transfers

The relevant transfer documents and sale contracts have been prepared for the transfer of ICP properties including leasehold land, Crown leasehold land, freehold land and option deeds. There are also indemnities in favour of the State of Queensland and Queensland Rail, required in relation to the transfer of property assets as well as for retail tenancies. These transfer documents have been reviewed by both Council officers and McGrathNicol. A schedule of documents requiring signature has also been prepared to ensure that all required actions for the transfer of the ICP properties are competed.

Stamp Duty

An application has been lodged with the Office of State Revenue (OSR) for an exemption from Stamp Duty under the corporate reconstruction provisions. Advice from KWM indicates that the transfer of property from ICP to Council, in the manner proposed by the Deed of Release, will likely meet the exemption requirements, however this is yet to be assessed by the OSR. The absence of a decision from the OSR on the exemption, prior to the transfer of the properties, is not considered an impediment to the transfer.

If there was any stamp duty obligation, this would rest with Council. This risk was obviously not quantified in the March 2019 McGrathNicol report.

Work In Progress

ICP has recognised $2.3 million of work in progress costs in relation to planning, design, engineering and construction of its retail assets. This includes a net $1.1 million for the demolition and stabilisation of the Commercial Hotel (former Murphy’s Pub) site after consideration of the total cost to complete the project and initial assessment of possible market value at completion.

The costs on these retail properties of ICP were undertaken with the visibility of Council, contribute to the broader CBD redevelopment and relate to those properties that are to be transferred. Therefore it is considered appropriate for Council to reimburse ICP for these costs (refer clause 3(a) of the Deed of Release). This is premised on Council’s decision to wind up ICP at this time which will not permit ICP to complete these works nor subsequently generate an appropriate return from this expenditure.

Construction Work In Progress - Development Inventory

ICP has incurred $16.9 million of costs in relation to planning, design, engineering, demolition and construction works which were ultimately intended to become or contribute to assets of Council. This includes expenditure on the proposed administration building, library, civic square and other associated assets.

This expenditure was incurred by ICP on the basis of the Development Agreement between ICP and Council for the civic space, library and carpark, staged approvals under this agreement and an intended variation for the Administration Building, after Council resolved to own the building vs lease it and that these costs would be met (reimbursed) by Council (refer recommendation C of the report by the Executive Support Officer dated 23 January 2018 concerning CDB Redevelopment to the City Management, Finance and Community Engagement Committee of 23 January 2018).

On this basis, and in conjunction with the decision by Council to transfer ICP properties to Council, it is appropriate for Council to reimburse ICP for these costs (refer clause 3(b) of the Deed of Release).

Tender Consideration Plan - Novation of Supplier Agreements

To provide a smooth transition and to maintain and preserve the supplier relationships, for the transfer of ICP properties, the existing agreements between ICP and its suppliers, for both the operations and maintenance of the ICP retail properties as well as ICPs redevelopment activities, are required to be novated to Council.

A quote or tender consideration plan in accordance with section 230 of the Local Government Regulation 2012 has been prepared as a separate report for Council’s consideration and adoption, to enable the redevelopment project and retail operations to continue on a timely basis and to ensure all intellectual property, knowledge, rights, warranties etc… are transferred to Council

Ranbury – Appointment as Leasing Agent

ICP has engaged Ranbury Property Services Pty Ltd to advise and act as a leasing agent for the retail and commercial areas of the ICP assets. To leverage the benefits and effort already undertaken, subject to a separate quote or tender consideration plan, Council may consider appointing Ranbury Property Services Pty Ltd to continue in this role.

The separate report and plan, for consideration by Council, outlines the independent market assessment and proposal process undertaken as part of the appointment.

Ministerial Exemption for the Disposal of Leasehold Interests

Owing to the unique nature of negotiations for retail and commercial tenancy, and to enable Council to achieve the objectives of its leasing strategy, Council may choose to seek a Ministerial Exemption under Section 236(1)(f) of the Local Government Regulation 2012 in relation to the disposal of a valuable non‑current asset by means of a lease. An exemption would allow Council to then lease the retail and commercial tenancies of Ipswich City Square and 2 Bell Street without the need to put each tenancy space out to separate tender or auction. The leasing plan and strategy will outline how Council and its leasing agent will ensure maximum value for Council and the decision and approval process to ensure transparency and accountability in the leasing process.

A submission seeking such an exemption is being prepared by Council’s Coordination and Performance Department.

SBFA Approval for a Performance Guarantee

An approval under the SBFA has been requested from the Department of Local Government, Racing and Multicultural Affairs (the Department). This is required for the provision of a performance guarantee (Bank Guarantee) in relation to the Crown lease for the Bremer Street Ramps that are attached to the Ipswich City Square Shopping Centre. Council will request the guarantee be provided by the Queensland Treasury Corporation (QTC).

The Department has indicated that this approval is unlikely to be received prior to the proposed settlement of the ICP assets. Whilst advice has been received that the transfer (settlement) of the property can occur, the registration of title on this lease asset will be delayed until the guarantee can be provided. This may also impact on the registration of the title on the property to which the Bremer Street ramps are attached. As mentioned, the delay in the registration of the title does not impact on the settlement (ownership) of assets.

GST

Notwithstanding that the settlement for the transfer of ICP properties and other assets under the Deed of Release is via a reduction of the loan account between ICP and Council, both Council and ICP will separately remain responsible for their GST obligations in relation the transfer transactions.

The Deed of Release does not permit the GST value attributed to the transfer transactions to reduce the loan account between ICP and Council. The GST value is to be paid by Council to ICP as a cash amount. The estimate of the GST component of the transfer transactions is $4,699,035.11.

Loan Repayment

Prior to the application of clause 6 of the Deed of Release, ICP intends to repay $750,000.00, or other amount as appropriate, of surplus cash to Council. The surplus cash is due to GST credits claimable by ICP. Given the requirement for Council to settle, in full, the transfer of the property and other assets with ICP, it was not considered appropriate to offset the GST cash payment against the estimated GST credits of ICP.

Debt Forgiveness

Following the settlement of ICP properties, the reimbursement of Work In Progress and the Construction Work In Progress – Development Inventory, via a reduction to the loan account between ICP and Council, as well as receiving the loan repayment, the estimated balance of the loan from Council to ICP will be $24,925,371.15.

Previous Council decisions to build and own the new administration building and library and to develop a significant portion of land as civic space, have impacted on ICP’s ability to earn future revenues, in the form of land sales and development profits. In turn this impacts on ICP’s ability to make further repayment against the loan account.

In light of the decision to wind up ICP at this time and to transfer the properties to Council at their current market value, ICP will not have the assets or capacity to earn revenues to repay the remaining balance. It is appropriate for Council to write down the remaining balance of its loan receivable from ICP and terminate the loan agreement.

The remaining balance of the loan to be written off by Council is materially within the $78.7 million losses outlined by McGrathNicol in their recent report.

The total cost of ICP activities, the subject of the McGrathNicol report from March 2019, was assessed as approximately $78.7 million. The forgiveness of the residual balance of the loan between ICP and Council does not materially increase that assessment. The forgiveness of the loan is a non-cash intra‑Group transaction (as are the property and other asset transfers) and has no impact on the consolidated results of Council and its Controlled Entities.

Loan balance as at 18 June 2019		$72,665,722.16
less settlement for property assets	Recommendation C	$27,814,565.78
less settlement for work-in-progress assets	Recommendation E	$2,300,127.95
less settlement for development inventory assets	Recommendation F	$16,875,657.28
less loan repayment (from surplus cash)	Recommendation I	$750,000.00
Value of loan to be written down (forgiven)		$24,925,371.15

Members Voluntary Liquidation

Following the transfer to Council of the ICP properties, other assets and operations, Council, via the shareholders representative, may then give further consideration to placing ICP into Members Voluntary Liquidation.

Financial/RESOURCE IMPLICATIONS

As a wholly owned subsidiary of Council, the transfer of the ICP properties, other assets and operations to Council will have a minimal impact on the combined revenues and expenses of ICP and Council (the Group). While there be impacts on Council’s operating surplus and balance sheet, however the cash flows impact for the Group are minimal and the ultimate wind up of ICP will save Council costs in the long term.

The delivery of the Ipswich Central CBD Transformation Project including the construction of the new administration building and library is included in Council’s 2019‑2020 Budget and Long Term Financial Forecast at a total cost of approximately $201.5 million.

As outlined in this report, settlement for the transfer of the properties ($27.8 million) and reimbursement of Construction Work in Progress and Work in Progress (approximately $19.2 million) will be by way of a reduction against the loan between ICP and Council. The residual value of $24.9 million of loan account between ICP and Council will be forgiven.

RISK MANAGEMENT IMPLICATIONS

Should the exemption from Stamp Duty under corporate reconstruction not be approved by the OSR, Council will be liable to pay Stamp Duty on the value of the transfer transactions. The value of the Stamp Duty, if payable, is estimated to be $1.6 million. This may increase if the OSR consider the WIP and WIP to be dutiable.

Council is proposing to acquire the assets and operations of ICP and in doing so creates a potential for exposure to unknown liabilities resulting from the assets and operations of ICP. Under the Deed of Release Council agrees to pay the operational liabilities arising after 18 June 2019 (typically in the form of invoiced costs). For other non‑operational liabilities, the Deed of Release does not require Council to pay such liabilities but it may elect to do so.

The loan between Council and ICP is limited to a maximum value of $75 million (the loan cap) under the most recent amended SBFA approval of the Under Treasurer, dated 2 June 2015. This amended approval lapses on 30 June 2019 at which time the loan cap reverts to its value under the original SBFA approval of $50 million.

Should the transfer of properties and reimbursement of construction costs incurred by ICP (approximately $47 million in total) not occur before 30 June 2019 nor be reduced against the loan account, Council would be in breach of the original SBFA approval.

Legal/Policy Basis

This report and its recommendations are consistent with the following legislative provisions:

Local Government Act 2009

Local Government Regulation 2012

COMMUNITY and OTHER CONSULTATION

No specific community consultation has been undertaken in relation to the transfer of ICP’s properties, other assets and operations back into Council.

Conclusion

The operations and activities of ICP has been the subject of great public interest in recent years. The transfer of the ICP properties, other assets and operations back into Council and the subsequent wind up of ICP enacts Council’s resolution of October 2018. It is also considered a necessary step in the delivery of the Ipswich Central CBD Transformation Project and the revitalisation of the Ipswich CBD.

Attachments and Confidential Background Papers

1	Deed of Release ⇩

Jeffrey Keech

Finance Manager

I concur with the recommendations contained in this report.

Sean Madigan

General Manager - Coordination and Performance

I concur with the recommendations contained in this report.

Andrew Knight

General Manager - Corporate Services

“Together, we proudly enhance the quality of life for our community”

Deed of release

Date

Parties Ipswich City Properties Pty Ltd ACN 135 760 637 of 45 Roderick Street, Ipswich, Queensland 4305 (ICP)

Ipswich City Council of 45 Roderick Street, Ipswich, Queensland 4305 (ICC)

Background

A. ICP is transferring all its Assets to ICC under various Documents.

B. ICC is paying value to ICP for the various Assets to be transferred as per consideration set out in the Documents.

C. ICC is to reimburse ICP for certain costs that ICP has incurred.

D. This deed is being entered into, to finalise financial and related matters between ICP and ICC, including ICC's forgiveness of certain debt owed by ICP to ICC as set out in this deed.

Operative provisions

1. Definitions and interpretation

1.1 Definitions

In this deed:

Assets means all the assets of ICP, extending to and including:

(a) all real property listed in Schedule 1;

(b) all personal property;

(d) goodwill in any business conducted by ICP, including the exclusive right to represent itself as carrying on the business as the successor to ICP,

but not including cash at bank required by ICP to pay its debts as and when they fall due.

Bremer Street Leasehold Tenure means the Bremer Street Ramp - State Leasehold as referred to in 1.2 of Schedule 1.

Business Day means Monday to Friday other than when there is a public holiday in Ipswich.

Debt means the debt of approximately $24,925,371.15 as at 27 June 2019 (subject to the terms of this deed).

Discretionary Payment has the meaning in clause 5(c).

Documents means the documents signed at or about the time of this deed to transfer the Assets from ICP to ICC.

Forgiven Debt means the debt forgiven as defined in clause 6(a).

GST Legislation means A New Tax System (Goods and Services Tax) Act 1999.

ICP IP means all Intellectual Property Rights owned by the ICP and the right to take action against any third party for the infringement of any rights relating to those Intellectual Property Rights whether occurring before or after the date of this deed.

Intellectual Property Rights means:

(a) patents, designs, trade marks and service marks (whether registered or unregistered) and any applications for, or rights to apply for, registration of any patent, design, trade mark or service mark;

(b) copyright (including copyright in software, websites, databases and advertising and other promotional materials);

(c) all rights to have information (including trade secrets, know-how, operating procedures and technical information) kept confidential; and

(d) all other rights or protections having similar effect anywhere in the world.

Non-Operational Liabilities means any liabilities of ICP:

(a) which are or have been incurred as a consequence of:

(i) any default or wrongdoing of ICP under any contract or arrangement, including any liability under any indemnity; and

(ii) any negligence or wrongful act or omission of ICP or persons for whom ICP is responsible; or

(b) in respect of which ICP has insurance and in respect of which the insurance cover responds to meet that liability.

Operational Liabilities means liabilities of ICP which are or have been incurred by ICP in the ordinary course of its business under contracts or arrangements it has entered into in relation to its Assets, including any proposed development or letting of those Assets and extends to any taxation (including GST) liabilities, on the basis any refund or payment due to ICP and paid to ICP as a result of a tax paid by ICC on behalf of ICP, shall be paid by ICP to ICC, but does not include Non‑Operational Liabilities.

Payment means the consideration payable to ICP by ICC under the Documents in the sum of $27,814,565.78.

1.2 Interpretation

In this deed:

(a) headings are for convenience only and do not affect interpretation;

and unless the context indicates a contrary intention:

(b) an obligation or liability assumed by, or a right conferred on, 2 or more parties binds or benefits all of them jointly and each of them severally;

(c) the expression "person" includes an individual, the estate of an individual, a corporation, an authority, an association or a joint venture (whether incorporated or unincorporated), a partnership and a trust;

(d) a reference to any party includes that party's executors, administrators, successors and permitted assigns, including any person taking by way of novation and, in the case of a trustee, includes any substituted or additional trustee;

(e) a reference to any document (including this deed) is to that document as varied, novated, ratified or replaced from time to time;

(f) a reference to any statute or to any statutory provision includes any statutory modification or re-enactment of it or any statutory provision substituted for it, and all ordinances, by-laws, regulations, rules and statutory instruments (however described) issued under it;

(g) words importing the singular include the plural (and vice versa);

(h) references to parties, clauses, schedules, exhibits or annexures are references to parties, clauses, schedules, exhibits and annexures to or of this deed, and a reference to this deed includes any schedule, exhibit or annexure to this deed;

(i) where any term is used in this deed which is defined in the GST Legislation, it will have the same meaning which it bears in the GST Legislation;

(j) where a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning; and

(k) the word "includes" in any form is not a word of limitation.

2. Asset transfer

(a) To the extent ICP has not transferred any Assets held by it under any of the Documents, by force of this deed, ICP transfers and assigns to ICC all Assets not otherwise transferred under the Documents.

It is anticipated that Assets not otherwise transferred under the Documents will either be nil or will be limited in scope and value.

(b) In respect of the Bremer Street Leasehold Tenure the transfer of lease for $1 may not have been effected as at the date of this deed and to the extent not effected, shall be effected as soon as practicable thereafter (once the necessary Ministerial approval to transfer can be secured) and each party must do all things to see that that occurs.

3. Reimbursement to be effected

(a) ICC agrees that on 27 June, 2019, it will reimburse ICP an amount of $2,300,127.95 for the cost of consultancy services and early works services effected in connection with the Assets transferred under the Documents.

(b) ICC agrees that on 27 June, 2019, it will reimburse ICP an amount of $16,875,675.28 for the cost of consultancy services and works services effected in connection with the Assets transferred under the Documents and more particularly in connection with a development agreement entered into between ICP and ICC.

(c) ICP accepts the reimbursements of $2,300,127.95 and $16,875,675.28 respectively in full and final satisfaction of all amounts owing by ICC to ICP on account of any works and services provided by ICP to ICC on any account (including under any agreement or arrangement between ICP and ICC).

(d) ICP acknowledges that it owes a debt to ICC and that the reimbursements referred to in clause 3(a) and 3(b) (other than the cash amount required by ICP to meet its GST liabilities for supplies made by ICP in connection with the reimbursement amounts) will not be made in cash, but rather ICC will make the reimbursements (other than a cash amount required by ICP to meet its GST liabilities for supplies made by ICP in connection with the reimbursement amounts) as and by way of reduction of the debt and the debt shall be reduced accordingly.

4. Payment

(a) ICC will make the Payment to ICP, as and when the Documents require, (expected to be on 27 June, 2019).

(b) ICP acknowledges that it owes a debt to ICC and that the Payment (other than a cash amount required by ICP to meet its GST liabilities in connection with supplies made by ICP on the transfer of Assets to ICC under the Documents), made need not be made in cash, but rather ICC will make the Payment (other than a cash amount required by ICP to meet its GST liabilities in connection with supplies made by ICP on the transfer of Assets to ICC under the Documents), as and by way of reduction of the debt owed to ICC by ICP and the debt shall be reduced accordingly.

5. Operational Liabilities and Non-Operational Liabilities

(a) ICP and ICC agree that ICC will pay on behalf of ICP and ICC do undertake to pay on behalf of ICP, all the Operational Liabilities of ICP arising on or after 18 June 2019, to the extent that ICP does not have cash to meet those Operational Liabilities.

(b) In respect of Operational Liabilities that comprise any taxation (including GST) liability paid by ICC on behalf of ICP, any refund or similar payment due to ICP as a result of tax paid by ICC on behalf of ICP shall be paid by ICP to ICC, upon receipt and shall be ICC's property.

(c) In respect of Non-Operational Liabilities, ICC are not required by this deed to pay such liability on behalf of ICP, but may elect to do so ( in this deed, Discretionary Payment).

6. Debt Forgiveness

(a) The debt owing to ICC by ICP after the transfer of the Assets under the Documents, the reimbursements referred to in clause 3 and the Payment referred to in clause 4, will be for the purposes of this deed be the Forgiven Debt. As at 27 June, 2019 the Forgiven Debt is anticipated to be (more or less) the amount of the Debt.

(b) ICC forgives and releases ICP from its obligation to pay the Forgiven Debt.

(c) In consideration of the forgiveness and release in clause 6(b), apart from the obligations of ICC under this deed, ICP releases ICC from all liability and claims, damages, costs and expenses (actual or contingent) on any account, owing, payable or due by ICC to ICP.

(d) If after the forgiveness and release under clause 6(b), any further amounts are paid by ICC in respect of any amount for Operational Liabilities or a Discretionary Payment, then ICC agrees to forgive and release ICP to pay that amount to ICC.

7. Notices

7.1 How notice to be given

Each communication (including each notice, consent, approval, request and demand) under or in connection with this deed:

(a) must be given to a party:

(i) using one of the following methods (and no other method) namely, hand delivery, courier service or post; and

(ii) using the address or other details for the party set out below (or as otherwise notified by that party to each other party from time to time under this clause 6(d)):

ICP

Tenant: Ipswich City Properties ACN 135 760 637

Address: 45 Roderick Street, Ipswich, Queensland 4305

Email: steve.bannister-tyrrel@ipswich-commercial.com.au

ICC

Name: Ipswich City Council

Address: 45 Roderick Street, Ipswich, Queensland 4305

Email: Jeffrey.Keech@ipswich.qld.gov.au

(b) must be in legible writing and in English;

(d) may be sent by email, at the address set out in clause 7.1(a)(ii).

7.2 When notice taken to be received

Each communication (including each notice, request and demand) under or in connection with this deed is taken to be given by the sender and received by the recipient:

(a) (in the case of delivery by hand or courier service) on delivery;

(b) (in the case of prepaid express post sent to an address in the same country) on the second Business Day after the date of posting;

provided that:

(d) if the communication would otherwise be taken to be received on a day that is not a Business Day or after 5.00 pm, it is taken to be received at 9.00 am on the next Business Day.

7.3 Notices sent by more than one method of communication

If a communication delivered or sent under this clause 7 is delivered or sent by more than one method, the communication is taken to be given by the sender and received by the recipient whenever it is taken to be first received in accordance with clause 7.2.

8. General

8.1 Stamp duties

ICC:

(a) must pay on time all stamp duties on this deed and the transfer of Assets and any related fines and penalties in connection with this deed and the transfer of Assets, the performance of them and each transaction effected by or made under them;

(b) is authorised to apply for and retain the proceeds of any refund due in respect of stamp duty paid under this clause 8.1.

8.2 Costs

ICC will bear the legal costs and expenses for negotiating, preparing and executing this deed.

8.3 Governing law

This deed is governed by and will be construed according to the laws of Queensland.

8.4 Jurisdiction

(a) Each party irrevocably submits to the non-exclusive jurisdiction of the courts of Queensland, and the courts competent to determine appeals from those courts, with respect to any proceedings which may be brought at any time relating in any way to this deed.

(b) Each party irrevocably waives any objection it may now or in the future have to the venue of any proceedings, and any claim it may now or in the future have that any proceedings have been brought in an inconvenient forum, where that venue falls within clause 8.4(a).

8.5 Counterparts

This deed may be executed in any number of counterparts and by the parties on separate counterparts. Each counterpart constitutes an original of this deed, all of which together constitute one agreement.

8.6 Further acts and documents

ICP and ICC must promptly do all further acts and execute and deliver all further documents required by law to give effect to this deed.

8.7 Severance

If at any time any provision of this deed is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair:

(a) the legality, validity or enforceability in that jurisdiction of any other provision of this deed; or

(b) the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this deed.

8.8 Waiver

(a) Failure to exercise or enforce, or a delay in exercising or enforcing, or the partial exercise or enforcement of, a right, power or remedy provided by law or under this deed by a party does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right, power or remedy provided by law or under this deed.

(b) A waiver or consent given by a party under this deed is only effective and binding on that party if it is given or confirmed in writing by that party.

(c) No waiver of a breach of a term of this deed operates as a waiver of another breach of that term or of a breach of any other term of this deed.

9. GST

9.1 Definitions

The terms "GST" and "GST Act" have the meanings ascribed to those terms by the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (as amended from time to time) or any replacement or other relevant legislation and regulations enacted to validate, recapture or recoup tax collected as GST.

Unless expressly stated otherwise, any amounts stated in this deed exclude GST.

9.2 GST payable

If GST is payable under the GST Act in relation to any supply made by a party (Supplier) under this deed, the parties agree that:

(a) an additional amount will be payable by the party providing consideration for that supply (Recipient) equal to the amount of GST payable on that supply; and

(b) the additional amount is payable at the same time as payment is otherwise due under this deed.

9.3 Reimbursement of costs, expenses and other amounts

If a party is required under this deed to reimburse or pay to the other party an amount calculated by reference to a cost, expense, or an amount paid or incurred by that party, the amount of the reimbursement or payment will be reduced by the amount of any input tax credits to which that party is entitled in respect of any acquisition relating to that cost, expense or other amount.

9.4 Variation

(a) If the Supplier determines on reasonable grounds, is advised by the Commissioner of Taxation or otherwise becomes aware that the GST payable on a supply made under or in connection with this deed is different to the additional amount paid by the Recipient to the Supplier in accordance with clause 9.2 (if any) in respect of that supply such that:

(i) the Supplier is required to pay an amount (or further amount) of GST in respect of that supply; or

(ii) the Supplier receives or becomes entitled to receive a refund or credit of the whole or any part of the GST paid by the Supplier in relation to that supply,

the Supplier:

(iii) must provide a corresponding refund or credit to the Recipient; or

(iv) will be entitled to receive the amount of that variation (including any penalties, interest or other charges levied on, or applied to the Supplier) from the Recipient,

as the case may be.

(b) For the purposes of calculating further variations under this clause 9.4, any additional amount referred to in clause 9.2 is taken to be amended by the amount of any earlier variation made under this clause.

(c) Where an adjustment event occurs in relation to a supply made by the Supplier under or in connection with this deed, the Supplier will issue an adjustment note to the Recipient in respect of that supply within 14 days after becoming aware of the relevant adjustment.

9.5 No merger

This clause shall not merge on any transfer of Assets.

Executed as a deed.

A. Executed by Ipswich City Properties Pty Ltd ACN 135 760 637 in accordance with section 127 of the Corporations Act 2001 (Cth):	B.	C.	D.
E.	F.	G.	H.
I. Full name of sole director and company secretary who states that he or she is the sole director and sole company secretary of Ipswich City Properties Pty Ltd ACN 135 760 637	J.	K.	L. Signature of sole director and sole company secretary

M. Signed, sealed and delivered for and on behalf of Ipswich City Council by its duly authorised signatory/delegate in the presence of:	N.	O.	P.
Q.	R.	S.	T. Signature of signatory/delegate
U.	V.	W.	X.
Y.	Z.	AA.	BB. Full name of signatory/delegate
CC.	DD.	EE.	FF.
GG. Signature of witness	HH.	II.	JJ.
KK.	LL.	MM.
NN. Full name of witness	OO.	PP.	QQ.

Schedule 1 – Real Property

1.1 2 Bell Street, Ipswich - Leasehold

Lot/Plan	Title Reference
Lease No.601375840 and Lease No.601375841 over Lot 1 on RP157021	18007008

1.2 Bremer Street Ramp - State Leasehold

Lot/Plan	Title Reference
Special Lease SL 27/51591, Sublease No.602809913 and Sublease No. 602809914 over Lot 25 on Crown Plan SL804975	17719151

1.3 All other Real Property - Freehold

Lot/Plan	Title Reference
Lot 1 on SP300605	51150993
Lot 2 on SP300605	51150994
Lot 2 on SP246525	50864849
Lot 2 on RP209886	18427021
Lot 1 on RP2677	13312126
Lot 1 on RP209886	17044044

1.4 All other Real Property - Leasehold

Lot/Plan	Title Reference
Lease 601907098 over Lot 3 on RP212242	17077066

Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5602160

ITEM: E.4

SUBJECT: Nicholas Street and Union Place Landscaping and Services Completion Works - Nicholas Street Ipswich Resubmission

AUTHOR: Project Accountant

DATE: 17 June 2019

Executive Summary

This is a report concerning the delivery of the remaining scope (yet to be awarded) of construction works (“Remainder Works”) within Nicholas Street and Union Place, for Nicholas St – Ipswich Central, which includes the completion of all construction works above pavement level.

RECOMMENDATION

That the Interim Administrator of Ipswich City Council resolve:

A. That the previous decision of Council, as per Item no. 4 of the Economic Development Committee No. 5 of 14 May 2019 and adopted at the Council Ordinary Meeting of 21 May 2019, be repealed.

B. That Council resolve to prepare a Tender Consideration Plan to enter into a contract with the existing supplier of Contract No. 13139 for Landscaping and Services Completion Works for Nicholas Street and Union Place in accordance with section 230(1)(a) of the Local Government Regulation 2012.

C. That Council resolve to adopt the Tender Consideration Plan to enter into a contract with the existing supplier of Contract No. 13139 for Landscaping and Services Completion Works for Nicholas Street and Union Place as set out in Attachments 1 and 2 of this report, in accordance with section 230(1)(b) of the Local Government Regulation 2012.

D. That Council approve a variation to Contract No. 13139 with JMAC Constructions Pty Ltd for the provision of Landscaping and Services Completion Works as set out in Attachments 1 and 2 of this report.

E. That the Chief Executive Officer be authorised to negotiate and finalise the terms of the contract to be executed by Council and to do any other act necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

RELATED PARTIES

JMAC Constructions Pty Ltd.

Advance Ipswich Theme Linkage

Strengthening our local economy and building prosperity.

Purpose of Report/Background

Ipswich City Council (ICC) called open public tenders for the Design and Construction of Nicholas Street and Union Place in April 2018. J MAC Constructions Pty Ltd (JMAC) was successful and was appointed as the Principal Contractor in November 2018.

The scope of works awarded under the contract included for the full design of all works within Nicholas Street and Union Place, but construction of part only of the full scope of works. The Remainder Works was to be awarded as a separate contract following the completion of JMAC’s contract.

As part of the tender process currently underway for the Administration Building, Library, Civic Space and Car Park refurbishment works (Main Contract), a Separable Portion (SP5) has been included for the completion of the Remainder Works. The Remainder Works has been included in the current tender for the Main Contract as a provisional sum.

Two options have been identified for the delivery of the Remainder Works:

· Remainder Works are delivered by the Main Contractor;

· Remainder Works are delivered by JMAC as a variation to their existing Contract.

A Tender Consideration Plan has been prepared and is attached to this report, detailing its objectives and how they will be achieved and measured, with option identification and analysis.

Rider Levett Bucknall (RLB) has reviewed the JMAC variation and have endorsed the proposed construction costs proposed by JMAC. It should be noted that the proposal includes a market-tested provisional sum for electrical work that will be competitively tendered by JMAC.

A report was tabled at the Economic Development Committee No. 5 of 14 May 2019 (Item no. 4) and adopted at the Council Ordinary Meeting of 21 May 2019. Recommendation A of the report sought an exception under the sole supplier arrangement s235(a). Upon review by Council Legal Services as a part of Council governance measures, it was identified that recommendation A in the Report was erroneous. The correct exception which should have been applied was the exception under s230 of the Local Government Regulation 2012, requiring preparation of a tender consideration plan.

Accordingly the recommendations of the Council Meeting of 25 June 2019 report include the repeal of the above-mentioned erroneous Council resolution, and new recommendations to apply the correct exception. Legal advice from ICC’s General Counsel and City Solicitor is included in confidential Attachment 3.

Financial/RESOURCE IMPLICATIONS

A detailed comparison of tender price versus existing provisional sum is included in Attachment 2. Resource costs of delivering the works are included in the Tender sum. Existing project resources will be utilised to manage the Contractor.

RISK MANAGEMENT IMPLICATIONS

Identification of key risks are included in Attachments 1 and 2. Management of such risks are in accordance with ICC’s Risk Management Framework and guidelines, as stated in the CBD Transformation Project Program Management Plan.

This recommendation is being made to reduce the probability of scope-gaps and design conflicts for this work which is linked to JMAC’s current scope. Furthermore, we anticipate JMAC will be more flexible with regard to incorporating any changes to scope or program that may arise in finalising the timing of this work.

Legal/Policy Basis

This report and its recommendations are consistent with the following legislative provisions:

Local Government Act 2009.

COMMUNITY and OTHER CONSULTATION

This is a scope of work within the overall Program of Works for Nicholas St – Ipswich Central, and as such does not require any additional specific community consultation as this has been undertaken as part of the overall Program of Works.

It should be highlighted that JMAC currently have an established relationship with adjacent stakeholders and we recommend maintaining continuity in this relationship.

Conclusion

It is recommended Council resolve to adopt the Tender Consideration Plan and engage JMAC to deliver the Remainder Works as a variation to their existing Contract.

Attachments and Confidential Background Papers

1.	Tender Consideration Plan ⇩

	CONFIDENTIAL
2.	Variation Assessment Report
3.	Legal Advice Resolution Repeal

Brett Edmunds

Project Accountant

I concur with the recommendations contained in this report.

Sean Madigan

General Manager - Coordination and Performance

I concur with the recommendations contained in this report.

David Farmer

Chief Executive Officer

“Together, we proudly enhance the quality of life for our community”

Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5618747

ITEM: E.5

SUBJECT: Tender Consideration Plan - Ipswich City Properties Pty Ltd Supplier Agreement Novations to Ipswich City Council

AUTHOR: General Manager - Coordination and Performance

DATE: 19 June 2019

Executive Summary

This is a report concerning the Quote or Tender Consideration Plan for the engagement of suppliers and contractors who are currently engaged by Ipswich City Properties for the Ipswich Central CBD Transformation Project and for the novation of these existing agreements from Ipswich City Properties Pty Ltd (ICP) to Ipswich City Council (ICC) as part of the winding up of ICP and the integration of the assets and operations.

RECOMMENDATION

That the Interim Administrator of Ipswich City Council resolve:

A. That a Tender Consideration Plan be prepared (attachment 1) in accordance with section 230 (1) (a) of the Local Government Regulation 2012 (Qld) for the novation of the existing Supplier Contracts or Agreements (to which Ipswich City Properties Pty Ltd are a party to the Contract or Agreement), be novated from Ipswich City Properties Pty Ltd to Ipswich City Council as outlined in the report by the General Manager – Coordination and Performance dated 19 June 2019.

B. That in accordance with section 230(1)(b) of the Local Government Regulation 2012, the Tender Consideration Plan (“TCP”) (Attachment 1) of the report by the General Manager – Coordination and Performance dated 19 June 2019 be adopted by Council. The TCP contained in Attachment 1 of the report is for the novation of existing supplier contracts or agreements (to which Ipswich City Properties Pty Ltd are a party to the contract or agreement) to be novated from Ipswich City Properties to Ipswich City Council.

C. That Council accept novation of the existing nine (9) supplier/contractor agreements as listed in Attachment 2 of the Report by the General Manager Coordination and Performance dated 19 June 2019, (as to which Ipswich City Properties Pty Ltd are a party to the Contract or Agreement), be novated from Ipswich City Properties Pty Ltd to Ipswich City Council for works pertaining to the Ipswich Central CBD Transformation Project as further described in the Report by the General Manager – Coordination and Performance dated 19 June 2019.

D. That Council accept novation of the existing fourteen (14) supplier/contractor agreements as listed in Attachment 3 of the report by the General Manager Coordination and Performance dated 19 June 2019, (as to which Ipswich City Properties Pty Ltd are a party to the Contract or Agreement), be novated from Ipswich City Properties Pty Ltd to Ipswich City Council, for works pertaining to the retail operations of the 2 Bell Street and Ipswich City Square properties as further described in the Report by the General Manager – Coordination and Performance dated 19 June 2019.

E. That Council accept novation of the existing eight (8) supplier / contractor agreements as listed in Attachment 4 (previously novated from EPC Pacific Ipswich 1 Pty Ltd to Ipswich City Properties Pty Ltd) of the Report by the General Manager Coordination and Performance dated 19 June 2019, (as to which Ipswich City Properties Pty Ltd are a party to the Contract or Agreement), be novated from Ipswich City Properties Pty Ltd to Ipswich City Council, for consultancy works pertaining to the design of the Administration Building Base Build as further described in the Report by the General Manager – Coordination and Performance dated 19 June 2019.

F. That the Chief Executive Officer be authorised to negotiate and finalise the terms and novation of the contracts to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

RELATED PARTIES

Various suppliers and sub-consultants listed in Attachments 2, 3 and 4.

Advance Ipswich Theme Linkage

Strengthening our local economy and building prosperity

Purpose of Report/Background

ICP has previously engaged a number of suppliers/contractors and sub-consultants for works pertaining to the Ipswich Central CBD Transformation Project and the ongoing operations of Ipswich City Square.

Due to winding up of ICP and the integration of the assets and business operations into Ipswich City Council by the end of June 2019, to ensure continuity of project works in relation to the CBD Redevelopment Project and the ongoing retail operations, any project contracts/supplier agreements are recommended to be novated to Ipswich City Council.

A detailed Tender Consideration Plan is included in Attachment 1.

The suppliers have been grouped as follows:

Project Suppliers (i.e. consultants and contractors engaged for the CBD Redevelopment)

Project suppliers requiring novation are listed in Attachment 2. These are suppliers directly engaged for redevelopment works. The procurement process used by ICP to engage project suppliers is as per that set out in the ICC CBD Transformation Program – Program Management Plan (PMP) dated September 2016. The PMP requires ICP procurement to be carried out in accordance with ICC procurement policies and procedures. To the best of the knowledge of the current project team, this process was followed by the Project team with oversight/certification by an independent probity advisor.

Project Suppliers (i.e. suppliers relating to the ongoing operations of Ipswich City Square)

Retail suppliers requiring novation are listed in Attachment 3. These are suppliers engaged to provide day-to-day services to maintain ICP-owned properties, e.g. cleaning, security, etc. The procurement process used by ICP to engage retail suppliers is as per that set out in the Ipswich City Properties Pty Ltd – Procurement Policy. It is recommended to continue to engage these suppliers on a month-to-month arrangement, up to a maximum of 6 months to enable a review to be undertaken on whether Council has existing suppliers and whether works is allowable under these contractors or to conduct a new procurement process.

Consultants novated from EPC to ICP

Ipswich City Properties Pty Ltd had previously entered into a Development Management Agreement with a developer, EPC and Council had entered into an Agreement for Lease with EPC, in relation to the construction and lease of the administration building.

Council resolved to negotiate and finalise the termination of the agreements of Council and ICP with the developer EPC. As part of the settlement, Council agreed to, amongst other things, pay consideration to the developer EPC for preparation of plans and designs for the administration building. As part of the settlement it was agreed that consultants engaged by EPC in relation to the project would be novated to ICP as per Attachment 4.

The current Contract Cost Summary in relation to the Consultants novated from EPC is set out in the Confidential Attachment 6 and outlines the possible Post Novation Fees payable in relation to all contracts of approx. $1 million.

Council is seeking confirmation, clarification and advice as to terms of these contracts and possible obligations in relation to the post novation fees or the ability to vary the scope and associated contract price.

The Principal’s Project Requirements as part of the tender documentation for the appointment of the Contractor to design and construct the Administration Building allows the option for the Contractor to accept novation of these consultants as outlined in Attachment 4.

As any obligations under the current contracts already reside within the Council consolidated group through ICP and these consultants have been engaged as part of the design of the Administration Building Base Build, it is recommended that the consultants listed in Attachment 4 be novated to Council.

Sub-consultants (i.e. consultants directly by the Project Management Partner relating to the CBD Redevelopment)
The list of consultants currently engaged directly by Project Management Partner, Ranbury Management Group, are listed in Attachment 5. The procurement process used by the project team to select sub-consultants was either based on value for money benchmarking (performed by an independent cost assessor) against industry standards for recommended sub-consultants, or via a competitive tender for all other sub-consultants. The existing agreement with Ranbury allows the appointment of sub-consultants that Ranbury directly manages. On the novation of the Management Services contract with Ranbury to ICC, there will be a number of sub-consultants who will continue to be engaged by Ranbury. ICC will undertake a review of these sub-consultant agreements to determine whether there is benefit and value in Council engaging the consultants direct, taking into consideration transfer of risks, etc.

Financial/RESOURCE IMPLICATIONS

Any additional resources required as a result of the engagement of these suppliers or contractors on the Ipswich Central CBD Transformation Project will be funded within current project budget allocations.

RISK MANAGEMENT IMPLICATIONS

Existing contract terms and conditions have been subject to legal review to ensure all rights, obligations and securities have been transferred as part of the novation of the contracts to ICC. If the existing suppliers and contractors were not novated and new procurement processes were undertaken there would be delays to the project and potential loss of knowledge and experience on the project.

Legal/Policy Basis

This report and its recommendations are consistent with the following legislative provisions:

Section 230(1) (a) and (b) of the Local Government Regulation 2012

COMMUNITY and OTHER CONSULTATION

There will be no effect to the community regarding the change of Principal for the Contracts.

Conclusion

To ensure continuity of project works and the transfer of rights and obligations under the contracts, it is recommended that Council agree to the novation of the existing ICP agreements to ICC as part of the winding up and integrations of the assets and operations of ICP into ICC.

Attachments and Confidential Background Papers

1.	Tender Consideration Plan ⇩
2.	Ipswich Central CBD Transformation Project Suppliers Novation Summary ⇩
3.	Ipswich CBD Retail Operations Suppliers Novation Summary ⇩
4.	Ipswich Central CBD Transformation Project Consultants novated from EPC Novation Summary ⇩
5.	Ipswich Central CBD Transformation Project Ranbury Subconsultants Summary ⇩

	CONFIDENTIAL
6.	Contract Cost Summary – Consultants Novated from EPC

Sean Madigan

General Manager - Coordination and Performance

I concur with the recommendations contained in this report.

David Farmer

Chief Executive Officer

“Together, we proudly enhance the quality of life for our community”

Council

Special Meeting Agenda

27 June

2019

Doc ID No: A5622520

ITEM: E.6

SUBJECT: Tender Consideration Plan - Appointment of Retail Leasing Agent - Ipswich Central CBD Transformation Project

AUTHOR: General Manager - Coordination and Performance

DATE: 20 June 2019

Executive Summary

This is a report concerning the Quote or Tender Consideration Plan for the appointment of a retail leasing agent for Ipswich Central CBD Transformation Project.

Ranbury Property Services Pty Ltd (“Ranbury”) are currently appointed as leasing agents by Ipswich City Properties Pty Ltd (ICP) in relation to the Ipswich Central CBD Transformation Project. The timeframes, process and resolutions of the ICP that lead to the appointment of Ranbury are outlined in the Tender Consideration Plan (Attachment 1).

RECOMMENDATION

That the Interim Administrator of Ipswich City Council resolve:

A. That a Tender Consideration Plan be prepared (attachment 1) in accordance with section 230 (1) (a) of the Local Government Regulation 2012 (Qld) for the appointment of a Retail Leasing Agent, as outlined in the report by the General Manager – Coordination and Performance dated 20 June 2019.

B. That the Tender Consideration Plan (attachment 1) as set out and outlined in the report by the General Manager – Coordination and Performance dated 20 June 2019 (“the Report”) in accordance with section 230(1)(b) of the Local Government Regulation 2012 for the appointment of a Retail Leasing Agent in relation to the Ipswich Central CBD Transformation Project be adopted by Council.

C. That Council appoint Ranbury Property Services Pty Ltd as retail leasing agent for the Ipswich Central CBD Transformation Project.

D. That the Chief Executive Officer be authorised to negotiate and finalise the terms of the appointment to be executed by Council and to do any other acts necessary to implement Council’s decision in accordance with section 13(3) of the Local Government Act 2009.

RELATED PARTIES

Ranbury Property Services Pty Ltd

Advance Ipswich Theme Linkage

Strengthening our local economy and building prosperity

Purpose of Report/Background

As part of Ipswich City Council’s (“Council”) overall CBD Redevelopment Strategy, Ipswich City Properties Pty Ltd (ICP), acquired the properties of Ipswich City Square in March 2009, and later, 2 Bell Street in February 2018 within the Ipswich CBD.

Council then entered into a Development Management Agreement (DMA) with ICP, for the development of the Civic Space, Library and Car park and Council resolved to construct and own a new Administration Building in the CBD. Alongside these works, ICP would be responsible for the redevelopment of retail spaces within Ipswich City Square and 2 Bell Street. This included identifying and implementing strategies to secure the most suitable tenants for retail spaces following completion of redevelopment works.

At the Council Meeting of 16 October 2018, ICC resolved to wind-up operations of ICP.

An Officers’ Report will be presented at the 27 June 2019 Special Council meeting requesting resolution for the adoption of recommendations to transfer assets, operating and redevelopment activities of ICP to ICC. Once the properties transfer to Council, Council will be responsible for delivery of the retail leasing strategy and the leasing responsibilities will transfer over to ICC.

Council therefore will need to appoint a leasing agent with the appropriate registrations and licences to act as the leasing agent for the Ipswich Central CBD Transformation Project.

To ensure consistency in the delivery of the leasing strategy and to maintain market confidence in relation to the leasing opportunities and the broader CBD Redevelopment Project, a detailed Tender Consideration Plan has been prepared in relation to Council not undertaking a full tender process for the appointment of an agent and recommending the appointment of the Retail Leasing Agent currently appointed by Ipswich City Properties Pty Ltd.

Appointment of Leasing Agents by ICP

To seek recommendations on the most appropriate leasing agent and strategy to achieve the agreed retail goals, Whittaker Property Group was engaged by ICP to provide this and a report dated 6 June 2018 Retail Leasing Agency Recommendations for Ipswich Central was tabled at the 26 June 2018 ICP Board meeting and the Board resolved to further review the leasing agent appointment. This report is included in confidential Attachment 2.

A report titled the Retail Strategy & Marketing Sounding Update for Ipswich Central Project was presented at the 19 December 2018 ICP Board meeting. That report was presented by a (now former) officer of Council and included incorrect advice to the new ICP Board (being the Interim Administrator) that indicated the former Board had already resolved to appoint Ranbury Property Services Pty Ltd as the leasing agent for the Ipswich Central CBD Transformation Project based on the Whittaker report. On that advice, the ICP Board resolved at the 19 December 2018 meeting to appoint Ranbury Property Services Pty Ltd as the leasing agent.

The appointment of Ranbury Property Services Pty Ltd by ICP in December 2018 as leasing agent is consistent with the independent recommendation of the Whittaker Property Group as per Attachment 2.

The inconsistent advice by the former Council officer to the ICP Board on 19 December 2018 was brought to the attention of the ICP Board on 24 June 2019.

Full details of the timeframes, processes, officer report recommendations and board resolutions that lead to the appointment of Ranbury is set out in the Tender Consideration Plan (Attachment 1).

FINANCIAL/RESOURCE IMPLICATIONS

Any additional resources required as a result of the engagement of Ranbury Property Services Pty Ltd as retail leasing agent for the Ipswich Central CBD Transformation Project will be funded within current project budget allocations.

RISK MANAGEMENT IMPLICATIONS

If a leasing agent is not appointed by Council, then leasing opportunities in relation to the Ipswich Central Redevelopment Project will not be able to be marketed by an external agent. This will put at risk the delivery of the retail strategy as Council does not have the expertise internally.

Legal/Policy Basis

This report and its recommendations are consistent with the following legislative provisions:

Section 230(1) (a) and (b) of the Local Government Regulation 2012

COMMUNITY and OTHER CONSULTATION

Nil

Conclusion

To ensure continuity of Project works in regards to retail leasing, it is recommended that Council agree to appoint Ranbury Property Services Pty Ltd as retail leasing agent for Ipswich Central CBD Transformation Project.

Attachments and Confidential Background Papers

1.	Tender Consideration Plan ⇩

	CONFIDENTIAL
2.	Retail Leasing Agency Recommendations for Ipswich Central

Sean Madigan

General Manager - Coordination and Performance

I concur with the recommendations contained in this report.

Andrew Knight

General Manager - Corporate Services

“Together, we proudly enhance the quality of life for our community”