The Alma Sports Club was just sold at auction for $7.94m. Glen Eira has just lost a unique opportunity to acquire significant open space.
Following on from GERA’s previous posting re the sale and probable $100m redevelopment of the Alma Sports Club, residents should note that the potential sale/leaseback agreement between Council and the Alma Sports Club (a land locked site of 7100+ square metres, valued at $8m for $3m) was again not openly discussed at the last Council Meeting (14/8/2012).
The Alma Club
Although the potential Alma Sports Club sale/leaseback was mentioned in response to a public question raised by a resident, the public question (presented below – (Council Meeting Minutes, 14th August, 2012 – Section 11.4) did not engender any discussion – it comprised a formal reading of the question and answer. Cr. Penhalluriack dissented from the response.
“In considering an offer from the Alma Sports Club to sell their property, did Council submit a proposal to the Club that would be acceptable to Council I.E. did Council submit a counter offer? Did Council consider utilising funds from Open Space contributions to fund the purchase?”
Public Question Answer*
The Mayor read Council’s response. He said:
“The Alma club proposed that Council buy, and then leaseback, the land to the club so that the club would continue to operate as before. Council did not accede to that proposition. Council spends far more each year on improvements to public open space than it receives in open space contributions. Council’s 2012-13 Budget and ten year Strategic Resource Plan already commit Council to spend the open space contributions expected to be received. A priority is to convert the former Glenhuntly reservoir to public open space. The reservoir is on two main roads and a tram line and is very accessible to the community.
Council has limited capacity for further borrowings. Council is budgeting to repay the GESAC loan over 14 years. Council also has to address the defined benefit superannuation shortfall which was notified to all Councils earlier this month. In those circumstances, Council has not put a counter
proposal to the Club.
Council understands that negotiations are underway for the proceeds from sale of the site to be used to improve community recreation facilities in Glen Eira.
In the event of future subdivision of the land, a public open space contribution would be involved and Council would propose to take that in the form of land to be used to provide a park for the local community.”
GERA believes that Council is not acting in the best interests of, or in accordance with the expressed open space wishes of the community by
- not entering into formal discussions of the potential sale/leaseback agreement. Any agreement would involve a myriad of details, proposals and counter proposals yet none of this has occurred. Council’s seemingly dismissive attitude appears to be summed up in the February, 2012, response to a public question which was attached, without any preamble, to the last page of the Council Meeting Minutes, 20th March, 2012.
“There are dozens of clubs within Glen Eira. There is no prospect of Council using ratepayers’ funds simply to provide financial support to the operation of any private club”.
As a result, Council is showing a lack of will and vision, a continued unwillingness to actively address the well documented and long standing residents’ concerns re a need to increase the amount of open space – hence the end result will be that a site with enormous potential for providing passive open space will be lost forever.
- failing to discuss the potential sale/leaseback agreement openly at the Councillor level, Council has failed to act in accordance with the principles of good governance (openness, transparency and accountability) and has hence
- restricted ratepayers awareness of the potential increase in open space
- prevented ratepayers from understanding the pros and cons of the potential access of additional open space
- failed to provide for any community participation or community input (despite much lauded claims of welcoming and encouraging community participation)
As surmised in our previous posting on this issue, we repeat that GERA believes that Council (Administration and Councillors) have a lot to answer for the handling of the Alma Club issue. Discussions/negotiations have never gone beyond the initial proposal, yet this proposal is not dissimilar to various other proposals where private club facilities have been built on public land. GERA believes Council has not acted impartially, responsibly or prudently by not formally discussing the sale/leaseback agreement and re-iterates that in doing so Council has shown a lack of vision and a failure to invest in the future of Glen Eira.
* GERA’s comments on Council’s response to the public question are:
- Sale and Lease Back Proposal
Private sporting/social club facilities on public land is an accepted concept – it represents a subsidy to the club which enables facilities, that benefit the community, to be built which might otherwise not be built. Providing such “subsidies” is one of the essential roles of government.
Usually, the public land exists prior to the building of the facilities (eg. the most recent example being the 2008 Maccabi Victoria Sports Foundation building of the Leon Haskins Tennis Centre in Bignell Road, Bentleigh East), however, in the Alma Sports Club instance the process differs. The facilities have been built on private land that, under the proposed sale/leaseback agreement, would later become public land. Regardless of the process, the end result is the same – a fact which Council has failed to recognise or take into consideration in it’s decision to “not accede” to, or even discuss, the proposal.
- Open Space Levy
The Open Space Contribution Levy, is a State Government legislated levy, payable (in the form of land or dollars) to Council, by developers when a site is subdivided. It is intended to provide Councils with funding for the acquisition of parkland, however, unlike other Councils, Glen Eira Council does not segregate these funds for the specific purpose of the acquisition of new parkland. Glen Eira’s interpretation of the legislation is such that funds raised from the levy may be used to maintain existing parkland. As a result, when rare opportunities arise to acquire open space, such as the unique Alma Sports Club opportunity, this Council does not have the funding readily available to take advantage of the opportunity and can, with questionable validity, claim it does not have the funds. Council’s 2010-2011 Annual Accounts states that in 2010 the Open Space Levy revenue was $1.630m and in 2011 it was $1.664m.
For the past 15 years Glen Eira residents have repeatedly and vocally expressed a need for more open space yet Council persistently uses the Open Space Contribution Levy for general parkland maintenance rather than the acquisition of future parkland. Residents are now asking why this is so.
- Glen Huntly Reservoir is a priority
Unfortunately Council’s performance on the Glen Huntly Reservoir (also known as the Booran Road Reservoir) does not support a “priority” status being given to this site. As mentioned in our 15th June, 2012, posting on the Booran Road Reservoir, in 2006/8 Council knew that the site would revert to Council (the site was officially reverted to Council in 2010). Despite two public consultations (March, 2008 and June, 2012), Council is yet to develop any substantive plans for the site. Council’s 2012 Strategic Resources Plan provides for conversion work on the reservoir to commence in 2016/7 and estimated a completion time of 2 years. Given the well documented and long standing open space issues within Glen Eira, the fact that it has taken/will take 13 years (from unofficial knowledge of the site reversion in 2006 to actual park completion in 2018/9) raises a question about Council’s definition of “priority”.
- GESAC loan and the Defined Superannuation Shortfall
- Council’s well publicised statements re GESAC are that it was under budget (under budget construction costs being further offset by liquidated damages) and financially successful – GESAC was not only self-funding but would also generate a profit. Now, in what GERA predicts will be first of many instances, the GESAC loan commitments are a major reason Council is unable to take advantage of this unique opportunity to valuable open space.
- The inclusion of the Defined Superannuation Shortfall would be a valid consideration except that
- As per Council’s Minutes, the potential sale/leaseback proposal (February, 2012) was rejected well before the superannuation shortfall was known (July, 2012)
- Of the reported $7.1m shortfall, $3m is already budgeted for and Council has 15 years to budget for the remaining $4.1m (Glen Eira Leader article – Superannuation Debt).
- No Counter Proposal
As mentioned in our previous posting and confirmed by the above answer to the public question, discussions with the Alma Sport Club, have been minimal. Council has not reviewed or considered the proposal in any detail or reviewed the proposal to the extent that a counter proposal could be made. The advertisements re the sale indicate that generous interest free vendor terms are available – a consideration that Council has failed to take into account. Not only would be the club owned land be available to Council at a heavily discounted price, the lease back agreement would provide an income for Council.
- Proceeds of Sale
The Alma Sports Club constitution clauses related to the dissolution of the Club precludes individual members benefitting from the sale of club assets. In the event of dissolution, any profit made on the disposal of club assets must be returned to the community via distribution to a similar organisation/s or Council. Hence, as mentioned in the above response, “Council understands that negotiations are underway for the proceeds from sale of the site to be used to improve community recreation facilities in Glen Eira”.
- Land as Open Space Contribution
Given Glen Eira’s aversion to pocket parks (most, along with small community centres, having been sold to developers pre 2004), Council’s statement that it “would propose to take the open space contribution in the form of land to be used to provide a park for the local community” is inconsistent with Council’s track record. 5% of the land value is the maximum open space contribution that can be levied on developments – simplistically, that means that Council would gain approximately 356 sqm of the site as parkland.