Monthly Archives: August 2012

OPEN SPACE – THE CONTINUING ALMA CLUB SHAM

NEWS FLASH

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.

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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.

Public Question 

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.

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* 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.

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OPEN SPACE – COUNCIL SHAM OVER THE ALMA CLUB

The Community/Council Plan recognises the importance of open space and states that Council “will actively seek new opportunities to increase and optimise open space” because it also recognises that Glen Eira has the least per capita open space in metro Melbourne (a per capita ratio that is further declining as development continues).  Reading this it would be reasonable to assume that when Council is presented with a rare opportunity to acquire the heavily discounted 7100 square metre Alma Sports Club site for $3m (located in a densely populated minimal change area), Council would at least seriously consider the opportunity and allow residents to express their wishes.  Alas not so.

When presented with this unique opportunity early this year, Council has rejected the offer without any meaningful dialogue with the club and has yet to discuss the offer in an open Council Meeting.  The end result of Council’s rejection appeared in the The Age, 28th July, 2012  – the site is now “expected to sell for about $8 million and,  following a rezoning, make way for a $100-million plus village with commercial and residential components, according to sources”.    GERA believes this offer (an $8m site for $3m) was worthy consideration and open discussion at a Council Meeting.  By rejecting the offer, Council has shown a lack of vision and a failure to invest in the future of Glen Eira.

Background

The 85 year old Alma Sports Club, located in the narrow, dead end Wilks Street, Caulfield North, occupies a 7100 square metre site. The site (in a residential area and only accessible from Wilks Street) features squash courts, 3 entous cas tennis courts, bowling green, car park and a generous club house with recently renovated facilities (restaurant, function rooms, bar and a cabaret venue).

In recent years, the not for profit, community focussed club has experienced financial difficulties. Wanting to preserve the amenity of the area, the Alma Sports Club approached Council to informally discuss a possible sale of the land/lease back agreement – the basic concept proposed by the club was for Council to buy the site for the cost of the mortgage ($3m) and allow the club to continue operating by a lease back agreement. Unfortunately, this proposal never progressed beyond the informal stage as Council (i.e. the Administration) categorically rejected the offer.  No discussion/decision occurred in an ordinary Council Meeting.

There are only two public records that the club approached Council with this discounted offer of sale of land/lease back agreement:

  • The Record of Councillor Assembly for 31st January, 2012 (included in 20th March Council Meeting Minutes Section 8bi – refer below link) is, as usual, uninformative.   Residents should be aware that Councillor Assemblies are in camera briefing sessions between the Council and the Administrations – by law decisions cannot be made at Assemblies, they can only be made at minuted Council Meetings.
  • At the Council Meeting of 28th February, 2012, a public question  was submitted by the Alma Sports Club, however, the question was read and answered at the meeting nor was it recorded as being taken on notice in the minutes of that meeting (as required by local law).  The public question arose out of frustration at Council’s refusal to discuss the potential sale and leaseback agreement with the Alma Club.   The  question and response was later attached, without any preamble, to the last page of the Council Meeting Minutes, 20th March, 2012.

Now at the beginning of August, 2012, the Glen Eira Leader (7/8/2012) reports that the site is to be auctioned and the club disbanded.  As the above linked “Age” article indicates, the site

  • is valued at $8 million (even though significant site demolition costs will need to be incurred)
  • will be subject to re-zoning to a higher density zone
  • is expected to become a $100-million plus village with commercial and residential components, according to sources”. 

The fact that this land is located within a minimal change area and has limited access (dead end, narrow street) will not preclude a major development.  The minimal change area policy, which generally restricts development of a lot to two dwellings, also states that where the lot size is larger than average (without an accompanying definition of  larger than average lot size)  higher density development will be permitted.  GERA accepts that at 7,100 square metres the site qualifies as “larger than average lot size”  – in this pro-development Council the question is not  if it will be permitted, it is how big will it be.

GERA finds it deplorable that this issue has never been discussed at an open Council Meeting and that Councillors and the Administration, by refusing to discuss a sale/lease back  agreement, have allowed a site with enormous potential for providing passive open space to be lost forever.

In reviewing Council’s performance on this issue, residents should bear in mind the following

  • In refusing to enter into any meaningful dialogue with the Alma Club re the potential sale/lease back agreement Council has again failed, despite it’s rhetoric, to increase Glen Eira’s open space.  Additionally, in failing to discuss the opportunity in an open Council Meeting, Council’s claims of open, transparent, accountable governance are called into serious question.
  • Council’s response to the Alma Club public question  includes the following “Council is operating within it’s own financial constraints. It is imperative that we spend ratepayers’ funds responsibly.  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”.   In GERA’s opinion this statement is woefully inadequate and lacks vision as
    • it fails to recognise the uniqueness of the clubs holdings (acquiring a site valued at $8m for $3m),
    • since no meaningful dialogue has occurred on the Alma Club’s proposal Council has no idea of what the lease back agreement would entail (potential rental income?)
    • while the order of the steps in the process that was used to develop the Maccabi Victoria Sports Foundation building of the Leon Haskins Tennis Centre (in Bignell Road, Bentleigh East, which comprises eight tennis courts, a Pavilion and Club Room) on Council Land differs from the Alma Club sale/leaseback proposal the end result is the same – i.e. private club facilities on council land
  • Council’s current budget is predicting a $5-6m surplus,  it therefore has the money available to purchase the heavily discounted site.   Plus Council has a discretionary spending fund.  While GERA recognises the need to budget and plan, GERA also recognises that unexpected opportunities arise and the sale of the Alma Club is an unexpected opportunity that Council should act on.  Council has consistently found funds for the unexpected – yet in this case lacks the will and vision.  Some, but not all, examples of unexpected funding in the past 12 months are
    • $2.2m to purchase 2 house lots adjoining Packer Park in 2011 (the combined size of the lots being approximately 20% of the 7100 sqm site being offered for $3m)
    • $1m+ to expand the GESAC carpark and relocate the playground
    • $750,000 to take advantage of a $250,000 state government grant to remodel the playground in the Murrumbeena Park
  • Council could also raise the funds by
    • increasing the Open Space Contribution Levy, which is a levy payable to Council by developers when a site is subdivided and which is intended to provide Council with funding for the acquisition of parkland.  The State Government determined maximum rate payable on this levy is 5% of the land value – as mentioned in an earlier GERA Open Space posting, Glen Eira open space levy rates vary across the municipality and rarely is the full 5% charged.
    • deferring some planned expenditures, for example
      • warm season grass planting
      • concrete plinthing ($500,000 for Caulfield Park)

GERA believes that Council (Administration and Councillors) have a lot to answer for over it’s handling of the Alma Club issue – not only for the usual lack of open, transparent and accountable governance and a failure to involve the community but also for a lack of vision and a failure to invest in the future of Glen Eira