Freo's View

FREMANTLE ADOPTS 2020/21 BUDGET

Posted in budget, city of fremantle, finances, local government, property, Uncategorized by freoview on July 9, 2020

 

There has been a lot of debate in Fremantle and other councils about when a rates increase is or isn’t a real rates increase. It is all quite discombobulated, so I will just copy and paste the media release from the City of Fremantle without any comment:

Fremantle Council has adopted a 2020-21 annual budget that features no increase in rate revenue and a freeze on the majority of fees and charges.

The decision to maintain rate revenue at the same level as the previous financial year was made in recognition of the financial impact of COVID-19 on ratepayers and the business community.

Fremantle Mayor Brad Pettitt said the 2020-21 budget was developed in an environment unlike any other in living memory.

“The tremendous public health, social and economic upheaval created by the COVID-19 pandemic has impacted us all in ways that we could not have imagined a short time ago,” Mayor Pettitt said.

“We know there are many Fremantle residents and businesses that have taken a big financial hit as a result of COVID-19, which is why we’ve chosen not to have any increase in rate revenue.

“We’ve also adopted a new hardship policy to provide relief to ratepayers facing financial stress.

“It must be remembered that COVID-19 has had a significant impact on the City’s finances as well. We estimate we will lose about $4 million in revenue in 2020-21 from things like parking and commercial rents.

“That means we’ve have had to make some very tough decisions to tighten our belts and choose to focus on the provision of core services and the delivery of our capital works program.

“The council will monitor this position during the year to ensure any improvement is delivered back into community services or recovery projects to support our community.”

Mayor Pettitt said the situation with rates had been made more complicated by this year’s revaluation of properties by the state government’s Valuer General.

“While the City has committed to no overall increase in rate revenue this year, individual rates notices may go up or down depending on the change in the Gross Rental Value of specific properties,” Mayor Pettitt said.

“Almost three quarters of Fremantle ratepayers will see their rates notice for 2020-21 either stay the same or go down compared to last year’s rates bill. Ten per cent will see an increase of less than two per cent, and 16 per cent of ratepayers will see their rates go up by more than two per cent.

“Some commentators have argued that because on average GRV’s have gone down rates should go down by the same amount, but that’s a misunderstanding of how rates are calculated.

“Every year councils work out how much revenue is required to provide the services and facilities the community needs, and then calculate the rate-in-the-dollar based on that.

“This year because on average GRV’s in Fremantle have gone down by about 10 per cent the rate-in-the-dollar has gone up by 10 per cent, but the amount of revenue collected will stay the same as last year.”

Despite the financial impact of COVID-19 the 2020-21 annual budget still includes funds for a substantial capital works program, including:

  • Completion of Walyalup Civic Centre and Library
  • New Kings Square play space
  • Public realm upgrades at Newman Court and Kings Square
  • Fremantle Golf Course, club house and community facility
  • Fremantle Markets building works
  • Arthur Head conservation works
  • Container Deposit Scheme refund point at Fremantle Recycling Centre
  • New Fremantle Park car park

In addition to adopting the 2020-21 annual budget at a special meeting last night, the council also endorsed a new Financial Hardship Policy.

The policy was developed to assist ratepayers that may be experiencing financial hardship and require a different approach to paying outstanding rates and service charges.

The support offered under the policy includes the City accepting reduced payments and establishing an alternative payment plan, pausing the payment of rates, administration fees and charges, ceasing penalty interest for up to six months and suspending debt recovery action.  

For more information on how local governments calculate rates please visit the Council Rates Explained page on the WA Local Government Association website.

FREMANTLE FINANCIAL HARDSHIP POLICY FOR RATEPAYERS

Posted in city of fremantle, covid-19, finances, local government, property, Uncategorized by freoview on July 8, 2020

 

It has only now come to my attention that the FPOL Committee of Fremantle Council will this evening sign off on a Financial Hardship Policy for ratepayers affected by the Covid-19 pandemic.

Each application will be determined on a case by case basis and where possible, the City will provide assistance subject to the following conditions:

•In the opinion of the Chief Executive Officer the ratepayer is experiencing genuine financial hardship

•The ratepayer’s circumstances can be substantiated upon request

•The ratepayer is not bankrupt or subject to a bankruptcy petition

•The property is the principal place of residence or the principal place of business of the ratepayer

•The applicant must be the owner or co-owner of the property and legally liable for payment of rates and charges

When a ratepayer is determined by the City to be in Financial Hardship, the City will offer the following options:

•Temporarily accept reduced payments and establish an alternative payment arrangement plan;

•Temporarily pause payment of rates, administration fees and charges;

•Cease any penalty interest for up to 6 months;

•Suspend any debt recovery action.

Payment arrangements will be facilitated in accordance with Section 6.49 of the Local Government Act 1995and the City will endeavour to establish payment terms that are realistic and achievable for the ratepayer.

 

Roel Loopers

 

DETAILS OF WALYALUP CIVIC CENTRE FINANCES

 

This Wednesday’s FPOL Committee of Fremantle Council will address some items concerning the Annual Electors Meeting, which was held early this year. This one concerning the finances of the new Walyalup Civic Centre. Below an edited version of the agenda item.

This report considers a motion moved at the Annual General Meeting of Electors on 9 March 2020 which recommended that:

It is proposed that the City of Fremantle engage the Auditor General to conduct a Post Investment Review of the construction of the new Civic Administration building in Kings Square, and provide a public report as to whether it has been implemented in accordance with the approved 2012 Kings Square Business Case, and whether the $50 million project investment has been in the best interest of Fremantle ratepayers.

The report should highlight any differences between the 2012 Business Case, as approved by Council, with particular focus on the following:

  • Has the total cost of the Admin building been constrained to the cost stated in the 2012 Business Case, including all cost associated with the projects dating back to the approval of the Business Case by Council in early 2013?
  • Has the City of Fremantle been successful in delivering on its financial risk management strategy, where it clearly stated that all cost over-runs would be managed via a fixed price contract for the building construction, where the contractor would be liable for cost overruns not the City of Fremantle?
  • Was the Admin building funded via Project Financing, as clearly stated in the 2012 Business Case, whereby the project would not require funds to be drawn from the City’s other sources of financing. In other words, was any debt associated with the project ring-fenced to the project itself rather than putting an additional debt burden on Fremantle ratepayers?

The Kings Square Business Plan was prepared for Council and publicly advertised in the second half of 2012 and adopted by Council in February 2013. The Plan provided the following costs for the construction of the new civic building;

Civic Centre and Library $16,779,883

Administration $27,564,642

TOTAL $44,344,525

These costs included demolition, base build and fit-out.

When budgeting for these works in subsequent years the City applied the Consumer Price Index (Perth) increases to the figures used in the original Plan. These were applied as follows;

Year

2014/15: $45,807,894

2015/16: $46,357,589

2016/17: $46,589,377

2017/18: $46,915,502

In late 2017 the City awarded a contract for the demolition of the former civic building and in late 2018 awarded a contract for the construction of the new civic, library and administration building and more recently a contract for additional furniture not contained in the construction contract. These amounts were for;

Demolition $ 2,383,743

Civic, Library, Administration $43,461,128

Additional Fit out/Furniture* $ 661,000

TOTAL $46,505,871

*(Not included in construction contract).

The project has been funded through reserve funds generated from the sale of property and debt funding as described in the Plan as below;

Reserves $29,550,000

Loan $20,000,000

TOTAL $49,550,000

Council meetings are in situ again and open to the public at the North Fremantle Community Centre, starting at 6pm.

Roel Loopers

 

FINANCIAL SUPPORT FOR STRUGGLERS

Posted in city of fremantle, community, covid-19, finances, Uncategorized by freoview on April 25, 2020

 

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FREMANTLE CITY NEEDS TO SAVE 13,5 MILLION

Posted in city of fremantle, community, covid-19, economy, finances, local government, Uncategorized by freoview on April 7, 2020

 

Fremantle Deputy Mayor and South Fremantle Councillor Andrew Sullivan wrote on Facebook that the City of Fremantle will need to save $ 13,5 million, and that one of the considerations for the elected members is to scrap the $ 800,000 CAT bus “in this time of austerity.”

Sullivan says that the Covid-19 crisis means that a lot of the $ 28 million business-like activity revenue of the City is no longer coming into the council coffers. Parking, commercial leases, activities at the arts and leisure centre that create income, and numerous charges and fees, have all been reduced to next to nothing.

Councillors will have to make hard and unpopular decisions when budget considerations for the next financial year are on.

There is of course also some expenditure the City will no longer have because of Covid-19, with events such as the Street Arts Festival and Hidden Treasures Music Festival already been cancelled this year, and it is unlikely the coronavirus restrictions will be over for the Fremantle Festival.

I believe the hard reality is that Fremantle Council financially over-committed with the building of the new Civic Centre, and that it has not much crisis funding to deal with the totally unexpected coronavirus pandemic.

Fremantle no longer charges parking fees, and even if it did, there are hardly any cars parked around town.

When we get to the other end of this crisis the Fremantle community will want to go back to some semblance of normalcy as soon as possible, and raising council rates simply can’t happen because too many people are struggling to stay on their feet and keep their businesses alive. More asset sales might be an option, but who will be interested in buying?

It is imperative that Fremantle Council takes the community with it on this very difficult journey and start a conversation about which savings are more acceptable than others. This is definitely not the time to start a blame game and rehash old criticism about the Kings Square Project. We need to move forward together!

Roel Loopers

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CITY SAYS FREMANTLE FINANCIALLY SOUND

Posted in city of fremantle, economy, finances, local government, Uncategorized by freoview on January 11, 2020

 

The City of Fremantle commented on yesterday’s blog post about the City’s financial situation, so here it is:

Clarification of City of Fremantle audit report

The City of Fremantle has received an unqualified audit report from the Office of the Auditor General for the 2018-19 financial year, which means the Auditor General identified no concern in relation to the way the City presented its financial statements.

The Auditor General did identify an adverse trend in the City’s Operating Surplus Ratio. This was specifically as a result of the sales of 12 Josephson Street and Tappers St Mews, which did not realise their ‘book’ value.

12 Josephson Street was sold on the open market as part of a program to sell under-utilised assets and make them available for redevelopment. The sale of that property has paved the way for the development of Perth’s first timber-framed office building which will result in more people working, and hopefully living, in Fremantle, which in turn will mean more customers for local businesses and more rates revenue for the City.  

The Tappers St Mews property was sold to not-for-profit social housing provider Foundation Housing last year. A restriction on the title of the property prevented it from being sold for private purposes, and therefore at the private market rate.

The sale of the property for less than the private market rate will allow Foundation Housing to continue to operate the property as viable social housing, which delivers a significant social benefit to the Fremantle community.

As a consequence of these sales not achieving their book value the City recorded a non-cash loss result. The Operating Surplus Ratio was negatively impacted by these book losses.

In relation to the Operating Surplus Ratio, Department of Local Government guidelines recommend local governments maintain a surplus between 1 and 15 per cent, which would provide a buffer against unforeseen financial shocks. The City’s result was less than 1 per cent off this guideline.

The City of Fremantle has always maintained the view that it is not prepared to increase the impost on ratepayers to build a surplus that most likely won’t be called upon. The City prefers to manage any unforeseen financial events within its current budget parameters.

Unlike many other local governments, the City generates about 90 per cent of its revenue. We don’t rely on state government grants or other external sources of funding for operational activities so therefore we have greater control over our budget.

The City remains confident that it is in a sound financial cash position and will continue to manage provision of services to the community and its renewal agenda within current budget levels. To illustrate this, the cash position for year ending 30 June 2019 as per the rate setting statement was a surplus of just under $5 million.

 

Roel Loopers

SIGNIFICANT ADVERSE TREND IN FREMANTLE’S FINANCES

Posted in city of fremantle, economy, finances, local government, Uncategorized by freoview on January 10, 2020

 

I copy the below the City of Fremantle’s annual report audit from the agenda of the Fremantle Council committee meeting to be held on Monday the 13th of January.

SUMMARY

The audit of the City of Fremantle annual financial report for the year ending 30 June 2019 has been completed by the Office of the Auditor General (OAG) and Council has been provided with an independent auditor’s report.The City has received an unqualified audit report. In the opinion of the Auditor General the financial report of the City of Fremantle fairly represents the results of the operation of the City and its financial position for the year ending 30 June 2019. This report recommends that the independent auditor’s report be received and the audited financial report with full set of financial statements for the financial year ending 30 June 2019 be adopted

The concluding (exit) audit meeting took place on Thursday 5 December 2019 and was attended by Vince Turco and Efthalia Samaras from the Office of the Auditor General along with the Auditors from Moore Stephens, City of Fremantle Mayor, Acting Chief Executive Officer, Director City Business and Manager Finance.

At this meeting the Audit Concluding Memorandum was discussed. This report is attached for the Committee’s review as a confidential attachment, the key outcomes are: Recommended to the OAG to issue and unmodified opinion on the audit of the City’s financial report. Noted a significant adverse trend in the financial position of the City. The Operating Surplus Ratio has been below the Department Local Government, Sport and Cultural Industries (DLGSCI) threshold for the past 2 years, with the current year ratio also being below the previous year. Did not identify any non-trivial uncorrected audit differences or any significant deficiencies in internal controls.

CONSULTATION OFFICER COMMENT

Council has completed its annual financial statements for the year ended 30 June 2019 and received an unqualified audit report. The Auditor General has issued an independent auditors report.The City received an unqualified audit report.

In the opinion of the Auditor General the annual financial report of the City:(i)Is based on proper accounts and records; and(ii)Fairly represents, in all material respects, the results of the operations of the City for the year ended 30 June 2019 and its financial position at the end of that period in accordance with the Local Government Act 1995 (the Act)and, to the extent that they are not inconsistent with the Act, Australian Accounting Standards.

The independent auditor reported in their opinion the following material matter indicates a significant adverse trend in the financial position of the City: The Operating Surplus Ratio has been below the Department of Local Government, Sport and Cultural Industries standard for a second year, with the current year ratio also being below the previous year.The financial ratios are reported at Note 36 to the annual financial report on page 71.The DLGSCI operational guideline 18 on financial ratios defines the operating surplus ratio as a measure of a local government’s ability to cover its operational costs and have revenues available for capital funding or other purposes.

The guideline sets the basic standard as met with a ratio result between 0.01 and 0.15. An advanced standard is met with a ratio result above 0.15. The ratio results for the last 3 years have been: The adverse trend result for 30 June 19 was due to an additional $4m in one-off operating expenditure which reduced the overall net result (and therefore increased the operating deficit) made up of:1.Sale of Tapper St Mews –Loss on asset disposal of $2.43m2.

Fair value adjustment to assets held for resale 12 Holdsworth St and 12 Josephson St –Loss on fair value adjustment of $1.57m

By removing the above one-off items the adjusted operating surplus ratio for 30 June 19 would be (0.02), the same as the previous year.

The agenda is available on the City of Fremantle website

Roel Loopers

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FREMANTLE ARTS GRANTS UP FOR GRABS

Posted in art, city of fremantle, finances, local government, Uncategorized by freoview on August 21, 2018

 

ARTS & COMMUNITY GRANTS ALERT/GRANT WRITING WORKSHOPS!

These grants aim to provide financial assistance in support of activities contributing to the wellbeing, vibrancy, and cultural diversity of Fremantle.

The next round of arts and community grant funding will open from 9:00am 4 September 2018. Applications close 5:00pm 27 September 2018.

If you would like help writing your grant application the City is running community workshops.

Tuesday 4 September, 10:00am to 11:00am at North Fremantle Community Centre
Tuesday 4 September, 6:00pm to 7:00pm at Fremantle Library
Wednesday 5 September, 10:00am to 11:00am at Sullivan Hall, White Gum Valley
Thursday 6 September, 6:00pm to 7:00pm at North Fremantle Community Centre
Friday 7 September, 10:00am to 11:00am at The Meeting Place, South Fremantle
Wednesday 12 September, 9:30am to 10:30am at Fremantle PCYC, Hilton.

Book your place by emailing grantfunding@fremantle.wa.gov.au

For more information on the grant process
https://www.fremantle.wa.gov.au/commu…/arts-community-grants

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FREMANTLE LOSES OUT ON $ 2 MILLION IN RATES ANNUALLY

 

When the Western Australian state government complains about the unfairness of the GST distribution, they might want to also have a think about the unfairness to some local governments, like Fremantle, regarding the local council rates exemptions for all kinds of institutions.

It costs the City of Fremantle estimated over $ 2 million annually, which is a big amount for a city with a small ratepayers’ base. We don’t know the exact figures because the Valuer General’s office does not provide councils with property values where there is no need.

But according to City of Fremantle figures we lose out on $ 707,000 from Notre Dame University, $ 210.544 from crown properties, $ 98,992 from places of worship, $ 24,085 from schools/educational, $ 630,819 from charities and $ 54,846 from others/written law/acts.

The above figures are not complete as they do not include the large TAFE site in Beaconsfield and others which are exempt from paying local government rates. The City also does not get rates from Fremantle Ports.

So maybe it is time the State Government compensated affected local councils for state laws that financially disadvantage them considerably.

Roel Loopers

FREMANTLE GOVERNANCE COST TRANSPARENCY

Posted in budget, city of fremantle, finances, local government, Uncategorized by freoview on July 31, 2018

 

Governance

 

I always try to keep the words balance and respect in mind when I publish a blog post, so I am happy to now post the reply by the City of Fremantle here in regard to the question I asked on the weekend about what the GOVERNANCE expenditure in the budget was for. Here it is:

Regarding what is included in the $47 million figure under ‘governance’ in the capital expenditure chart in the rates booklet – the vast majority of that ($46.3 million) is the allocation towards the new Kings Square administration and library building.

It also includes $504,500 towards the purchase of our current admin building from the Dockers and $105,000 for the new parking app.

The rest is for things like office furniture, telecommunications equipment, IT equipment (like PC’s, tablets, printers and accessories) fixed and wireless internet etc.

 

Roel Loopers

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