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F I N A N C E A N D G O V E R N A N C E C O M M I T T E E R E P O R T

Agenda Item 5.3

12 February 2008

SUBMISSIONS: LEASING OF PREMISES LEVEL 2–9, 225 BOURKE STREET, MELBOURNE, COMMONWEALTH BANK BUILDING - CITY VILLAGE

Division Community and Culture

Presenter Ray Buckley, Manager Property Services

Purpose

1. To report to Finance and Governance Committee on submissions received by the City Village Committee (“the Committee”) subsequent to advertising the proposed lease arrangements in accordance with Section 190 of the Local Government Act 1989 (“the Act”) and the Council resolution of 27 November 2007. The City Village refers to floors 2-9 of the Commonwealth Bank Building, 225 Bourke Street, Melbourne and the proposal to provide subsidised rentals for ‘not for profit’ tenants.

Recommendation from Management

2. That the Finance and Governance Committee:

2.1. note the full resolution of the City Village Committee passed at its meeting of 1 February 2008;

”1 That the City Village Committee, having considered all written submissions in relation to the proposed leases to ‘not for profit’ tenants at subsidised rentals for the purposes of the “City Village” project (“City Village”) and having provided an opportunity to be heard to any person wishing to be heard in support of his or her submission, recommend, through the Finance and Governance Committee, that Council:

1.1 enter into separate leases of portions of 225 Bourke Street, Melbourne with each

proposed tenant and on the proposed lease arrangements identified in the Tenancy Schedule below (See Attachment 1): 1.1.1 for an initial term of three years starting from March 2008, with an

option of a further three years; 1.1.2 initial rental for each tenancy, estimated on the attached Tenancy

Schedule, representing the subsidised net market rental plus budgeted outgoings for the building;

1.1.3 rental reviewed annually with an annual fixed increase of 4 per cent per annum, and a review to market rental levels at the exercising of the option;

1.1.4 tenants to provide an annual report to Council demonstrating their performance to the community;

1.1.5 tenants to provide an annual report to Council detailing their funding arrangements, current financial responsibilities, and continued requirement and eligibility for the level of subsidy received;

1.1.6 tenants to participate in and abide by the rules and regulation of the ‘City Village Management Committee’; and

1.1.7

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such other terms and conditions as may be required by the Manager Legal Services.

1.2 notify in writing people who lodged a submission of its decision and the reason for its decision; and

1.3 dissolve the City Village Committee”.

2.2. note the detail of the submissions process as described in this Management report;

2.3. refer the recommendation of the City Village Committee to the Council meeting on 26 February 2008; and

2.4. note that a supplementary Management report will be presented for consideration at the Council meeting of 26 February 2008.

Key Issues

3. There have been a number of Council reports on the City Village proposal. In April-May 2007 there was an expression of interest process for ‘not for profit organisations to register interest in proposed tenancies in the City Village. Recommendations from the expression of interest process were considered by the Community Services Committee on 14 August 2007. Subsequently, Council resolved on 27 November 2007 to advertise the proposed leases in accordance with Sections 190 (2), 190 (3), 190(4), and 223 of the Local Government Act 1989 (“the Act”) and established the City Village Committee to consider submissions.

4. An advertisement was placed in The Age on 8 January 2008.

5. A number of submissions were received, with the South Pacific Foundation of Victoria acting as the agent for the submitters. Written submissions were received from 42 respondents. In addition, advice was received, via the South Pacific Foundation of Victoria that 102 people wished to make a verbal submission to the City Village Committee.

6. The South Pacific Foundation of Victoria was an applicant to the April-May 2007 expression of interest for the City Village but was not subsequently recommended as a proposed tenant.

7. The City Village Committee met on 15 January, 29 January and 1 February 2008. The full minutes of the Committee are provided as attachment 1.

8. Arrangements were put in place for the meeting of 29 January 2008 to hear submissions from the 102 people who had indicated an intention to attend to speak in support of their submission. This included room hire and attendants for a larger meeting and the engagement of an interpreter, as requested by the South Pacific Foundation of Victoria. Subsequently, no submitters attended the meeting.

9. The additional administrative arrangements have impacted upon the original timing for the City Village Committee. Consequently, it is proposed for the Finance and Governance Committee to consider the detail of the submission process and for a further report to be presented to the Council meeting of 26 February 2008. This report will include all submissions and a detailed management response to the issues raised in the submission process. It is important to consider the leases in this timeframe in order to not negatively impact on proposed tenancies and implementation for City Village.

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10. It should also be noted that two of the proposed tenants have formally advised Council that they no longer require tenancy at the City Village. These are the Mental Health Legal Centre and the Children’s Book Council. The impact of this advice is that City Village has one whole floor (360m2), and part of another floor (60m2) which is not allocated. The report to Council will also recommend a process for managing the current vacancy and for any subsequent vacancies that may arise at City Village.

Relation to Council Policy

11. The City Village concept is consistent with the following Council policies:

11.1. Strategic Direction 3.1 – Inclusive and Engaging City - Welcome and facilitate all sectors of the community to participate in City life and An environment that empowers and fosters community involvement and builds social and community networks is essential to the City's future; and

11.2. Strategic Direction 3.2 – Inclusive and Engaging City- Encourage social equity, inclusion and wellbeing- Encourage activities which contribute to the development of an inclusive and engaging place for all people and communities in the municipality.

12. The recommendations are made in accordance with the requirements of the Local Government Act 1989.

Finance

13. It is estimated that the annual rental paid to Council will be in the order of $315,000 gross.

14. The total rental subsides for the whole building amounts to approximately $214,000 based on the approximate building measurements available.

15. Capital Works to comply with DDA to be completed prior to occupancy are estimated at $760,000 as outlined in the report to council 30 October 2007 – Agenda Item 6.3.

16. This is based on the estimated tenancy areas determined, as detailed on the tenancy schedule appended hereto, and the rental rates as discussed with tenants.

17. The estimates provided are based on the current understanding of the net lettable area from Council records, the existing floor plans, and the verbally agreed tenancy areas - these may vary when the managing agent completes measurements and details actual lease liabilities to each

Legal

18. Pursuant to section 190 of the Act, the Council must, at least four weeks prior to granting certain specified leases or sub-leases, give public notice of the proposal to lease or sub-lease. The public then have the right to make submissions in respect of the proposed leases or sub-lease in accordance with section 190(4) of the Act. The process that must be followed by Council concerning the right to make submission on the proposed lease or sub-lease is set out at section 223 of the Act.

Background

19. “City Village” is a facility where ‘not for profit’ community groups can obtain affordable city premises through the subsidising of rentals by council on council owner property designated for this purpose.

19.1. City Village is to occupy office floors level 2-9, 225 Bourke Street, Melbourne which were previously occupied by the City of Melbourne;

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Attachments: 1. Minutes of the City Village Committee Meeting – 15 January 2008

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19.2. this proposal does not effect either of the ground floor retail tenants, Sweet Mama’s Café or The Commonwealth Bank, both of which have lease obligations to October 2009 with a 10 year option thereafter; and

19.3. occupants for City Village were selected through an Expression of Interest campaign undertaken in April/May 2007.

20. Council resolution of 27 November 2007 authorised that the proposed leases be advertised in accordance with Sections 190 (2),190 (3), 190(4), and 223 of the Act.

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CITY VILLAGE COMMITTEE

Tuesday, 15 January 2008 3.00pm

Milan Room

Level 3 Melbourne Town Hall

Present Manager Property Services, Ray Buckley Manager Legal Services, Kim Wood

Apology Acting Director Community and Culture, Morris Bellamy

In Attendance Manager Governance Services, Keith Williamson Coordinator Real Estate Services, Mark Karutz

1. Appointment of Chair Moved: Manager Property Services, Ray Buckley That the Manager Legal Services, be elected Chair of the City Village Committee. Seconded: Manager Legal Services, Kim Wood Carried unanimously

2. Commencement of Meeting and Apologies The meeting commenced at 3.05pm. The Committee noted an apology had been received from the Acting Director Community and Culture, Morris Bellamy.

3. Adjournment of Meeting Moved: Manager Legal Services, Kim Wood

That the City Village Committee adjourn at 3.08 pm and resume at 3pm on Tuesday, 29 January 2008 in the Yarra Room, Level 2, Town Hall Administration Building.

Seconded: Manager Property Services, Ray Buckley Carried unanimously

4. Resumption of Meeting The meeting resumed at 3.25pm in the Yarra Room. All committee members were present. The Manager Governance Services, Keith Williamson and Coordinator Real Estate Services, Mark Karutz were also in attendance.

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5. Appointment of Chair Resolved: That the Acting Director Community and Culture, Morris Bellamy, be elected Chair of the City Village Committee. Moved: Manager Legal Services, Kim Wood Seconded: Manager Property Services, Ray Buckley Carried unanimously

6. Declarations of Pecuniary Interests and Conflicts of Interests (Agenda Item 2) There were no declarations of pecuniary interests or conflicts of interests.

7. Hearing of Submissions in relation to City Village Leases Submissions/Correspondence

The Committee noted, as at 23 January 2008 (14 days after the publication of the public notice) the following submissions had been received:

Written Correspondence

• South Pacific Foundation of Victoria Inc. • G Falemoe • B Kingi • T Ogle • I Keating • E Forbes • G Newman • A Phillips • P Pipi • J Pipi • L Walker • C Rawiri • A Molloy • R Kereopa • K Hubber • T Tuhaka • P Serancke • M Wills • H Potae • W Marshall • K McManus • N Boyle • J Locke • H Whatarau • T Puna • R Owen • D Haukiri • K Uerata • W Sciascia • T Wetini • F Waine • A Broughton & G Davies

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• G Maaka • H Tua • L Afeaki • R TeHau / B Tehau • H Aporo • S Aporo • D Sapsford • T Faleamua • C HArawira • A Havea Copies of all written correspondence were circulated to Committee members prior to the meeting.

Requests to Address the Committee

• Rewai Te Hau • Tania Nepia • Rewa Stewart • John Stewart • Erana Stewart • JB Stewart • Samuel Stewart • Craig Stewart • Ropihana Stewart • Timoti Haenga • Horowai Haenga • Renn Haenga • Grace Tuhoro • Wetini Tuhoro • Jaron Tuhoro • Nehe Tuhoro • Gemma Nepia • Hemi Kaiwai • Nathan Kaiwai • Sylvia Taare-Hiroki • Rua Hiroki • Troy Para • Liza Para • Teri Karena • James Nelson • Jeremy Nelson • Kauri Horua • Hugh Tibble • Kiri Marshall • David Marshall • Daphne Johnson • Robert Henderson • Nanette Henderson • Gus Swann • Anne Swann • Travel Robati • Renee Robati • Whetu Robati • Aroha Robati • Tamara Robati • Alex Robati • Memore Nookura • Takaina Takaiti

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• Naomi Poa • Miti Tako • Tako Tako • Kahu Wineti • Karen Wineti • Joshua Wineti • Riki Wineti • Moana Waerea • Michelle Waerea • D Ruru • T Puna • Kili Mafaufau • Ula Mafaufau • Milanetta Fuimaono • Junior Paila • Nathan Paila • J Faamoe • C Apulu • C Howman • V Howman • M Howman • Emisoi Howman • Fred Howman • Myra Howman • Harry Howman • H Meredith • R Meredith • W Siliva • S Siliva • R Falute • L Falute • F Faaui • Manase Manase • Eunisia Manase • Mark Le Pou • Petal Le Pou • D Lepou • A Lepou • D Esera • Matthew Taia • Diane Taia • Melvina Taia • Polynesian Youth SE Outreach Team (includes 17 people, names not provided). The Committee welcomed Mr Maahi Tukapua to the Committee meeting, who was in attendance to provide interpreting services for those submitters who had requested it.

The Committee noted that no submitters who had requested to be heard were present at the meeting. The Manager Legal Services, Kim Wood, suggested that the Committee adjourn the meeting to consider the written submissions received.

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8. Adjournment of Meeting Moved: Manager Legal Services, Kim Wood

That the City Village Committee adjourn at 3.33pm and resume at 2pm on Friday, 1 February 2008 in the Yarra Room, Level 2, Town Hall Administration Building.

Seconded: Manager Property Services, Ray Buckley Carried unanimously

9. Resumption of Meeting The meeting resumed at 2.05pm in the Council Meeting Room. All committee members were present. Moved: Manager Legal Services Kim Wood

1. That the City Village Committee, having considered all written submissions in relation to the proposed leases to ‘not for profit’ tenants at subsidised rentals for the purposes of the “City Village” project (“City Village”) and having provided an opportunity to be heard to any person wishing to be heard in support of his or her submission, recommend, through the Finance and Governance Committee, that Council: 1.1. enter into separate leases of portions of 225 Bourke Street, Melbourne with each

proposed tenant and on the proposed lease arrangements identified in the Tenancy Schedule below: 1.1.1. for an initial term of three years starting from March 2008, with an option of

a further three years; 1.1.2. initial rental for each tenancy, estimated on the attached Tenancy Schedule,

representing the subsidised net market rental plus budgeted outgoings for the building;

1.1.3. rental reviewed annually with an annual fixed increase of 4 per cent per annum, and a review to market rental levels at the exercising of the option;

1.1.4. tenants to provide an annual report to Council demonstrating their performance to the community;

1.1.5. tenants to provide an annual report to Council detailing their funding arrangements, current financial responsibilities, and continued requirement and eligibility for the level of subsidy received;

1.1.6. tenants to participate in and abide by the rules and regulation of the ‘City Village Management Committee’; and

1.1.7. such other terms and conditions as may be required by the Manager Legal Services.

1.2. notify in writing people who lodged a submission of its decision and the reason for its decision; and

1.3. dissolve the City Village Committee.

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Tenancy Schedule

Tenancy Schedule

Fl Tenant Estimated Rental Lease Term Option Rental

Area (m2

NLA) pa Commenced (years) (years) Reviews 2 South Project 221.6 $31,866 01-Mar-08 3 3 Annual 4% and Market at Option 2 Melbourne Fringe 41.55 $5,975 01-Mar-08 3 3 Annual 4% and Market at Option 2 Platform Artists Group 13.85 $1,992 01-Mar-08 3 3 Annual 4% and Market at Option 3 Mental Health Legal

Centre 284 $40,839 01-Mar-08 3 3 Annual 4% and Market at Option

4 IWDA (International Women's Development Agency)

277 $39,833 01-Mar-08 3 3 Annual 4% and Market at Option

5 Melbourne International Film Festival

269.8 $48,348 01-Mar-08 3 3 Annual 4% and Market at Option

5 Melbourne Junior Chamber of Commerce

14.2 $2,042 01-Mar-08 3 3 Annual 4% and Market at Option

6 Grit Media 99 $14,236 01-Mar-08 3 3 Annual 4% and Market at Option 6 Capital City LLEN 33 $5,330 01-Mar-08 3 3 Annual 4% and Market at Option 7 Experimenta 193.9 $27,883 01-Mar-08 3 3 Annual 4% and Market at Option 7 Centre for Sustainability

Leadership 27.7 $3,983 01-Mar-08 3 3 Annual 4% and Market at Option

7 Bayanihan Australia Community Network

27.7 $3,983 01-Mar-08 3 3 Annual 4% and Market at Option

7 Children's Book Council 27.7 $4,474 01-Mar-08 3 3 Annual 4% and Market at Option 8 ALSO Foundation 231.7 $33,318 01-Mar-08 3 3 Annual 4% and Market at Option

8 & 9 Joy FM 94.9 356.3 $51,236 01-Mar-08 3 3 Annual 4% and Market at Option Total $315,338

Seconded: Manager Property Services, Ray Buckley Carried unanimously

10. Closure of Meeting The meeting closed at 2.25pm.

Chair City Village Committee

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Agenda Item 5.3 Finance and Governance Committee

12 February 2008

FINANCE ATTACHMENT

SUBMISISONS: LEASING OF PREMISES LEVEL 2-9, 225 BOURKE STREET, MELBOURNE, COMMONWEALTH BANK BUILDING- CITY VILLAGE

The key financial implications of the recommendation are contained in the body of the report.

Joe Groher Manager Financial Services

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Agenda Item 5.3 Finance and Governance Committee

12 February 2008

LEGAL ATTACHMENT

SUBMISISONS: LEASING OF PREMISES LEVEL 2-9, 225 BOURKE STREET, MELBOURNE, COMMONWEALTH BANK BUILDING- CITY VILLAGE

Legal advice will be provided as required in relation to the granting of leases at City Village.

Pursuant to section 190(3) of the Local Government Act 1989 (“the Act”), where a Council proposes to enter into a lease for:

• one year or more where rental for any period of the lease is $50,000 or more per annum;

• one year or more where the current rental value of the land is $50,000 or more per annum;

• 10 years or more (including options); or

• a lease which is a building or improving lease,

the Council must give at least four weeks public notice of the proposal and the invite submissions in respect to the proposal in accordance with section 223 of the Act.

Section 223 of the Act provides the Council, or where the Council so determines, a committee of the Council must consider any written submission received by the Council within 14 days after the public notice.

If submissions are received, the Council must take into consideration the submissions prior to making a final decision and must notify submitters in writing of the Council decision and the reason for its decision.

Kim Wood Manager Legal Services

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