2016-08-09 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                                  9 AUGUST 2016


8                        REVIEW OF PROPOSAL FOR NOOSA CONVENTION & CULTURAL CENTRE
DOCUMENT INFORM AT ION




Author                           Chief Executive Officer Brett de Chastel
                                 Brett de Chastel

Index                            ECM / Subject / 72.05 Noosa Convention & Performing Arts Centre

Attachments                      1.   CCIQ Noosa Report titled “Noosa Convention & Cultural Centre
                                      Initiative – Pre-feasibility Study” (35 pages – supplied separately to this
                                      agenda; 2 hard copies available in the Councillors’ Room)

                                 2.   AEC Report titled “Noosa Convention and Performing Arts Centre:
                                      Pre-feasibility Review” (48 pages – supplied separately to this agenda; 2 hard
                                      copies available in the Councillors’ Room)



EXECUTIVE SUMMARY
CCIQ Noosa has developed a pre-feasibility study for a Convention and Cultural Centre
potentially to be located at The J site at Noosa Junction. That study identified a range of
potential economic benefits that could accrue if a 1,000 seat convention centre and a 700 seat
co-located performing arts centre was established at Noosa. Council commissioned AEC Group
Ltd (AEC) to review the CCIQ Noosa proposal and provide advice on the financial and economic
impacts and to inform whether a full feasibility assessment of the proposal should occur.

There is a considerable amount of detail in both reports. The CCIQ Noosa Pre-feasibility Study
identifies a range of economic benefits that could accrue from a co-located convention and
performing arts centre. They have estimated construction costs of between $15M to $20M for an
entry level convention centre and conversion costs of The J to a performing arts centre of
between $7M and $10M.

The AEC assessment has identified that typically, grant funding will only cover approx one third
of construction costs of convention centre type proposals. AEC have also identified in more
detail the likely annual operating revenues and costs (including depreciation) which result in
typical regional convention and performing arts centres operating at an annual financial loss.
Using cost drivers which apply to convention centres elsewhere, AEC have calculated a net
operating loss of approximately $2M after taking into account the existing cost of operating The J
(actual annual loss on a convention and performing arts facility would be approximately $2.6M).
This is separate to the cost of construction.

Depending upon a number of variables, when taking into account the capital and annual
operating costs, the net annual impact will be somewhere between approximately $3M (6.26%
general rate increase) and approximately $5M (10.45% general rate increase) if the Council was
to fund and operate the facility. It should be noted that CCIQ Noosa did not suggest that Noosa
Council must be the financing agency and operate the facility as their goal is to have such
facilities established for the economic benefit of our region. However, the financial analysis by
AEC clearly highlights some financial challenges to bring that to fruition.

Based on the two reports, the CEO is recommending that Noosa Council does not take on this
initiative as a project to be funded by ratepayers but rather, the information and research in the
reports be made available to the market so that the private sector can determine if it can make
such a project commercially viable.




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