2016-08-09 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                               9 AUGUST 2016


Financial Costs of Construction
   It was not within AEC’s brief to undertake a full Quantity Surveyor cost analysis. They have
     identified that the CCIQ Noosa cost estimate did not appear to include external
     infrastructure costs such as parking, entry / exit connectors, lighting requirements etc.
     Council staff have noted that there has also been no allowance for infrastructure charges
     and other development costs.
   AEC have identified that there are different funding options available including all capital
     funds being provided by Council (e.g. via borrowings) or through the receipt of grant
     funding. Grant funding sources for other convention centres under the Stronger Regions
     Funding program have been identified in the AEC report. The average amount funded was
     34% of the total project cost which in this case, would amount to $10M out of the $30M
     total funding required.9 Details of individual project funding for convention centre type
     projects have also been provided in Appendix A (page 37).




   The next stronger regions fund application round is scheduled to open in the next month or
     so and is focused on “shovel ready” projects.10
   Different capital cost scenarios have been modelled by AEC to see the impact on Council’s
     finances.
   The “worst case” scenario would be no grant funding and the full capital cost is funded by
     borrowings. This would mean increased interest and redemption costs and result in
     Council’s current surplus (as represented by an operating surplus ratio) going into negative
     territory for the next 10 years.




   The “best case” scenario would see grants of $20M (comprising 66% of the potential
     capital cost). Under this scenario, the Council would still have operating deficits for the
     next 10 years but not to the same magnitude as the worst case scenario.11
   The projected operating deficits under both of these scenarios are only related to the
     capital costs and don’t include any costs of operating.12

9
  AEC Report – page 23 Table 6.2 and Appendix A page 37
10
   Source – Regional Development Australia
11
   AEC Report – see figure 6.2 on page 24

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