2016-08-09 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                     9 AUGUST 2016


    The annual Interest and Redemption charges for Council borrowings would be:
      o For a $10M loan – $930K p.a.
      o For a $20M loan - $1.86M p.a.
      o For a $30M loan - $2.790M p.a. 13

    The cost per ratepayer to fund the interest and redemption on loans at those levels would
      be between a 2.02% and 6.06% increase in general rates.14

Financial Costs of Operation
    AEC have modelled details of a typical Convention Centre and Performing Arts Centre
      based on their actual experience with facilities of this nature. Their report sets out details
      of typical cost structures and likely demand / revenue for these facilities.
    AEC have modelled two scenarios. Using their own assumptions in relation to demand and
      cost structures, they have determined that the net annual loss for the combined convention
      and performing arts facility would be $2.684M (including depreciation). It is important to
      note that this does not include any financing costs – it is only the annual operating position
      and any financing costs would be additional. As The J is already running at an operating
      loss, the net difference is the key - $1.951M. This equates to approximately a 4.24%
      general rate increase for the annual operating cost.15




    The AEC report also models the revenue (demand) assumptions made by the CCIQ Noosa
      Report. In that case, the annual operating loss for the combined convention and
      performing arts facility would be $2.753M (including depreciation). It is important to note
      that this does not include any financing costs – it is only the annual operating position and
      any financing costs would be additional. As The J is already running at an operating loss,
      the net difference is the key - $2.020M. This equates to approximately a 4.39% general
      rate increase for the annual operating cost.16




12
   AEC Report – Page 24 section 6.3.1
13
   Borrowing costs calculated by Council’s Finance Manager based on current interest rates (which are at
historic lows) and are based on a 15 year borrowing term with Queensland Treasury Corporation for
commercial projects. Note that these costs have been calculated separately from the AEC report by
Council staff.
14
   Calculated by Council staff based on current general rates. (AEC use a dollar cost per ratepayer but
Noosa Council traditionally uses a percentage increase in general rates as its calculation. The latter
approach has been used in this report).
15
   General rate impact calculated by Council staff.
16
   General rate impact calculated by Council staff

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