2020-11-10 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                             10 NOVEMBER 2020


The site was previously leased to a concrete supplier who vacated in November 2013. Following
a period of vacancy, Council undertook an expression of interest (EOI) process in 2017, which
led to a new lease with Eco Cottages (EC), a pre-fabricated modular home builder. The business
utilises termite resistant native Cypress timber in its buildings and has been recognised for its
research and development. At the time of the EOI, EC occupied nearby leased premises in
Johnson Court and it sought to lease Council’s vacant site to establish a new purpose-built
factory. The agreed lease was based on the terms of the EOI, which provided for total lease
terms of 10 years, comprising an initial term of 4 years and two 3 year options.
EC obtained development approvals and constructed its new factory on the site in 2018. The
factory is approximately 2,600m2 in area and includes extensive roofed hardstand areas,
enclosed climate-controlled factory spaces, offices and a 100kW solar system. The new factory
has allowed EC to grow in excess of its predictions, with it more than doubling staff to 25 people,
including 6 apprentices and a PHD student. EC continues to grow and aims to add further staff
and apprentices in coming months.




                                Figure 2 – Eco Cottages’ new factory
To date EC has invested $3.6M in the site, which raised through its own equity and private
investment. EC recently wrote to Council outlining a desire for longer-term tenure to reflect its
significant investment, provide it with security of tenure and allow it to obtain bank finance in
future. EC has also requested use of a 200m2 balance area of the site in the northwest corner,
which was withheld from its lease area to allow for a proposed telecommunication tower (Telstra
was negotiating with Council but ultimately built its tower on Unitywater’s adjacent site).
EC has been an excellent lessee and Property staff are supportive of its request. Following
discussions about possible tenure models EC has agreed to not exercise its upcoming 2021
lease extension option but to instead enter into a new whole-of-lot lease for a 20 year term, with
a further 5 year option. The agreed terms are as follows:

Lease Provision           Proposal
Lessee:                   Eco Cottages Pty Ltd (ACN 124 625 458)
Premises:                 Whole of Lot 2 on RP176126
Lettable Area             5,800m2
Annual Rent:              $34,200 plus GST
Lease Start Date:         20 November 2021
Lease Term:               20 years
Options to Extend:        1 x 5 years
Market Rent Reviews:      3% annually, with Market Rental Assessments conducted in years 5, 10, 15
                          and 20 at Council’s discretion. Market Rent Assessments shall be based
                          on an unimproved land basis only.
Permitted Use:            Manufacturing, storage and display of prefabricated buildings and uses
                          ancillary thereto

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