2020-11-10 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                              10 NOVEMBER 2020


The proposed rental is based on an independent market valuation and reflects the rent that
would have been applicable under the existing lease in year 5 (subject to indexation), with a
further provision for the balance 200m2 site area. The scheduled market rental reviews will
provide a mechanism to ensure the rent continues achieve a fair market value through the full
lease term.
It is recommended Council agrees to enter into the new lease, together with a further permit for
use of the balance 200m2 area for the interim period up to the new lease commencement.

Previous Council Consideration
Ordinary Meeting Minutes, 18 October 2017, Item 2, Page 8
That Council note the report by the Property Advisor to the General Committee Meeting dated 16
October 2017 regarding the expressions of interest process undertaken for the commercial lease
of Council land at 4 Jarrah St Cooroy (formally described as Lot 2 RP176126), and:
A.    Agree to enter a commercial lease of the site to Eco Cottages Pty Ltd for a four (4) year
      term.
B.    Agree to an initial rent-free period of 4 months and deferral of a further 3 months’ rent
      payments to the second year of the lease.
C.    Authorise the CEO to award two subsequent lease extensions of 3 years, subject to the
      lessee complying with the terms of the lease.

Ordinary Meeting, 18 May 2017, Item 2, Page 8
That Council note the report by the Property Advisor to the Services & Organisation Committee
Meeting dated 9 May 2017 and proceed to an Expression of Interest process for a commercial
lease of Council land at 4 Jarrah St, Cooroy (Lot 2 RP176126), as detailed in the report.

Ordinary Meeting, 1 May 2014, Item 10, Page 9
That Council note the report by Property Officer, Property and Land Management to the General
Committee dated 28 April 2014 and seek Expressions of Interest (EOI) for a Commercial Lease
for 4 Jarrah Street, Cooroy.

Finance
The financial return posed by the new lease is as detailed above. The minor expansion to the
lease area represents a $1,200 initial increase to the annual rent in the first year, with indexation
applying thereafter. Budgeted rental income for this site has been impacted by approximately
38% so far in the 2020 calendar year due to COVID-19 concessions given in accordance with the
national Leasing Code of Conduct. Eco Cottage’s trade is understood to have now recovered
and further rental concessions are unlikely.
Some legal and transaction costs will be incurred with the new lease in the order of $3,000,
which will be shared evenly between the parties.

Risks & Opportunities
The proposed new long-term lease avoids risk and provides certainty for both parties by
providing Eco Cottages with long-term tenure reflective of its significant investment in the
premises. Some opportunity cost is involved for Council but this was previously acknowledged
and accepted during the original EOI and lease process.




                                                                                    Page 15 of 131