2018-12-11 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                11 DECEMBER 2018


When The J looked to increase Noosa FM’s rental payments to $10,000 in 2009, Noosa FM lobbied
Council for the rent to remain at $6,000 p.a. (plus CPI increases) on the grounds of being unable
to afford a rental increase. Noosa FM were successful with their request, however there was no
clarity regarding an expiration date of this variation and thus the reduced rental rate remained in
place through to the end of calendar year 2017.
In 2017, Noosa FM belatedly requested the activation of the next available lease extension option.
At the time, Noosa FM were unable to comply with the full financial requirements stipulated by the
lease (ie. the suggested rental rate) and as such the extension option was not activated by Council.
The lease stated that by this point, unless otherwise negotiated, the base rent should be 66% of
market rate, which was assessed as being $52,000. As such, Noosa FM’s base rent charge should
have been $34,320.
Since this point, management has had a number of discussions with Noosa FM’s Committee
regarding the matter but has not yet been able to reach a resolution. In late 2017, Noosa FM’s
Committee of the day agreed to increase rental payments to $18,000 for 2018 only, with the view
to negotiating arrangements beyond this.
Over recent years, Noosa FM has experienced a great deal of volatility with regard to the make-
up of its Committee of management. This has affected its ability to execute a long-term strategy.
This, together with significant changes to the broader community radio space since 2006, has left
the station in a much weaker financial position than ever envisaged at the time the lease was
signed.
A recent financial update provided to Council revealed that Noosa FM generated a $31,000 loss
in 2017/18, with operating costs of $82,000 against revenue of $51,000. The update showed that
cash reserves funded the loss. The balance of remaining cash reserves was $73,000 at the end of
financial year.
The current Committee seems to have stabilised the station and has implemented measures to
boost revenue and cut expenditure. The largest improvement to date relates to the cancellation of
paid bookkeeping services, saving the station $12k p.a. The Committee has commenced strategic
planning for a more stable and viable future and has also prepared a projection for 2019’s operating
position.
The projection forecasts revenue to increase to approximately $93,000 and expenditure to total
$87,000. Expenditure includes a one-off cost of roughly $15,000 for the repair and upgrade of the
station’s antenna and does not allow for a rental expense. Management notes that if achieved, a
revenue increase of $42,000 equates to an 82% increase on last year’s results. While noble in
intent, this is an ambitious target.
Noosa FM have communicated their belief to Council that enforcement of the lease terms as they
stand now would place significant financial strain on the organisation that could result in its eventual
collapse. With current interim arrangements due to expire at the end of 2018, a resolution is
required in order to allow both parties to plan for the future.

Options for consideration:
Management presents the following options to Council for consideration and discussion:
1.  Enforce the terms of the current lease and seek annual rental payments of $34,320 from
    2019 onwards.
2.  Accept Noosa FM’s view that current lease terms are unviable and look to enter into a new
    lease with different terms.
3.  Given the high commercial value of the space occupied by Noosa FM at The J, seek lower
    cost accommodation for Noosa FM in an alternative location with the costs of the move to a
    different site being offset by revenue derived by commercially letting the space currently
    occupied by Noosa FM.

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