2017-10-13 Special Meeting

SPECIAL MEETING AGENDA                                                              13 OCTOBER 2017


NPA’s portion is to be held in trust until such time that the project area is gazetted to protected
area status. Whilst the outcome is ultimately the same, issues of unlawful fetter are unlikely to be
raised successfully given that the ultimate agreement will not bind the State to exercise its relevant
discretion but simply confirm that if that process is completed, contribution funds of Council and
NPA will be transferred to the State and if not, they will be returned to Council and NPA. This
reduces Council’s financial risk.

8.1.3. Complexities of managing various parties in the transition process
Given that there are six parties to this complex project with different interests and that the project
will operate over a 10-year period, there is a real possibility that intended deliverables and progress
could be delayed if processes are not put in place to manage progress and address any issues as
they arise. To facilitate this, Council will note that the MOU provides for the establishment of a
transition committee and includes requirements that each party is responsible for.

8.1.4. Financial Risks
There are some financial risks associated with this project that Council should consider when
making its decision on the “in principle” approval.
The first financial risk is Council’s financial exposure to rehabilitation and management costs
associated with the Pine PLA once Council becomes trustee of the Conservation Parks. The issue
of rehabilitation has been analysed by Council’s Environment Officers, and rehabilitation has also
been independently peer reviewed by Noosa and District Landcare. This provides assurance to
Council that the potential rehabilitation costs can be reasonably relied upon to the extent outlined
in the financial modelling. The financial modelling set out below provides a “best and worst case”
scenario for rehabilitation of the 750 ha of pine PLA land that highlights the differences between
mainly natural regeneration compared to greater levels of assisted regeneration and active
reconstruction. While the most likely scenario based on the assessment of our Environment staff
is towards the lower case (mostly natural regeneration) the other scenarios have been modelled
to provide Council with the range of potential outcomes. This is not an exact science but the upper
and lower costs allow Council to consider the potential financial impacts of rehabilitation. Council
could also potentially receive grant funding towards rehabilitation costs.
Further, this is not the first time that pine lands in the broader region have been rehabilitated and
we can learn from the experience elsewhere. Our Environment staff have visited Bribie Island to
observe the significant natural regrowth that has occurred in the former pine areas without any
significant intervention.
In addition, we aim to manage rehabilitation obligations by way of contractual terms to ensure that
Council’s rehabilitation responsibilities do not go beyond 5 years from it becoming trustee of the
Conservation Park.
A second financial issue to consider is the funding being provided by NPA. Whilst there will be a
formal funding agreement in place between Council and NPA with respect to NPA’s obligations to
pay Council its contribution to acquisition costs (beyond the initial $500,000 to be paid directly to
the State) and rehabilitation, it is important for Council to be aware that NPA is a not for profit entity
(NFP).
An analysis of NPA’s audited financial statements for the last three financial years has been
undertaken by the CEO as part of our due diligence process. NPA’s funding obligations under this
project will be a large impost on that organisation’s finances for a number of years. Council should
be aware that NPA has cash reserves of more than $500,000 enabling it to meet its initial
contribution and based on current cash flows, it could also meet its ongoing obligations. However,
financial contributions by NPA beyond their initial acquisition contribution are dependent on it
maintaining its current income streams associated with two current leases. It is proposed that
Council and NPA enter into a formal funding agreement as part of the transactional arrangements,
but the options available to Council to enforce a funding agreement in relation to a not for profit
organisation are limited. That is indeed the case for any not for profit organisation.

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