2018-05-22 Special Meeting Agenda

SPECIAL MEETING REPORT                                                                     22 MAY 2018


Overall, while the factors outlined below will drive a shift in the revenue and tenancy mix, it is not
anticipated to impact total annual revenue for the Hub during the 2018/19 year
An evaluation of the proposed tenancy mix compared to the December 2017 forecast reveals the
following changes in assumptions underlying the Hub’s operating revenues:
       Total permanent lease space is anticipated to be lower under the proposed tenancy mix
        compared to the December 2017 forecast.
       However, the December 2017 forecast assumed a low occupancy rate for permanent rental
        in the first year (50%). The timing of lease negotiations and proposed annual lease terms
        means that the let space will actually be occupied for the entire financial year.
       Demand for co-work space is higher than anticipated compared to the December 2017
        forecast.
       The permanent lease rate charge per square metre under the proposed tenancy mix will be
        lower than the December 2017 forecast. While the fee for co-work space is anticipated to be
        higher than the December 2017 forecast.
In respect of cost estimates, the following is noted:
       A Digital Hub Director has been employed to manage the facility. Provision of funding for
        salaries and wages had been allowed for under the December 2017 forecast. Once the
        Certified Agreement is finalised, the financial projections will be updated to reflect 2018/19
        budget forecasts for salaries and wages.
       All other operating and maintenance cost forecasts remain aligned to previous forecasts.
       The fitout requirements for the facility were presented to Capital Works Executive on 24 April
        2018, where funding for some immediate work for fitout scope and design of $60k was
        endorsed.
       Once the tenancy mix has been adopted, the second stage of the fitout can be undertaken
        to accommodate all permanent lease and co-work space needs. Further funding
        requirements for the second stage to complete the fitout will be also addressed through the
        Capital Works Executive for inclusion in the budget.


Budget Implications
2017/18 Budget
Nil.
2018/19 Budget
The final mix of permanent lease tenancy and co-work revenues will inform 2018/19 budget for
adoption in June 2018.

7.     Risks and Mitigations

Risk                                          Mitigation
 Loss of potential tenants through delays      Expedite the awarding of the tender to the four
                                               qualifying respondents and proceed to lease
                                               negotiations.
 Unable to reach agreement on lease terms      Ensure all options have been exhausted.
 Compliance with LGA Regulations for fair      Valuation and market research report indicates a
 market price                                  highly competitive marketplace for the attraction of
                                               commercial tenants
 Unoccupied Building due to delay in reaching Responsive Council with robust parameters that
 agreement with prospective tenants            supports fair and commercially viable decision for
                                               all parties. Delegated CEO authority

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