2016 08 09 - S&O Agenda - Item 8, Att 2 - AEC Noosa Convention & Performing Arts Centre Pre-feasibility Review

PRE-FEASIBILITY OF CONVENTION AND PERFORMING ARTS CENTRES



6.            COUNCIL FINANCIAL POSITION
6.1           CURRENT FINANCIAL POSITION
The Noosa Shire Council 2015/16 10-year Financial Forecast (Income Statement) shows a consolidated operating
surplus (before capital grants and contributions) of $1.3 million, increasing to $2.4 million in 2024/25.

The 10-year Financial Forecast (Cash Flow) shows Council has a positive cash balance as at 30 June 2016 totalling
$34.3 million, estimated to be slightly lower at $33.2 million as at 30 June 2025. Council’s debt position for 30 June
2016 was estimated at $38.1 million, declining to $5.0 million in 2024/25.

The 2015/16 10-year Financial Forecast (Balance Sheet) shows that Council holds, and is capable of managing,
substantial asset holdings with the written down value of assets at 30 June 2016 estimated at $931.7 million.

Relevant extracts from the Financial Forecast are provided in the below table.

Table 6.1: Long Term Financial Forecast (Summary), $M
    Item                                                                                         2015/16   2024/25
    Income Statement
    Operating Revenue (excl. capital grants and contributions)                                     $87.3    $110.8
    Operating Expenses (excl. depreciation and finance costs)                                      $66.9     $85.8
    Operating Surplus (excl. capital grants and contributions, depreciation and finance costs)     $20.4     $25.0
    Depreciation and finance costs                                                                 $19.1     $22.6
    Operating Surplus (excl. capital grants and contributions)                                      $1.3      $2.4
    Cash and Debt Position
    Cash at year end                                                                               $34.3     $33.2
    Debt at year end                                                                               $38.1      $5.0
    Balance Sheet
    Infrastructure, Property, Plant & Equipment (WDV)                                             $931.7   $1,203.3

With its relatively strong financial position, Council presently has capacity to fund suitable capital projects via a mix
of cash reserves and debt funds. However, in order to ensure that it remains financially sustainable, Council must
critically assess the potential merits of this proposal relative to other capital renewal and upgrade projects, with
reference to their relative benefits and costs to ratepayers in addition to their risk profile.


6.2           CAPITAL FUNDING
CCIQ Noosa indicates that the facilities could be at least part-funded using Federal and/or State Government
grants. Most funding programs generally require an element of matched funding by Council. For example, funding
can be accessed via the Federal Government National Stronger Regions Fund (NSRF) for up to half of the project
costs to an upper limit of $10 million. The table below shows that the average total approved grant under the NSRF
accounts for 34% of the total project cost from rounds 1 and 2 of the NSRF (third round to be announced in July
2016). Some example NSRF projects and funding levels are provided in Appendix A for reference purposes.

Table 6.2: NSRF Round 1 and 2 Funding
                   Commonwealth           Total Project Cost     Funding Approved
                 Funding Approved                                   vs Project Cost
    Round 1            $212,253,603             $642,010,425                    33%
    Round 2            $293,434,371             $841,925,861                    35%
    Total              $505,687,974            $1,483,936,286                   34%
Source: Australian Government (2016b, 2016c)

It is premature at this stage to indicate which grant programs may be suitable for Council to apply. Three funding
scenarios have been modelled for the purposes of this pre-feasibility assessment:

      All capital funds provided by Council.

      $20 million in grants, with the remaining funds provided by Council through borrowing.



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