2018-04-10 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                          10 APRIL 2018


Risks & Opportunities
PAI’s financial position

The financial analysis undertaken by White and Grey in December 2017 indicated that Pomona
Arts Inc was at risk of becoming insolvent within the next 12 months.

Knowing this, the current management committee has attempted to turn this position around
through galvanising community support through a number of fundraising initiatives that has
reduced their overdraft from $47,000 in June 2017 to $27,000 as reported at their March 25 2018
AGM. The work of the current Management Committee to achieve this should be acknowledged.

The risk however is that this voluntary committee will burn out and PAI may once again find itself
unable to repay its overdraft, meet its mortgage repayments or maintain the building.

Options for Council to consider
Four options are put forward for Council’s consideration:

Option 1: Maintain the Status Quo

Council continues to provide PAI with a Community Alliance grant and a water rebate leaving
Pomona Arts Inc to trade out of its current financial situation.

 Pros                                                    Cons
 Council limits its financial contributions to the PAI   Current PAI management committee may burn out
 in the short term                                       and the organisation will potentially find itself
                                                         remaining under financial pressure
 Allows the market to determine the outcome.             Pressure will remain from some members of the
                                                         community for Council to intervene and provide
                                                         financial assistance
                                                         No Conservation Management Plan developed for
                                                         the building

Option 2: Council negotiates to purchase the Majestic Theatre

This would occur through either outright purchase or by taking over the PAI’s mortgage to Ron
West from PAI on the same terms and conditions as are currently in place. Subsequent to this
purchase Council then lease the building back to PAI on certain conditions and at an initial
peppercorn rental for three years to enable PAI to settle its debts and invest for growth.

After the initial 3 years, Council could then revisit the terms of the lease and seek an increased
rental return from PAI assuming that it has improved its financial position.

Prior Queensland Treasury approval is required for any potential mortgage takeover under the
Statutory Bodies Financial Arrangements Act.

 Pros                                                    Cons
 The future of this important heritage building is       Building condition unknown including whole of life
 secured                                                 costs(ongoing capital renewal and maintenance
                                                         costs)
 Council purchases the Majestic          Theatre    on   No Conservation Management Plan developed
 favourable terms and conditions
 PAI management committee can              focus    on   Council takes full responsibility for mortgage
 managing and activating the building                    payments (should this option be pursued)


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