2022-10-11 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                            11 OCTOBER 2022


Ordinary Meeting Minutes, 24 September 2015, Item 2, Page 12
That Council note the report by the Special Projects Officer to the Infrastructure and Services
Committee Meeting dated 15 September 2015 and the Further Report to the General Committee
Meeting dated 21 September 2015 and:
A.   Adopt Option A (as set out in the Report to the Infrastructure and Services Committee
     Meeting dated 15 September 2015) and authorise the CEO to enter into an agreement
     with the Cooroy Lower Mill Board to operate the Butter Factory Arts Centre on a 12 month
     trial basis, commencing 1 January 2016; and
B.   Provide a 12 month operating subsidy of $120,279 to the Cooroy Lower Mill Board on the
     basis that the Board provide six-monthly acquittals.
Finance
Following analysis of operational needs of the BFAC and the CFG’s financial position, this report
recommends Council maintains an annual operational subsidy of $114,500 (ex GST) for the
five-year permit.
Initial expectations were that Council’s level of operational subsidy would reduce over time and
this has occurred with a direct reduction of $18,379 in the annual contribution and an increase
in cost responsibility for the CFG. The CFG has grown the BFAC’s revenue significantly over
the last three years and Council’s subsidy has decreased from 56% to 31%. Council is now only
paying a third of operational costs and the CFG are growing in self-sufficiency and covering
71% of operational costs. There is a risk that if the subsidy is reduced too much, the cost of
operations will become unviable for the CFG and Council will be obliged to deliver the services
directly and bear an increased cost.
The 2022/23 Libraries & Galleries budget provides sufficient funding to contribute financial
support to the CFG for operations to June 2023. There is not sufficient funding in the 2022/23
budget for Council to return to managing and operating the Butter Factory.
Additionally, this report proposes to provide the CFG with annual funding on this subsidy model,
dependent on continuing satisfactory performance. As per the initial subsidy agreement, the
future subsidy agreement is to be reviewed annually. The CFG would also gradually take over
responsibility for additional cost elements e.g. electricity costs, once Council completes an
internal electricity audit.
Risks & Opportunities
The CFG have demonstrated their ability to effectively operate the BFAC. They have a strong
management and governance model in place which ensures stability of the executive committee
and the organisation generally. They have a strong working relationship with Council officers
and within the community. Based on the information available and their track record there is
limited risk to Council in extending the agreement for a further five years.
There are significant implications if Council does not extend the agreement to the CFG. Council
will need to undertake another expression of interest process to secure a new community
organisation to manage the facility, undertake the management directly or find another use for
the facility. All of these options would be time-consuming, costly and damaging to Council’s
relationship with the community.
Entering into another agreement with the CFG will provide the opportunity to continue the
positive partnership and goodwill developed over the last seven years. The CFG have
demonstrated that they are capable of taking responsibility of managing the facility and have a
strong foundation for future success, providing Council with a level of assurance for future
service delivery. Continuing operations under the CFG will retain the 2015 community
consultation outcomes of ensuring a cultural and community focus for the facility and community
participation in the management.



                                                                                  Page 74 of 75