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Adelaide City Council to sell assets including beach volleyball court and car park to raise money for ‘future fund’
A popular inner-city volleyball court and car park will be sold by the financially challenged Adelaide City Council.
Colin James
Follow@ColinJamesTiser
January 13, 2021 - 7:18AM
THE ADVERTISER
Lord Mayor explains the budget
Adelaide Lord Mayor Sandy Verschoor explains the council's 20-21 budget. Video: Adelaide City Council
https://www.adelaidenow.com.au/3481fe3c ... e5df01c374
Adelaide City Council will start selling a secret list of assets as it faces operating losses of almost $100m in four years.
Elected members already have voted to put a popular city volleyball court and car park on the market while the details of seven other assets will remain confidential.
The move to sell the Beach Volleyball court on the corner of Pirie Street and Frome Street and adjacent Pirie-Flinders UPark station comes after councillors last month decided to continue a rate freeze.
The former Franklin St bus depot is also expected to be sold. Proceeds will be put into a new “future fund” designed to generate a new income stream to help the council get back into the black.
Councillors last month rejected a staff push to increase the rate in the dollar for residential and commercial properties, instead deciding to raise fees and charges at the rate of inflation while allowing borrowings to increase to $93 million by June.
The council’s increasingly precarious position is unprecedented, with one staff report late last year warning it was at risk of becoming “financially unviable”.
The council has incurred operating deficits for the past three financial years totalling $58.5m. A further $39m loss is forecast for this financial year.
Four hundred temporary, casual and full-time jobs have been cut in a bid to annually save $20m in operational savings demanded by the dominant Team Adelaide faction.
Much of the council’s debt involves using borrowed money in recent years to buy the former Le Cornu site at North Adelaide and spending tens of millions upgrading Rundle Mall, Victoria Square, Topham Mall, Bent Street, Gawler Place, Waymouth Street and the Frome Street Bikeway.
The pandemic has put the council’s finances under further stress, with decreased activity in the CBD reducing its income by an estimated $20m since last March.
Councillors were told last November they must increase rates, fees and charges if the council was to return to operating surpluses.
Elected members have asked staff to investigate how properties exempt from rates such as universities, schools and churches can be levied.
Exempt properties cost the council more than $35m each year in lost rate revenue.
Team Adelaide also has sought more detail on how much is needed to be spent over the next decade on critical infrastructure.
Staff have presented revised financial modelling which shows more money will be needed to be borrowed to cover operational costs, infrastructure maintenance and a $28m contribution towards the proposed $400m Adelaide Central Market Arcade redevelopment.
Under a revised long term financial plan – to be discussed at a forthcoming workshop – the council’s debt will reduce to $68m by 2029.
However, an estimated $175m needs to be spent upgrading or replacing key assets such as the Torrens Weir, Adelaide Bridge and Grenfell Street-Currie Street bus corridor. This will lift the debt to at least $143m by 2031.
The workshop will be briefed on how city footpaths, roads and stormwater drainage also need to be upgraded over the next decade, taking the potential infrastructure spend to over $400m – prompting council’s decision to start selling assets.
Property and commercial associate director Tom McCready confirmed “opportunities” to “maximise public value for ratepayers” from the council’s extensive property portfolio were being explored.
“This includes consideration of opportunities relating to the sale of underperforming assets as well as leveraging existing assets for city shaping initiatives,” he said.
Mr McCready said the City Beach Volleyball site had been identified as “a potential mixed-use development opportunity acting as a catalyst within the City East precinct”.
The City Beach volleyball courts are popular with CBD office workers.
“The City of Adelaide intends to release the site to the market to gauge interest and will consider how the adjoining Pirie-Flinders UPark may add value to the site,” he said.
Adelaide City Council rules out small cuts to community events, grants, programs to save $1.5m
It’s desperate to reduce a $34m loss – but debt-laden Adelaide City Council has rejected a staff proposal to cut spending to events such as Anzac Day.
Colin James
Follow@ColinJamesTiser
THE ADVERTISER
Lord Mayor explains the budget
Adelaide Lord Mayor Sandy Verschoor explains the council's 20-21 budget. Video: Adelaide City Council
Adelaide City councillors have rejected spending less on public events such as Anzac Day to reduce a $34m loss.
Staff have modelled how 20 per cent cuts to various operational activities and public events could immediately deliver $1.5m in savings.
They suggested possible reductions in funding for the annual Anzac Day memorial service and march through the CBD, Christmas in the City, New Year’s Eve, History Festival, Umbrella Winter Festival and Fashion Week. Other programs included grants for heritage protection, sport and recreation, arts and culture and Aboriginal reconciliation.
Also examined was business activation, community safety, sister-city relationships, community development and Australia Day sponsorship.
But the idea was instantly ruled out by elected members during a special workshop to discuss the council’s long-term financial plan.
Several instead called for other options, such as borrowing more money, to be considered as council – which already owes $100m – faces a $34m operating deficit.
Greens candidate Robert Simms said community groups had already been adversely impacted by COVID and needed ongoing support from the council to help them survive.
“If we start talking about cuts to community services, that would have a devastating impact on that sector of the community,” he said.
“Many already are being hit hard by COVID. Many rely on the City of Adelaide.
“Are we going to start cutting support for the parklands, shutting libraries or whatever? These things are really vital.”
Cr Simms said it was wrong to put “an ideological view ahead of common sense” during “an once in a century economic crisis”.
“I want to know why we wouldn’t continue to borrow to get us through this difficult period”.
Veteran councillor Anne Moran agreed, saying the total savings from the possible cuts suggested by staff “were so minuscule” they were not worth it.
“They will cause a lot pain for very little gain,” she said.
“It is not going to help pay a $100m debt off. It is not going to get us out of our financial hole at all.”
WHY ADELAIDE CITY COUNCIL OWES SO MUCH
Seven consecutive years of rate freezes, resulting in the loss of potential income of $16m if CPI had been applied
Repeated spending on big projects over the past four years such as 10-Gigabit Adelaide and upgrades to Topham Mall, Gawler Place.
COVID-19's ongoing impact on the Adelaide CBD, costing $20m so far in lost income from parking, rents and fees
Staff being ordered to find $20m in operational savings, largely through redundancies and organisational restructures
Borrowing too much money to cover operational costs and capital works, taking the council from a $17m operational surplus in 2016-17 into three consecutive years of operational losses totalling $57m, with another loss of $34m forecast this year.
Accounting for major capital works projects resulting in a number of large write-offs in recent years
Recently appointed chief operating officer Justin Lynch said the council needed to find ways to return to operating surpluses, rather than losing money.
Mr Lynch said the council was not saving “enough for a rainy day” and needed to plan for large spending on infrastructure over the next decade.
“We are living beyond our means, we not living within them.” he said.
“COVID has come along and exposed our weaknesses, especially from a business perspective.”
Acting chief executive Clare Mockler said the idea of the cuts had been suggested by staff to “understand where council does have appetite to look for some sort of savings”.
“I absolutely understand the concept that death by a thousand cuts is not palatable for anyone and really no one wins,” she said.
Further workshops to discuss the council’s budget and long-term financial plan will be held next month.