Property and User Charges at Alpine Resorts and Victorian Municipalities August 2008 Published by the Alpine Resorts Co-ordinating Council, July 2008. An electronic copy of this document is also available on www.arcc.vic.gov.au. Reprinted with corrections, August 2008 © The State of Victoria, Alpine Resorts Co-ordinating Council 2008. This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. This report was commissioned by the Alpine Resorts Co-ordinating Council. It was prepared by Saturn Corporate Resources Pty Ltd. Authorised by Victorian Government, Melbourne. Printed by Typo Corporate Services, 97-101 Tope Street, South Melbourne 100% Recycled Paper ISBN 978-1-74208-341-4 (print) ISBN 978-1-74208-342-1 (PDF) Front Cover: Sunrise over Mount Buller Village. Acknowledgements: Photo Credit: Copyright Mount Buller / Photo: Nathan Richter. Disclaimer: This publication may be of assistance to you but the State of Victoria and the Alpine Resorts Co-ordinating Council do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. The views expressed in this report are not necessarily those of the Victorian Government or the Alpine Resorts Co-ordinating Council. Property and User Charges at Alpine Resorts and Victorian Municipalities A Comparison of Occupier and User Charges at Ski Resorts and Municipalities Report prepared for: Alpine Resorts Co‐ordinating Council By: Bill Unkles Saturn Corporate Resources Pty Ltd July 2008 TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION 2 Methodology 2 1 VICTORIAN RESORTS 4 1.1 Selected Resorts 5 1.2 Resort service levels 5 1.3 Entry fees, service charges and other income 6 1.4 Rents 6 1.5 Consumer Price Index 7 1.6 Mount Baw Baw 7 1.7 Mount Buller 9 1.8 Falls Creek 10 1.9 Mount Hotham 11 1.10 Lake Mountain 13 1.11 Mount Stirling 13 1.12 Key Findings 13 2 VICTORIAN MUNICIPAL CHARGES 14 2.1 Selected Municipalities 14 2.2 Charging Methods 15 2.3 Rents 15 2.4 Comparisons 15 2.5 Key Findings 18 3 VICTORIAN MUNICIPAL AND ALPINE COMPARISONS 19 3.1 Key Issues of Comparison 19 3.2 Key Findings 20 4 NEW SOUTH WALES RESORTS 21 4.1 Selected Resorts 21 4.2 Entry fees 21 4.3 Rents 22 4.4 Service charges and other income 22 4.5 Thredbo 23 4.6 Perisher Range Resorts 25 4.7 Charlotte Pass 27 4.8 Selwyn 28 4.9 Key Findings 28 5 COMPARISONS BETWEEN VICTORIAN AND NEW SOUTH WALES ALPINE RESORTS 29 5.1 Key Issues of Comparison 29 5.2 Key Findings 35 References 36 Appendix 1: Data ‐ ski resort benchmarking comparisons 38 Appendix 2 Data for municipal comparisons 40 Appendix 3 IPART recommended charges for Perisher Range Resorts 2005‐06 42 Disclaimer Saturn Corporate Resources Pty Ltd has taken due care in collecting and presenting accurate information and in making accurate deductions in this report. No responsibility can be accepted for any errors based upon incorrect information provided to the author and used in compiling the report, nor for any misinterpretation by readers of material presented in the report. Property and User Charges at Alpine Resorts and Victorian Municipalities 1 EXECUTIVE SUMMARY The analysis shows that Victorian Alpine Resort Management Board charges compare favourably with equivalent charges imposed by adjacent Victorian municipalities and the New South Wales alpine resorts. The various resort and municipal entities provide different scope of services and apply different charging regimes, making comparisons difficult. Bed‐based comparisons have been determined to be the most valid. Property charges in resorts in both Victoria and New South Wales cover land rental as well as service charges. In Victoria, land rental subsidises service charges. Victorian alpine resort rentals are comparable to the cost of land rental or funding freehold land purchases outside those Resorts, however, the cost of land rental (or purchase) is not generally included in the income of municipalities, this rental income (real or imputed) accrues to property owners not service providers. Thus the full cost of holding property outside alpine resorts is not reflected in any comparison that only includes fees and charges for municipal‐type services and facilities. Property charges by municipalities and water authorities only include service charges. Charges related to provision of municipal type services and water and sewerage at Victorian alpine resorts are competitive with those charged in the surrounding municipalities and in a selection of likely home base municipalities of alpine resort visitors. The average of total income per bed for the resorts was $1,467 compared to $1,083 for the selected municipalities. While the resort income average was higher than the selected municipalities, it is noted that the average total income for the selected rural municipalities was $1,586. Thus the resorts have slightly lower charges than their adjacent municipalities. In 2005‐06 per capita grant income was lower in Victorian resorts ($113) compared to Victorian municipalities ($168). In that year, grant income as a proportion of total income was 7.8% of total resort income but 19.8% of total Municipal income. Over the decade, grant income in Victorian resorts represented 19.8% of total resort income, thus indicating the long‐term proportional grant income is similar to municipalities. Since 2001‐02, there has been some restructuring of gate entry charges within the Victorian resorts with a greater proportion of funds now being raised through gate entry charges, this change has been largely attributable to changes at Mount Hotham and Mount Buller. In NSW a surcharge has been applied to winter season visitors to Kosciuszko National Park. Notwithstanding, the gate entry charges per visitor day in Victoria are higher than those in New South Wales. However, in Victoria, all the gate entry charges are used to provide services directly related to the resorts, whereas in NSW most of the charges (59%) are applied generally to the National Parks throughout the state. Between the Victorian resorts there are some notable differences in the revenue structures. Mount Baw Baw, has the highest combined gate entry and trail charges per capita but the lowest rental and service income. At Falls Creek the opposite structure applies. With respect to a comparison of property charges between Victorian and NSW resorts, in NSW resorts, average total of property related income per bed was an estimated $1,368, including rents. The comparable figure for Victorian resorts was an estimated $743. The Victorian resorts appear to be more than competitive with those in NSW. Property and User Charges at Alpine Resorts and Victorian Municipalities 2 INTRODUCTION The Alpine Resorts Co‐ordinating Council (ARCC) commissioned Saturn Corporate Resources Pty Ltd (SCR) to undertake a comparative study of charges (including rates, rents, service charges, fees and contributions) at selected Australian Ski Resorts and in selected Victorian municipalities. The study provides an independent assessment of the relative charges and aims to provide a basis for the comparison of the net charges imposed on residential leaseholders/landholders. Each resort has its own specific method of charging leaseholders for the delivery of services, while the range of services offered by the resorts also varies. Hence it is difficult to make direct comparisons between the charges, as the publicly available data does not always separate operational expenditures in sufficient detail. While every effort has been made to provide comparisons on a similar basis, this approach may tend to simplify the issue as each resort provides a different set of services and/or service standards. The study aims to identify the major sources of occupier and user income, differences between resorts in application of charges and other issues that may impact on the use of these charges. The study builds on a similar study undertaken by SCR in 2003 for the then Mount Buller Alpine Resort Management Board. Methodology The information in the study has been compiled through interviews with representatives of each of the land managers, responsible authorities or head lease holders in the alpine areas, a review of the various land manager annual reports and reviews of annual reports of the municipalities, holding companies and authorities supplemented by information gathering from appropriate officers. The information gained is based on the 2005‐06 financial year, as, at the time of commencement of the study, that was is the last year for which audited accounts were available for the alpine resorts in Victoria. The expression ‘charges’ is used as a generic term to mean rates, rents, development fees, contributions and service fees imposed on occupiers of land. The use of charges linked to a specific function implies the cost/charge for delivery of that specific function e.g. development charge. The simplified results are presented in terms of total income per bed or in the case of municipalities, total income per resident as it is assumed one resident is equivalent to one bed. The residential totals are based on the 2006 Census of Population and Housing counts of persons counted within the local government area on Census night. This may slightly underestimate the number of beds, as it does not include beds in accommodation establishments not used for guests on census night, thus slightly overstating the averages per bed/resident for municipalities. From published and otherwise available information, it was not possible to separate commercial rents and service payments from non‐commercial rents and service payments for each Victorian resort. Therefore the comparative numbers include total rents and service fees on a per bed, Property and User Charges at Alpine Resorts and Victorian Municipalities 3 per site and per winter visitor day basis.