CITY LIFESTYLE 16 JUNE 2021 4.1 LEASE RENEWAL – CORNUBIA PARK SPORTS CENTRE REPORT OF: Sport, Leisure & Facilities Manager REPORT OVERVIEW EXECUTIVE SUMMARY This report has been prepared following the receipt of a request from Logan Basketball Inc. (LBI) for Council to renew its lease over the Cornubia Park Sports Centre. The report provides a review of LBI’s performance over the last five (5) years under the existing lease, due diligence and proposals for future development of the venue if the lease is renewed. Criteria: Direction - It requires Council to make a decision of a strategic nature; or Council has specifically requested it CORPORATE PLAN PRIORITY Quality Lifestyles RECOMMENDATIONS IT IS RECOMMENDED: 1. That the renewal of the trustee lease over part of the Cornubia Park Sports Centre with Logan Basketball Inc. (LBI), in accordance with details in the report of the Sport, Leisure and Facilities Manager dated 16 June 2021, be endorsed. 2. That Council resolves, in accordance with the Local Government Regulation 2012, Section 236(1), that the exception in section 236 (1)(b)(ii) applies to Council on the disposal of a valuable non-current asset other than by tender or auction by way of lease over part of the Cornubia Park Sports Centre to Logan Basketball Inc. on the basis that Logan Basketball Inc. (LBI) is a ‘community organisation’. 3. That the Sport, Leisure and Facilities Manager be delegated authority to execute all documents associated with the establishment of the trustee lease with Logan Basketball Inc. (LBI), as detailed in Clause 1 above. Report Page 1 of 7 CITY LIFESTYLE 16 JUNE 2021 REPORT DETAILS INTERESTED PARTIES The interested parties are summarised in the table below: Table 1: Interested Parties in Lease Renewal – Cornubia Park Sports Centre Stakeholder Level of Engagement/Interest Councillor Miriam Stemp Division 10 Councillor Logan Lightning Football Club Precinct partner Shailer Park State High School Precinct partner Cornubia Park Netball Association Precinct partner Existing User Groups Venue hirers School Groups Venue hirers Movement Health and Fitness Lessee of part of Cornubia Park Sports Centre PURPOSE OF REPORT/BACKGROUND Business Plan The current lease with LBI expires on 30 June 2021. LBI are seeking to have this lease renewed to continue the success attained since taking over the management of the centre five (5) years ago. LBI have requested a ‘10 + 10 year’ lease with a lease fee of $25,000.00 per annum with CPI increase annually capped at $35,000.00. Under this arrangement, LBI have committed to not increase facility hire costs for a minimum of 5 years with a 3% increase implemented in the 5th year. Upon taking over the management of the venue in 2016, LBI reduced hire fees by 10%. If Council were supportive of establishing a new lease with LBI it would be recommended that this be for a period of 10 years with no option so as to mitigate any risks associated with the organisations capacity in the longer term. LBI are committed to continuing to focus on the following four (4) key elements of success: Delivering outstanding customer service and customer experience; Reducing end-user costs associated with sport and recreation activities; Providing targeted and positive investment into the local community; and Developing the Cornubia Park Sports Centre into the sporting capital of South-East Queensland. Outcomes/Performance – last five (5) years Over the last five (5) years, LBI have delivered the following benefits through the management of the Cornubia Park Sports Centre: Operational savings to Logan City Council Reduction in venue hire fees to user groups Reduction in membership fees for sporting clubs due to reduced court hire rates Reduction in event costs Increased engagement from local businesses Investment in excess of $450,000 into the maintenance and improvements of the venue Cornubia Park Sports Centre is now home to over sixty (60) regular user groups Entered into a 10-year agreement with Shailer Park State High School, which will ensure shared use of the re-developed Multipurpose Sports Hall Maintained multipurpose sports focus Report Page 2 of 7 CITY LIFESTYLE 16 JUNE 2021 Delivery of large-scale events including: o Multiple State Basketball Championships o Multiple State School Basketball Championships o Indian Cultural Performance o Mixed Martial Arts Fight Night o Karate South East Queensland Championships o State Netball Championships o School Graduation Ceremonies o Business events Maintenance and Improvements Completed: o Upgrade to high speed internet providing free Wi-Fi for facility users o Upgrade to security camera system o Installation of new high-quality sound system o Toilet and change rooms refurbishment at a cost of $240,000 in partnership with the Federal Government o Painting and refurbishment of main office and other areas within the venue o Installation of additional storage for use of regular venue users at no charge o Stadium entrance improvements o Installation of new carpets and stadium seating in viewing area Proposed: o Internal access from Court 3 and 4-end of stadium to mezzanine o Reception upgrade o Installation of Airius cooling fans throughout the venue o Installation of Court Curtain between Courts 1 and 2 o Stadium Scoreboard upgrade o Kitchen and café redevelopment (A copy of the Logan Basketball Inc. – Cornubia Park Sports Centre Venue Management Lease Renewal Proposal is attached as background papers to this report – Attachment 1) Due Diligence In addition to the Business Plan provided, LBI were also requested to provide further information for the purpose of undertaking due diligence. An overview of this information is as follows: Audited financial statements Last two (2) audited financial statements provided have been reviewed and the following is noted: Logan Basketball Inc had operating deficit in 2019 and an operating surplus in 2020 – though revenues increased marginally year on year even with substantial grant funding received. It is unknown as to the financial position of the organisation for year to date 2021, and what impact the ongoing global pandemic may yet have. Grants of 24% ($254k) of total operating revenue were received in 2020 compared to 0.6% ($6.7k) in 2019. 2020 grant funding was primarily as a result of the Community Sports Infrastructure Program and associated with the changeroom redevelopment. Logan Basketball Inc were also the recipients of JobKeeper ($30k) and Cashflow Boost ($20k) COVID-19 response programs during 2020FY. Report Page 3 of 7 CITY LIFESTYLE 16 JUNE 2021 Insurance Details Certificates of currency provided for: Workers Compensation Insurance o Work Cover Queensland Public Liability Insurance $20,000,000.00 o XL Insurance Company Letters of Support Letters of support were provided by: Australian Futsal Association Basketball Queensland Cornubia Park Netball Association Mayor Darren Power Cr Miriam Stemp Southside Martial Arts Academy Bendigo Bank Volleyball Queensland (A copy of the Logan Basketball Inc. – Letters of Support is attached as background papers to this report – Attachment 2) Operating Manuals/Policies The following policies and procedures were received: Environmental Policy Risk Management Policy & Procedure Incident Management Procedure Asset management Policy and Procedures Lease Terms and Conditions As this facility is on land owned by the Queensland Government, any change of leasing arrangements must comply with the Land Act 1994 and Land Regulation 2020. Trustee leases of trust land may be entered into and registered without the need to obtain or have Ministerial approval under the Land Act 1994 for trust land under the trusteeship of the State or a Local Government, provided: The trustee lease is consistent with the purpose of the trust land; and The lease complies with the requirements of section 7(2) of Land Regulation 2020; and A copy of this Written Authority forms part of the trustee lease documents lodged for registration in the Queensland Land Registry. Logan Basketball Inc. proposal meets these conditions. Under the Local Government Regulation 2012, Council may resolve to apply an exception for the disposal, to a community organisation (s236 (1) (b) (ii)), of a valuable non-current asset other than by tender or auction. Report Page 4 of 7 CITY LIFESTYLE 16 JUNE 2021 This exception has already been resolved as per clause (a) 7, within Council's policy 'Licence or Lease of Council Owned or Controlled Land to Sporting, Recreational and Community Organisations' which states: 7. Council resolves, in accordance with the Local Government Regulation 2012(Qld) Section 263 (2), that the exception in section 236 (1) (b) (ii) applies to Council on the disposal of a valuable non-current asset, by way of lease, for Council owned or controlled land to Community Organisations under this policy. In summary, Council is able to enter directly into a trustee lease with Logan Basketball Inc without the need to go to tender. If Council is supportive of the renewal of the trustee lease with Logan Basketball Inc. (LBI), it is proposed that Council will offer a Standard Sport and Recreation Lease in accordance with the following Council Policies: “Licence or Lease of Council Owned or Controlled Land to Sporting, Recreational and Community Organisations”; and “Remissions to Sporting, Recreational and Community Organisations”. Table 2: Lease Terms and Conditions Term Ten (10) Years Lease Policy Category (C) Special Council owned or controlled land to which Council has made significant capital contributions Lease Fee $25,000.00 per annum (annual CPI increase) capped at $35,000.00 Service Changes Utility Charges Remission: 100% water access charges 60% water volumetric charges Sewerage Charges Remission: 100% sewerage access charges Cleaning Charges Remission: 50% cleansing rates for the standard 24 litre service (excluding industrial bins) Subject to Council policy “Remissions to Sporting, Recreational and Community Organisations”. Operational Costs The Lessee is responsible for all outgoings including, but not limited to water, rubbish collection, electricity, telephones, internet and other such services and operational expenses.