Council Minutes - Town of Cambridge

COUNCIL
20 DECEMBER 2011
10.4 MINDARIE REGIONAL COUNCIL - CITY OF STIRLING WITHDRAWAL
PURPOSE OF REPORT:
To consider the valuation prepared by PriceWaterhouseCoopers (PWC) for the value of the
current and future rights and obligations, including assets and liabilities, of the Mindarie
Regional Council attributable to the City of Stirling. To also consider City of Stirling's request in
relation the value to be paid upon withdrawal.
BACKGROUND:
As a result of the Supreme Court action initiated by the City of Stirling in mid 2010 and
mediation held in August 2010, it is proposed that the City of Stirling withdraw from the
Mindarie Regional Council.
A Heads of Agreement was entered into by the parties to negotiate in good faith during the
period until 30 April 2011 in relation to the adjustment of assets and liabilities of the Mindarie
Regional Council to enable the City of Stirling to withdraw.
The negotiating period expired and the Town decided in May 2011 not to approve the extension
of the expiry date of the Heads of Agreement but agreed to participate in negotiations to
facilitate the withdrawal of the City of Stirling. For the Heads of Agreement to continue it
required all parties to agree and as the Town did not support the extension, negotiations are no
longer being carried out under that arrangement.
PriceWaterhouseCoopers (PWC) were appointed to assist the Mindarie Regional Council and
its members to value City of Stirling's interest for the purpose of adjusting the assets and
liabilities of the regional council.
The valuation exercise was to be undertaken in two stages as follows:
1. Preliminary Report for the identification of a preferred method of valuation.
2. Final Report based on the methodology from Stage 1 containing a valuation of the
current and future rights and obligations, including assets and liabilities of the Mindarie
Regional Council.
After the completion of Stage 1, the Town at its April 2011 meeting considered the methodology
proposed by PWC based on a Discounted Cash Flow (DCF) and decided not to accept the
proposed methodology. It was considered at the time that the DCF method would be based on
assumptions of future cash flows and is purely hypothetical and not appropriate for a
cooperative arrangement such as the MRC for the following reasons:
(a)
(b)
MRC is an entity owned by the members with the primary function of receiving waste for
disposal in the most efficient manner on a cost recovery basis.
MRC was not set up to make a profit for the owners and this is enunciated in the financial
precept that member’s fees would be set at the cost of tipping.
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