Council Minutes - Town of Cambridge

COUNCIL
20 DECEMBER 2011
City of Stirling - Second Proposal
Following the MRC meeting of last week, the City of Stirling has now reconsidered its proposal
and has advised that its Council decided on 14 December 2011:
to continue with the withdrawal process
request the Minister for Local Government to extend the withdrawal process for 3
months (to 31 Match 2010)
not participate in the working group established by MRC on 8 December 2011
reduce their request for a payout to 75% of the PWC averaged valuation
not to seek withdrawal as a guarantor from the RRF guarantee.
The Council also decided that if the agreements to effect the City of Stirling's withdrawal from
MRC are not effected by 31 March 2012, they will recommence the Supreme Court
proceedings against the MRC and the other participants.
In relation to the reduced payout amount referred to above, a 25% discount would reduce the
amount to $9.285 million ($12.38 million average valuation @ 75%) from the earlier request of
$11.14 million.
As indicated in the analysis of the PWC methodology, it is considered that Scenario A does not
have any merit and any discussion on valuation using that method should be based on
Scenario B only. Scenario B determined the City of Stirling's one-third share at $11.8m,
therefore at a 10% discount this would be reduced to $10.62 million and at 25% the reduced
amount would be $8.85 million.
It is noted that the City of Stirling are no longer seeking to withdraw from the RRF guarantee
which is consistent with the Town's position.
Financial Costs
Should the members agree to pay the City of Stirling $9.285 million to withdraw, the Town will
be liable for $1.16 million of that payment (one eighth). In addition, the tipping costs have
increased approximately $20 per tonne due to the reduced waste being delivered by the City of
Stirling which creates an extra cost to the Town of $200,000 per year. The valuation prepared
by PWC does not take into account the additional costs to the remaining members as a result
of the City of Stirling withdrawing from the MRC as it is not part of the business value.
However, any negotiation with the City of Stirling to withdraw needs to take into account the
adverse financial impact on the remaining members. As a continuing member, it is deemed
acceptable to pay a higher tipping price due to the reduced tonnes that will result in extending
the life of the landfill, but not to also be paying a high exit price for the withdrawal of a member.
It is also considered that any payment to the City of Stirling should come from MRC funds and
the remaining participants should not be required to make a proportional payment to MRC to
facilitate the payment. The City of Stirling payment should be paid as follows:
from City of Stirling's paid in capital which at 30 June 2011 is $844,000 as stated in the
audited financial statements
paid their share of the Members Revenue Equalisation Reserve (i.e. under/over’s
account) which had a balance as at 30 June 2010 of $1.926 million in total with Stirling's
share being $667,000. Note: this amount needs to be updated with the 2011 end of
year financial results;
any residual amount negotiated be paid from annual operational surpluses of the
regional council over a period of time inclusive of interest;
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