Council Minutes - Town of Cambridge

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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; H:\Ceo\Gov\Council Minutes\11 MINUTES\December 2011\D Item 10 Onwards.docx 233
COUNCIL 20 DECEMBER 2011 A further matter to consider is the Town's continued membership of the MRC. If the City of Stirling is able to withdraw from the MRC on favourable terms with a payment of approximately $9 million then it may also be in the Town's financial interest to withdraw and achieve a similar pro rata payment of around $2.25 million. The Town would the need to find an alternative waste disposal site to tip waste. The Town's current waste strategy is to reduce the amount of waste sent to landfill and if successful will see the tonnages reduce over time. If the Town wanted to pursue this action it is considered necessary to act now at the same time the City of Stirling withdraw. If not it is unlikely that the Town would ever achieve such favourable conditions in the future. This matter would need serious consideration and evaluation of the impacts before proceeding. POLICY/STATUTORY IMPLICATIONS: The withdrawal of a participant in a Regional Council is to follow the process outlined in Section 699 of the Local Government Act 1960. If negotiations in relation to the adjustment of assets and liabilities of the Mindarie Regional Council are not finalised in good faith, the City of Stirling has the option to resume the Supreme Court Action. FINANCIAL IMPLICATIONS: The financial implications relate to the impact of the potential change in ownership of the Mindarie Regional Council. The net assets of the Mindarie Regional Council at 30 June 2010 were approximately $27.5 million. The financial implications for the Town are detailed earlier in this report. STRATEGIC DIRECTION: In accordance with the objective of the Strategic Plan 2009 - 2020 "Capacity to Deliver", two goals are relevant: Open and transparent governance Financial sustainability COMMUNITY CONSULTATION: This matter was assessed under the Community Consultation Policy No. 1.2.11. In accordance with the assessment criteria, no consultation is required as this report is administrative in providing information to Council. ATTACHMENTS: Nil H:\Ceo\Gov\Council Minutes\11 MINUTES\December 2011\D Item 10 Onwards.docx 234
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Page 185 and 186: COUNCIL MINUTES TUESDAY 20 DECEMBER
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Page 229 and 230: COUNCIL 20 DECEMBER 2011 10.3 METRO
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Page 241 and 242: COUNCIL 20 DECEMBER 2011 (a) (b) (c
Page 243: COUNCIL 20 DECEMBER 2011 14. CLOSUR
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Council Minutes - Town of Cambridge

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