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Unanimous decisions bring hope for Kiama Council

The Bugle App

Cathy Law

02 March 2023, 5:17 AM

Unanimous decisions bring hope for Kiama Council

While the decision not to include the Terralong St ILUs in the sale of Blue Haven was the focus of attention for many, a number of other pivotal decisions were made unanimously at Council's Extraordinary Meeting on Tuesday - to help Council to meet its Performance Improvement Order (PIO) from the Office of Local Government and restore its financial viability.


“Those decisions weren’t taken lightly or off the cuff,” says Mayor Neil Reilly.



“Everything was questioned and everything was debated. However once that debate was over, and minor and major amendments made, all were unanimous decisions of Council.


“I commend the Councillors and Council staff for their vital contributions to the Meeting. I am pleased that we reached a consensus, with some give-and-take from all sides. Tough decisions were made, the outcomes of which have given us a solid path forward towards a sustainable future for our Council and our Municipality.


“The community knows we have wrestled with the issues around our finances and Blue Haven since we were sworn into office back in January 2022. Debates have swung back and forth many times because of the significance of these decisions.


“I’ve been speaking all year about the need for compromise and for us to work as a team. This all came together and I’m proud of what we achieved.”


The Council Meeting at The Pavillion


The decisions, most of which reinforce the need for further asset sales, included:

  • accepting the two year cash flow forecasts, which show that “further asset divestment to clear the full TCORP debt and also leave KMC a respectable unrestricted funds position at June 2024 is required.” Amongst other things, the report says further asset divestments are needed as the sale of Blue Haven Bonaira is expected to result in a net cash injection of just $20 to $25 million, possibly by late 2023, as well as a reduction in current liabilities of $72 million. Capital works expenditure has also been reduced by $5 million for both 2023 and 2024, and operational efficiencies are needed.
  • accepting the Liquidity Plan, which the business paper says, “illustrates, subject to property sales being realised at the values and within the timeframes anticipated, that the concerns with Council’s ability to clear its debts, replenish reserves and build working capital to meet its regular outgoings, may be eased. Council has already identified several reserves (restricted funds) to be replenished, such as Employee Leave Entitlements and property.”
  • approving talks to begin on the early repayment of $30 million of the $45 million debt owned to TCorp, as part of renegotiating the another loan for the remaining $15 million if necessary. Full repayment currently due August 2023.
  • approving the Property Plan, after stressing the importance of considering other factors rather than just financial in deciding whether to refurbish, repurpose, redevelop or dispose of. The Plan lists 29 Council properties and five Crown Reserve properties it manages, with some of the properties already in the process of being sold, eg. Akuna St carpark.
  • deciding on the distribution of the net proceeds of $27.5 million from sale of Akuna Street, including making $1 million available for TCorp loan repayment; topping up the prudential balances needed to be held for the RADS and ILU deposits by $4.6 million (required by the PIO); adding $2.5 million to the Employee Leave Entitlement reserves (required by the PIO) and $8.4 million to the Land Development restricted reserve; and injecting $11 million into operational cash.
  • endorsing completing service reviews into its commercial business areas - waste services, leisure centre, Pavilion and holiday park - as a priority, ahead of rolling out a program of reviews for the other general services it provides
  • authorising the sale of Blue Haven Bonaira, including appointing specialist consultants for the tender; starting the process of converting it to operational land for the sale; look at subdividing out Havilah Place for a separate sale; continuing work to excise the community garden from operational to community land; and preparing a dilapidation report on the Terralong St assets.

CEO Jane Stroud says the documents made public for the Meeting show plainly that because of a structural deficit for the initial two to three year period, in order to remain a going concern, “We must divest where we can to be able to pay our bills when and where they fall due.


“This is about restoring those to a healthy balance so that this and future councils don’t find themselves in this cycle of deficits.”


CEO Jane Stroud and Mayor Neil Reilly at the Extraordinary Meeting


She’s pleased she has been authorised to proceed with the sale of Blue Haven Bonaira, and that now Blue Haven Terralong is not to be included there is clarity to consider planning proposals for separating the land around the Havilah site (former nursing home) and the community garden.


“We can progress with those and consider what the time frame of the process is and what opportunities are presented after that fact,” says Ms Stroud.


The Meeting also called for a dilapidation report on the 43 year old Terralong St site to assess what further investment will be needed.



“There has never been a strategic asset management plan for those pieces of infrastructure, and they need to be brought up to compliance,” says Ms Stroud, describing the report as a significant body of work to be undertaken and noting there are no reserves held for their replacement.


Ms Stroud has already been in touch with TCorp.


“Those formal negotiations to refinance are commencing as a matter of urgency, and while TCorp are very positive about the early repayment they are also very aware of the remaining $15 million owed and the challenges around seeking refinancing with our current balance sheet having incomplete financial statements.”



Asked by Councillor Warren Steel to explain how the situation has got to this, she ended with, “There is no question that we are in this predicament through a series of complex decisions that have been made in the past that have all caught up with us today.”