Project Funding and Costs
Principles of Cost Management
There are two main principles which underpin the funding of The Concourse:
Firstly, it should not result in a reduction in Council services or programs. Secondly, it is imperative that Residential rates not be increased to fund the project. Also, a conservative estimate has been assumed regarding realisation of assets and revenue streams and has been based on prevailing market conditions. Other sources of income are supported by documented research and/or benchmarking.
The project funding plan was subjected to a third party review to critically appraise the assumptions and income projections detailed in the plans. The results were reported to Council and are publicly available.
At regular intervals throughout the project, and as the funding plan is updated and/or amended to accommodate the changing architectural design and commercial market, the funding plan will be audited by finance auditors PricewaterhouseCoopers who will report directly to The Concourse Steering Committee.
The total development costs for The Concourse are $162.05 million. The project costs include all professional fees, allowances for contingencies, as well as all fixed construction costs. Council will meet these costs by contributing approximately 66% in equity, and 34% ($55 million) in loan borrowings – repayable over 40 years.
The funding plan for the project included $30 million in long tern debt funding with the balance of the funds coming principally from asset sales, long term leasing of council car parks, Section 94 contributions, grants and donations.
Due to slowdown in some sectors of the economy, revenues from Section 94, grants and donations have been delayed and may not be received to coincide with project expenditures.
To enable the project to be delivered without delay or impact on other services, Council proposes to fund the temporary shortfall in project revenues with shorter term loan funding.
The proposal is to borrow up to an additional $25 million during 2010-2011 over a period of up to 20 years. The loan repayments will be funded from site revenues and general funds with principal repaid as funding revenues are received. The funds will be borrowed from the banking sector or capital markets and be secured by the income of the Council.
Information regarding costs and revenue are reported to The Concourse Steering Committee and Council on a regular basis. All reports, including supporting statements from Council's finance auditor PricewaterhouseCoopers, are available from the The Concourse Steering Committee meetings agendas and minutes.
The latest development summary and the The Concourse Project Cost Movements, which have occurred since the Funding Plan was developed in 2002, are also available for download.
Project Funding Planning
Willoughby City Council’s current financial position is sound. It is anticipated that this position will continue well into the future. The adopted expenditure budget for 2010/11 is $168,806,400.
Project costs and revenue have been updated over the subsequent 4-5 years since the original funding plan was prepared. Costs have increased to accommodate additional floor area and facilities required by the community as a result of feedback received from the Masterplan Exhibition, and the relocation of theTown Hall and rehearsal spaces to the main site.
Increases in revenue to meet the additional scope have been found through achieving higher than planned prices in asset sales and other sources of income.