ordinary meeting of council 01 may 2013

Ordinary Meeting of Council 01 May 2013

5.2 SPECIFIED AREA RATE - HAZELMERE INDUSTRIAL AREA

INFRASTRUCTURE

Ward: (Guildford Ward) (Financial Services and Rates)

Disclosure of Interest: Nil

Authorised Officer: (Executive Manager Corporate)

KEY ISSUES

The current Hazelmere Industrial area was zoned as 'General Industrial' by the

Metropolitan Regional Scheme (MRS) in 1992. Since then a number of

developments have taken place, which has in turn called for infrastructure

upgrades in the area.

Seven key infrastructure upgrades were identified at a total estimated cost of $15

million and a Specified Area Rate (SAR) was the mechanism chosen to fund the

works with the reserve being created in the 2010/11 financial year. A loan of $3.1

million was raised to enable work to commence with repayments funded by the

SAR.

In October 2011, the Western Australia Planning Commission (WAPC) approved a

structure plan to expand the industrial area in Hazelmere. It is anticipated that

subsequent approval by the Metropolitan Regional Scheme (MRS) will be obtained

within two years.

The additional Hazelmere Industrial Area requires construction of infrastructure

that incorporates approximately 9,165 metres of roads, drainage and footpaths at

an estimated cost of $29.6 million.

Introducing a SAR is again the preferred mechanism to fund these additional

infrastructures. This SAR is to be called "Hazelmere Industrial Area Infrastructure".

Legal advice from McLeods confirmed that this SAR can be introduced even though

the rezoning has not officially taken place with reference to Local Government Act

1995 section 6.37(1).

As the infrastructure upgrades will benefit everyone in the current and future

industrial area it is proposed to combine the SAR for the properties within the

future industrial area with the properties in the existing industrial area.

In order to do this, the current SAR would need to be stopped at the end of the

2012/13 financial year and a new SAR called " Hazelmere Industrial Area

Infrastructure" be introduced in the 2013/14 financial year, which would include all


properties in the current and future industrial area.

Unspent funds from the current SAR held in the reserve account will only be spent

on works planned for that area. Future repayments on the loan to start work on

the current stage will be funded from the new SAR.

The new SAR requires construction of infrastructures at a total estimated cost of

$40 million.

The charge is to be calculated the same way as the current SAR, with the City

contributing $3 for each $1 raised. It is anticipated that the SAR will raise

approximately $2.9 million in 2013/14 ($716,000 from SAR and $2,148,000 from

City's contribution).

The Specified Area Rate and Council contributions are estimated to be applied for a

period of 13 years.

As certain Hazelmere landholders will be affected by this proposal, it will be

imperative to notify them of the changes.

It is recommended that the Council adopt the creation of a Specified Area Rate for

Hazelmere Industrial Area Infrastructure and inform ratepayers within the applicable

area.

BACKGROUND

Hazelmere Enterprise Area has been identified as suitable for industrial purposes and the

development of this area has been the subject of much discussion by the Council as far

back as 1985.

The current Hazelmere Industrial Area which is approximately 190ha of land north of the

Great Eastern Highway Bypass was zoned as Industrial by the Metropolitan Region

Scheme (MRS) in 1992.

In May 2010, the City of Swan adopted the "Hazelmere Industrial Roads and Drainage

Rate," to be applied from 1 July 2010. This "Specified Area Rate (SAR)" was introduced

as the mechanism to fund the works required to upgrade the infrastructure (roads,

drainages and footpaths) at the general industrial area in Hazelmere to industrial

standards.

There were seven roads with a total estimated cost of $15 million, which had been

identified as required to facilitate the business growth in the area. As part of this

Hazelmere Industrial Area Infrastructure upgrade, the City of Swan has constructed the

extension of Stirling Crescent in the 2011/12 financial year and in the 2012/13 financial

year the City is upgrading Bushmead Road from Stirling Crescent Roundabout to Central

Avenue.

Meanwhile on the 18 October 2011, the Western Australia Planning Commission (WAPC)

approved a structure plan to expand the industrial area in Hazelmere. As a result, the

industrial area in Hazelmere is being expanded to include a section west of the current

Ordinary Meeting of Council 01 May 2013 industrial area (approximately 80ha) and an area south of the Great Eastern Highway

Bypass (approximately 130ha). This rezoning would not officially take place until

approval by the Metropolitan Regional Scheme (MRS) and amendments to the City of

Swan Local Planning Scheme No.17 a process which could take two years.

Nonetheless, in anticipation of the rezoning, the City has identified a number of works

which will be required to upgrade the infrastructure in the additional industrial area. The

cost estimate for the project is expected to be over $29.6 million comprising of new

construction and/or upgrade of roads, drainage, footpaths, street lights and crossovers

to industrial standard.

Legal advice from McLeods confirmed that a SAR can be introduced even before rezoning

has taken place. Section 6.37(1) of the Local Government Act 1995 states:

(1) A local government may impose a specified area rate on rateable land within a

portion of its district for the purpose of meeting the cost of the provision by it of

a specific work, service or facility if the local government considers that the

ratepayers or residents within that area -

a) have benefited or will benefit from; or

b) have access to or will have access to; or

c) have contributed or will contribute to the need for,

that work, service or facility.

As the additional infrastructure work will undoubtedly benefit the ratepayers in the

current industrial area as well, it has been proposed to end the current SAR at the end of

the 2012/13 financial year and introduce the new SAR in the 2013/14 financial year,

which will include ratepayers in the current and future industrial area.

DETAILS

The current Hazelmere Industrial Roads and Drainage SAR was the mechanism chosen to

fund seven key infrastructure upgrades in the Hazelmere Industrial Area with a total

estimated cost of $15 million. The seven works are:

Stirling Crescent: - Great Eastern Highway Bypass to Bushmead Road

Stirling Crescent: - Bushmead Road to Lloyd Street

Stirling Crescent: - Amherst Road to Lloyd Street

Bushmead Road: - Central Avenue to Stirling Crescent

Bushmead Road: - Stirling Crescent to Roe Highway

Lakes Road: - Lloyd Street to Roe Highway

Central Avenue: - Bushmead Road to Stirling Crescent

In the 2011/12 financial year the City has completed the extension of Stirling Crescent

from Bushmead Road and nearly reaching Lloyd Street as the latter has not been

constructed yet. In the 2012/13 financial year, the City is upgrading the road and

constructing new drainage along Bushmead Road from Stirling Crescent to Central

Avenue.

Ordinary Meeting of Council 01 May 2013 With the current proposal of combining the SAR, the City would have to end the current

SAR at the end of the 2012/13 financial year and it has been estimated that there will be

$1.6 million left in the reserve account. This amount would need to be spent on one of

the remaining five works identified below. Remaining loan repayments will be met from

the new SAR reserve.

In the 2013/14 financial year, the City will be introducing a new SAR, which will include

all properties in the current and future industrial area. The remaining five of the seven

works identified above as well as infrastructure upgrades for the additional industrial

area will be funded by this new SAR - except for the $1.6 million portion paid from the

old reserve.

The five remaining infrastructure upgrades from the current industrial area and their cost

estimate is summarised in the table below:

Infrastructure items Length Cost

1. Bushmead Road - Stirling Crescent to Roe Highway 650m $1,709,500

2. Stirling Crescent: GEH Bypass - Bushmead Road 730m $1,919,900

3. Stirling Crescent: Amherst Road - Lloyd Street 1100m $2,893,000

4. Lakes Road: Lloyd Street - Roe Highway 810m $2,130,300

5. Central Avenue: Bushmead Road - Stirling Crescent 730m $1,919,900

Total infrastructure 4,020m $10,572,600

The proposed infrastructure upgrades for the additional industrial area involves

construction of roads, drainage and footpaths, with street lighting and crossovers, as

follows:

Infrastructure items Length Cost

6. Talbot Road: Stirling Crescent - Roe Highway 800m $2,104,000

7. Talbot Road: Abernethy Road - Stirling Crescent 660m $1,735,800

8. Stirling Crescent: GEH Bypass - Adelaide Street 1100m $2,893,000

9. Adelaide Street: Abernethy Road - Stirling Crescent 850m $2,735,500

10. Adelaide Street: Stirling Crescent - Roe Highway 1020m $2,682,600


11. New Road: Stirling Crescent South towards Roe Hwy 1200m $5,436,000

12. Bushmead Road: Central Avenue - RAB 600m $2,078,000

13. Lakes Road: Lloyd Street to Hazelmere Circus 600m $1,578,000

14. Vale Road: GEH Bypass to Lakes Road 625m $1,581,250

15. Hazelmere Circus: Lakes Road to Mary Street 500m $1,265,000

16. Amherst Extension: Bushmead Road to Hazelmere

Circus 440m $1,993,200

17. Amherst Extension: Stirling Crs to Bushmead Rd 770m $3,488,100

Total Infrastructure 9,165m $29,570,450

The 17 works listed above have been identified based on the Hazelmere Enterprise Area

Structure Plan and the costs are indicative only and subject to change. Additionally a

detailed investigation and design may reveal additional works required to facilitate the

industrial growth in the area.

It should also be noted that the list above has been identified based on the 2011

Structure Plan. Further investigation into traffic and drainage modelling would need to be

done prior to the design phase to identify any impact on the infrastructure requirements.

Total cost for the 17 works is $40,143,050.

Financial Projection Model

The current and future industrial area in Hazelmere requires construction and/or upgrade

of infrastructure at an estimated cost of $40 million in current dollars.

In order to fund this work, it is proposed to end the current "Hazelmere Industrial Roads

and Drainage Rate," SAR and introduce a new Hazelmere Industrial Area Infrastructure

SAR, which would include all ratepayers in the existing and future industrial areas.

By combining the existing and future industrial area into one SAR, the City would be able

to raise enough funds so as to eliminate the need to apply for additional loan funds. At

current values this combined SAR would raise approximately $716,000 with a Council

contribution of $2,148,000, giving a total of $2,864,000 in 2013/14. This value will

increase each year and it is anticipated that after 13 years, there would be enough funds

in the reserve to complete all the works.

Old SAR Reserve closing balance at 2012/13 is $1.6 million. Existing loan repayment will

continue in new Reserve and it is expected to be finished in 2021/22.

The estimated construction cost is $40 million in current dollars and $51 million in future

dollars.

Ordinary Meeting of Council 01 May 2013 Total SAR collected over 13 years is around $13 million and the City's contribution is

around $39 million, making a total of $52 million.

Therefore it is anticipated that the SAR will be applied from 2013/14 financial year to

2025/26.

The actual works are expected to commence in the 2013/14 financial year and could

take approximately 15 to 16 years to complete.

CONSULTATION

As some Hazelmere landholders will be affected by this proposal, it will be important to

inform the community regarding the introduction of this combined Specified Area Rates.

However since considerable consultation (which included advertisements, community

consultation and media release) was undertaken back in 2010 when the original SAR was

introduced, the level of consultation done here would be slightly less. Ratepayers will be

notified through individual letters which outlines the SAR.

The new SAR will be advertised in conjunction with the 2013/14 differential rate

advertisement and as such ratepayers will have 21 days as per sec 6.36 (b) (ii) of the

Local Government Act 1995 in which to submit any objections to Council.

Key messages will include:

The Specified Area Rate Charge will enable the upgrade of roads, drainage and

footpaths, with street lighting and crossovers in the specific Hazelmere area. It is a

long-term solution and these improvements cannot be achieved without the Charge.

As per Local Government Act 1995 section 6.37(1), City of Swan can adopt this

Specified Area Rate based on ratepayers or residents within that area

a) Have benefited or will benefit from;

b) Or have access to or will have access to; or

c) Have contributed or will contribute to the need for,

that work, service or facility.

The City of Swan will contribute $3 for every $1 contributed by affected landholders,

and will cease the SAR charge upon payment of all infrastructure items.

ATTACHMENTS

Map of Hazelmere Enterprise Area Structure Plan and Hazelmere Industrial Area

Infrastructure with proposed works identified.

STRATEGIC IMPLICATIONS

The proposal is aimed at achieving strategic objective of ensuring the City’s

infrastructure meets community needs.


STATUTORY IMPLICATIONS

Rating and accounting provisions of the Local Government Act 1995 apply, in particular

Section 6.37.

FINANCIAL IMPLICATIONS

The significant financial implications are as follows:

There are growing pressures for development within the area and the infrastructure

planned in this program will help facilitate business growth in Hazelmere. This

proposed construction incorporates 13,185 metres of roads, drainage and footpaths

at a total estimated cost of $40 million.

Combining the Specified Area Rate will result in increased revenue initially of around

$716,000 in 2013/14, credited to a reserve account for "Hazelmere Industrial Area

Infrastructure".

Council contributes to the reserve account a contribution matching the SAR collection

on the basis of $3 to $1, initially around $2,148,000 in 2013/14.

Specified Area Rate and Council contributions are estimated to be applied for a period

of 13 years.

VOTING REQUIREMENTS

Absolute majority

RECOMMENDATION

That Council resolves to:

1) End the current Hazelmere Industrial Area Specified Area Rate in the 2012/13

financial year.

2) Advertise the creation of a new Specified Area Rate for the Hazelmere Industrial

Area Infrastructure for the purpose of infrastructure construction, which combines

ratepayers in the existing industrial area and the future industrial area. The rate

would be adopted as per the 2013/14 Budget, effective from 1 July 2013. This

rate will be based on Gross Rental Valuation supplied by the Valuer Generals

Office.

3) Notify the affected ratepayers about the proposed change.

CARRIED

Ordinary Council Meeting

1 May 2013

ordinary meeting of council 01 may 2013

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