Council has almost $21m in unspent developer contributions in the bank

A recent controversial State Government push to take control of local government developer contributions has lead to a push back from the NSW Local Government Association,(NSWLGA) representing Councils across New South Wales, and has lead to a renewed media focus on developer contributions themselves.

By The Editor

Locally this has lead to resistance to the State Government proposal from the Coffs Harbour City Council (CHCC) and also a statement in response by local State MP Gurmesh Singh that Council’s will still be able to access their developer contributions.

Those stories were covered by CCO here; https://coffscoastoutlook.com.au/mayor-says-plan-to-take-developer-contributions-from-councils-will-lead-to-rate-rises/ and also here too; https://coffscoastoutlook.com.au/developer-contributions-gurmesh-singh-has-his-say/

What are developer contributions?

The NSWLGA has defined developer contributions as helping “fund vital infrastructure to support population growth in communities, including footpaths, cycleways, parks and open space to help cope with the increased demand new development brings.”

Correspondents to CCO have also been debating this issue and some have asked for proof of ‘the many millions’ of unspent developer contributions.

Today we present evidence to the effect that the CHCC, as per the accounts presented in tonight’s Council agenda, has accumulated unspent developer contributions of almost $21m.

Council’s bank balances

Tonight’s council meeting agenda states; “The bank balances and investment total of $252,909,524.75 as at 31 August 2021 is allocated between Council’s external restrictions, internal restrictions and unrestricted funds.

The balance of Council’s cash, cash equivalents and investments as at 30 June 2021 was attributable to external restrictions, internal restrictions and unrestricted funds as follows:

Fund$000
External Restrictions139,150
Internal Restrictions110,426
Unrestricted4,467
Total254,043
Go to https://infocouncil.coffsharbour.nsw.gov.au/Open/2021/09/CO_20210923_AGN_2257_AT_WEB.htm for tonight’s agenda – Clickable link at bottom of this article

Now there are a number of issues that are immediately of interest here but today we want to focus on the External Restrictions figure of $139,150,000.

This figure is where any unspent developer contributions can be found because they are ‘ringfenced ‘external contributions. This means they can only be spent on things such as footpaths, cycleways, parks, and infrastructure needed with the increased demand new development brings. In other words monies aid by developers to Council for these purposes

Attachments to the 26 August Council meeting one month ago showed a breakdown of the External Restrictions entry in the accounts. The entry pertaining to these is reproduced as a screenshot below;

For more information go to; https://infocouncil.coffsharbour.nsw.gov.au/Open/2021/08/CO_20210826_AGN_2247_AT_WEB.htm

Unspent developer contributions are $20,882,000. Almost $21m.

We know these figures are correct, in spite of the Draft diagonal stamp above, as they align exactly with the figures in tonight’s Council agenda

Questions for Council

Now there might be some very good reasons for this and we are sure Councillors, and probably State Government and also more than a few developers would like to know what they are.

No doubt Council’s executive Management, being as open and transparent as they always are, will oblige.

However, in addition to; “Why is it that almost $21m is unspent?” Questions such as; “How long have some of these contributions been unspent?”, “What plans are in place to acquit these contributions?” and “Is keeping these monies tied up in the bank at a time of historically low interest rate returns such a great strategy?” also spring to mind.

In regard to the last question above we note that tonight’s financials show that the CHCC has $43,036,947.00, or 17.02% of it’s investment portfolio, in BBB+ to BBB- securities.

These are supposedly the ones it has been argued that the NSW Treasury based TCorp had concerns about in regards to a possible CCS loan to Council . See Pg 16 of tonight’s agenda at the link below.

Issues such as unspent grant monies and the amount of available ready cash also arise from the finances as presented to Council tonight.

We will address those, and other issues too, tomorrow.

____________

Tonight’s CHCC agenda can be found at; https://infocouncil.coffsharbour.nsw.gov.au/Open/2021/09/CO_20210923_AGN_2257_AT_WEB.htm

Lead photo: Adobe Stock

8 thoughts on “Council has almost $21m in unspent developer contributions in the bank

  1. Right me not being a financial guru one thing stands out !!! $21 million is for infrastructure, so does this mean it’s sitting in the bank getting bugger all interest for years? Yet when it is spent on infrastructure because of rising costs the $21 million will build a lot less than it could have when it was first obtained, that seems pretty dumb to me. Am I missing something?

    Editor; No Bill you are spot on in regards with your last question. It was what we were getting at, albeit obliquely, in our very last question above too.

  2. This is excellent, CCO. Thank you indeed. Keen to hear how more knowledgeable contributors can enlarge on the information provided and questions asked.

    Quick early questions, from many, sifted to these.

    Should the explanation by NSW governments that these contributions are to be spent on local infrastructure be accepted at face value? Seems a loose term. Is there a time limit applied to this attribution of funds? Is “infrastructure” clearly defined? Can “relating to infrastructure” meet the explanation — such that legal fees, engagement of consultants etc relating to infrastructure fulfil the obligation?

    The thinking behind these is that if you’re setting about a major project, without yet informing the governing body, knowing it will take millions to look at it, wouldn’t it be reasonable to keep monies at hand for initial costs? How deeply has the former CCS torn into council finances, and with that, impacted on roads and footpaths etc.? What role has this project played, financially and in service delivery, that the public doesn’t know? Did councillors ever ask about this? I can’t recall a single question.

    Some shortish while ago Cr Swan questioned McGrath about service delivery, quoting figures that were less than impressive. McGrath took those figures, recast them, brought in more, re-framed the issue, and sold the governing body the proposition that this council’s service delivery was above the standard in every way except one, the latter being subject to figures not yet having come in which would then once arrived lift that component above the standard.

    Is this going to remain as acceptable, or will the entire acceptance and allocation of funds be properly investigated — in other words, if management felt it could take advantage of a weak governing body, bolstered by an unquestioning voting bloc, and get away with otherwise unacceptable disclosure, is the matter going to be allowed to let pass? That’s it?

    Which leads to an unpleasant thought. This isn’t the only council in the state that has problems of managerial disclosure. Or expenditure. Some councils have recently fully blown it. So is there any wonder the State wants to regain control of a big area of councils finances? What moral grounds, and ethical grounds, do NSW councils have to stand on, in demanding these funds remain with them, to be held and allocated by them?

    There’s a lot more to that story yet to come, as the big city councils take on the fight, no doubt with their own misuse questions and no doubt hindered by regional councils of inadequacies.

    Finally, let’s remember that the so-called LGNSW is all about local councils, which is all about its own interests. The essential matter is that LGAs get properly served. This State push to gain control of developer contributions seems somewhat akin to the GST allocations, and I think it may be good practice to wait and see what the State has in mind. There may well be legislated requirement included in the move that ensures all funds from a particular LGA go towards that LGA. None of it ideal, of course, but it’s early days on this one.

    Cr Rhoades some months ago kicked this off locally. He’s leading the charge, and has for a solid part of his councillor career been an active stalwart for local councils, frailties included. Wouldn’t it be a turn of events if Steve McGrath and the former-CCS were exposed in the contributions fight, by way of example?

    1. Just read that through and the clarification needed is that the concern resides in the pre-publicly known period of the days when the addition of council offices were to be added, if not in fact dating back to when the earliest days of the project were discussed in executive privacy (bearing in mind the CCS project was unclearly conceived such as we know it).

      Float the idea, at that starting point, there will be costs to look into it. Has there ever been questions or disclosure as to what was spent on the idea prior to it becoming publicly tabled? Can’t recall a single one. It’s in that area that I wonder if developer contributions were kept aside for the preliminary costs, which begs the question as to how early the council offices idea actually originated, awaiting an opportune time. (Run the ‘cultural’ element first, get the public onboard with a bigger local project, knowing you’ll add the offices later? Piggy back the State Govt push for infrastructure?) When and who cooked this thing? So the above comment doesn’t refer to consultants that we know about. And the CCS idea is infrastructure.

      At this stage it would take a strong argument to rule out the CCS project in any form at its earliest conceptions as being separate from keeping develeper contributions at hand. Clear as mud, isn’t it. It all highlights the value of management being open and transparent, and straight-talking. We’d not have these suspicions, would wholesomely support Council in its quest to maintain control of those funds. They blew it. You too, Denise.

      The definitions are a worry. “Spend on infrastructure” implies what we expect it to, yet in the actual legally-binding wording (is there any?) could be so loose as to be exploited, with ready-made allocations in the books to absorb it.

      In any case, $21 million is good comfort to have when embarking on a major project, especially one as muddled and uncertain as this.

      And where is the public update on Waste? Is that not overdue?

    2. 40c Thanks for your explanation , it makes sense to me now why the NSW gov is pushing this change, and it appears this council is a part of why the state wants to clean it up .

  3. It’s difficult to imagine that the former-CCS and this council hasn’t played a role in the NSW Govt decision, Bill. The CCS-idea is a seriously expensive proposition, instigated by people who have never done it before. Even as, or if, council management has been impeccable in how it has so far followed the rule of law, which it no doubt has, the result is a community fiercely divided, a hatred for the project that its few in-council proponents seemingly expected would by now just go away, with the end result being an ongoing magnet for bad publicity.

    It’s a current one-off around the state, from a conspicuous regional perspective, sticking out like the proverbials. Previous projects such as in Port Macquarie live there with a continued disgust and negative community regard — one of the first things they say about the place, still.

    Added to that, the NSW Govt by now would conceivably have examined Council’s books. We tend to think of the major governments, state and federal, as “politicians”. These govts are more than that: there are bright minds in there who do know what they’re doing. For all of the godawful faults, some truly frightening, the Australian government system overall is stable and functions reasonably well, considerably better than international alternatives. But it is a system having undergone unheralded changes, as it moves through each ‘modern’ era.

    Unfortunately, this council thought an undertaking such as they have in mind would require only a barrage of PR to get it through. Even that has now stopped, defeated. Since the promises, as came across strongly, about both the acid sulphate soils and TCorp, were broken, and since councillors began asking more significant questions (after the deals were done), management has also pulled back on its “we are overachievers” remarks. Steve McGrath, in meetings, has shown a more chastened persona. Council is simply not hitting the public marks that it clearly thought it would.

    Right now, it’s biggest concern is that all of that and more isn’t gentled into the state media spotlight, by the NSW Government, to make its powerful public case for its contributions push. For what it’s worth, I don’t think that’ll happen: these people behind the scenes who hold the system together, the non-opportunists, are more sophisticated than that. It’s an opportunity for the State Govt, however, and a state-wide blow up of local events could well happen.

    The new serious potential end-result of the former-CCS, so far, by council? Loss of local control of developer contributions. That would make those years of that blowhard PR, and relying solely on that, something to regret, one would think.

    This State Govt push is a big-impact moment none of us expected. Yet now it’s here, it is making more sense, that it would come, by the day.

    Talk about playing with the “big boys.”

    For me though the greater interest is in what the State Govt push might portend. The local government system as I see it has dis-integrated — its core strength, such as it was, built to handle smaller populations and run by less opportunistic careerists, has dissolved into a commercial free-for-all.

    That’s not how the system was envisaged or meant to be. Don’t think the State Government, of any persuasion, hasn’t noticed. The cost wastage is a phenomenon. It’s a blood bath of what should be considered corporate engagement. Too much, that’s a masquerade; again, pushed out by where local governments achieve at its standout best: in its promoted PR. PR in names and titles of plans and personnel and in its PR public persuasions.

    What was a government sector has become a hybrid. A hybrid of the corporate and the government. We would know of only the ‘tippiest tip of the icerberg’ as to how on-edge such a system now hangs by its threads. So it can’t continue. This push may well be a signal of more to come, as State governments of any persuasion reign it back in.

    I think we will, undoubtedly, see more major changes in the long years ahead. Ground-moving changes. As it currently stands, many I’ve listened to consider the “governing” body to be now a mere rubber stamp. It doesn’t ‘govern’ much at all. Yet the commensurate increase in manager qualifications and standards hasn’t come with it. It’s worsened if anything.

    That then is a system out of whack. The future of local government will be very interesting indeed.

    1. The State govt has been intervening in Local Government for decades. Think of the rate-pegging legislation introduced by the Wran govt in the 70’s to keep lazy and inefficient Councils from relying solely on raising rates exorbitantly to solve their financial slackness. This legislation still endures today and has proven effective in reigning in Councils’ profligacy in all LGAs.
      The Developer Contributions system was also introduced, by the State govt, to provide a means to raise much needed revenue for infrastructure provision to support inevitable population growth and is still a major source of revenue for councils today.
      As our learned friend above has pointed out “there are bright minds in there who do know what they’re doing”………….and they are watching.
      Can anyone else see the irony here that by relying upon massive PR and spin to paper over the cracks of a poorly-planned and unfunded development to win over the community Council has instead drawn attention to those higher up on a seemingly unrelated issue?…..Namely, the potential misuse of developer contributions? The community and State Govt are smarter than what Council management naively envisaged it seems and are rapidly joining the dots.
      A shot has been fired across Council’s bow by the Govt……..get your act together or we will intervene.
      Our Council’s response? Rates will have to rise!
      This is the best that our highly paid CHCC managers can do? So much revealed in so few words.

  4. With a population of about 25 000 000 and three tiers of government, we are grossly over-governed. With the level of ineptitude displayed by numerous LGA managers, not the least our own, perhaps it’s time to dispense with the government level which is seemingly managed by amateurs, and perhaps most open to suspicions of corruption. I’d like to think that our incoming council will be able to change my mindset.

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