Statement - Frankston Basketball Stadium redevelopment

Friday 17 March 2017

Council has been in negotiations with the Frankston District Basketball Association (the Association) since mid-2016 to determine a fair and equitable lease model in order for works to commence on the much needed Frankston Basketball Stadium redevelopment.

During the course of these negotiations, Council has listened to the feedback and requests made by the Association and has endeavoured to meet many of the needs that the Association has presented.

Furthermore, Council has taken into consideration the community benefit that this new sporting hub will provide towards junior sports participation and sporting in general for the entire community.  This includes an expected increase in facility maintenance costs to be funded by Council.

The proposed lease arrangement allows for a much lower lease payment than at other like facilities ($326,000 for six courts in Keilor, $191,000 for six courts in Boroondara, which are also consistent with courts in Casey and Knox.)

At the 20 February 2017 Council Meeting, Council confirmed its previous decision made in consultation with the Association, and agreed to in good faith in July 2016, to increase the rent of the facility to $60,000 per annum , plus a turnover rent of 6% of all Association earnings over $1 million. This would have represented rental of approximately $132,000 per annum – well less than other facilities.

Following representations to Council from the Association, at a Special Meeting held on 6 March 2017, Council again considered the rental model and resolved to charge a fixed rent of $60,000 per annum, commencing six months after the date of practical completion of the works.  However, subject to the capacity of the Association to pay, Council reserves the right to negotiate the rental model after a period 18 months from completion of the works.  This negotiation may result in the introduction of a turnover rent. Any additional payment would be negotiated with the association and not imposed unilaterally.

Further, Council also agreed to waive the current rent for the construction period through until 6 months after the date of completion of the works.  This was not requested by the Association but provided by Council in good faith.

The initial project budget was $15 million, however was reduced to $12.5 million when government funding did not match Council’s request.  This resulted in the scope of works being reduced to match the budget available. The scope reduction was agreed to by the Association, however they are now demanding that the scope be reinstated.  Council is not in a position to find the $2.5 million plus of additional funds to deliver these works.

Nonetheless, Council has undertaken to immediately commence planning and design for these additional works, which will include retractable seating, administration area and an additional 300 car spaces.  With funding secured, these works could commence immediately following the current works.

Council is disappointed that the Association appears to have a winner takes all approach to negotiations.  Council is mindful of the community’s best interests and cannot be held to ransom over these matters.

Councillors met with board members of the Association last night, whereby Council’s position was outlined.  We now await a response from the Association.

Council is committed to the project as scoped and agreed to by the Association.  A preferred contractor has been nominated to undertake the agreed works upon finalisation of the discussions with the Association.

Negotiations with the Association will continue in order to resolve the outstanding matters.  Any decisions Council makes will be in the best interests of the whole community.

Stage one of the $12.45 million Council managed project is jointly funded by the Australian Government ($4.95m), Frankston City Council ($4.5m), the Victorian Government ($2.5m), and the Frankston & District Basketball Association ($1m).

At Council’s December 2016 meeting, Councillors also voted to provide an additional $555,953 to allow for completion of stage one of works, taking Council’s total investment to $4.5million. 

Frankston City Council Mayor
Cr Brian Cunial

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