BUSINESS PLAN

FOR

MAJOR LAND TRANSACTION

TO

DISPOSE OF LAND BY WAY OF LEASE

COLLIER PARK
GOLF COURSE
 BUSINESS PLAN
COLLIER PARK GOLF COURSE

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ............................................................................................. 2

2. INTRODUCTION ......................................................................................................... 3
3. BACKGROUND ........................................................................................................... 3
4. PREMISES LOCATION AND DESCRIPTION.............................................................. 4
5. LEGISLATIVE REQUIREMENTS ................................................................................ 4
5.1 DISPOSING OF PROPERTY .............................................................................. 4
5.2 PREPARATION OF A BUSINESS PLAN ............................................................ 5
5.3 PUBLIC NOTICE REQUIREMENTS ................................................................... 5
5.4 CONTAMINATED SITES ACT 2003.................................................................... 6
6. ASSESSMENT OF MAJOR LAND TRANSACTION .................................................... 6
6.1 PROPOSAL ........................................................................................................ 6
6.2 EFFECT ON THE PROVISION OF FACILITIES AND SERVICES BY THE CITY 7
6.3 EFFECT ON OTHER PERSONS PROVIDING FACILITIES AND SERVICES IN
THE DISTRICT.................................................................................................... 8
6.4 EXPECTED FINANCIAL EFFECT ON THE CITY OF SOUTH PERTH ............... 8
6.5 EFFECT ON MATTERS REFERRED TO IN THE PLAN FOR THE FUTURE ..... 9
6.6 ABILITY OF THE CITY OF SOUTH PERTH TO MANAGE THE TRANSACTION .
.......................................................................................................................... 10
6.7 DETAILS OF ANY JOINT VENTURE ................................................................ 10
7. VALUATION OF SUBJECT PREMISES .................................................................... 10
7.1 BASE RENT...................................................................................................... 10
7.2 PERCENTAGE RENT ....................................................................................... 10
7.3 OTHER REVENUE DERIVED FROM GOLF COURSE OPERATIONS............. 11
8. METHOD OF DISPOSAL........................................................................................... 11
9. COMMENTS ON BUSINESS PLAN........................................................................... 11
10. PROCESS FOLLOWING PUBLIC ADVERTISING .................................................... 12
APPENDIX 1 – SITE PLAN................................................................................................. 13

© City of South Perth – May 2010

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 BUSINESS PLAN
COLLIER PARK GOLF COURSE

1. EXECUTIVE SUMMARY
Best described as picturesque and challenging, Collier Park Golf Course is a 27 hole
international standard public golf course. It is one of the most popular public golf
courses in the Perth metropolitan region. The large driving range and immaculate
putting greens have been key contributors to the courses continued patronage and
success.

The operation of the cafe/bar (kiosk), function centre facilities (offices/meeting

room/clubhouse), pro-shop, driving range, cart store and hire area form part of the
proposed lease, under an agreement with the City of South Perth (the City), to
Rosetta Holdings Pty Ltd, who acts as the course controller and collects green fees
on behalf of the City, in return for a set commission. The City undertakes all
maintenance of the course.

This Business Plan discloses:

(1) the intent of the City to dispose of the cafe/bar, pro shop & cart store, offices
and meeting room, driving range and cart hire area, situated on Lot 3817
Thelma Street, (Reserve 36435), and Lot 3858 Hayman Road, (Reserve
38794) Como, commonly known as Collier Park Golf Course, by way of a
commercial tenancy lease for a period of five (5) years, via a private treaty
process to the current lessee, Rosetta Holdings Pty Ltd;
(2) the City’s statutory obligations in relation to the disposition of property under
the Local Government Act 1995;
(3) the assessment requirements in relation to a land transaction and the
disposition of property required under the Local Government Act 1995; and
(4) the public consultation process required under the Local Government Act 1995.

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2. INTRODUCTION
The purpose of this Business Plan is to:
a) Advise the community that the City proposes to undertake a Major Land
Transaction;
b) Provide the opportunity for the public to comment on the Business Plan,
detailing the premises the City is proposing to dispose of by way of lease; and
c) Satisfy the requirements of Section 3.58 and 3.59 of the Local Government
Act 1995 relating to the City’s proposals for:
(i) the Disposal of Property; and
(ii) entering into a Major Land Transaction.

3. BACKGROUND
The Collier Park Golf Course is situated on Lot 3817 Thelma Street (Crown Reserve
36435) and Lot 3858 Hayman Road (Crown Reserve 38794) Como. By virtue of a
Management Order dated 28 June 1994, the City of South Perth has the power,
subject to the consent of the Minister for Lands, to lease all or parts of Lots 3817 and
3858 contained in Crown Land Titles Volume LR3100 Folio 613 and LR 3102 Folio
500, respectively.
The Collier Park Golf Course was developed in 1984 and Rosetta Holdings Pty Ltd
was contracted by the City to operate the facility for a period of three (3) years. The
operation of the kiosk (cafe/bar area), pro-shop, offices and meeting room/function
centre facilities, driving range, workshop, cart park and cart storage shed form part of
a commercial tenancy lease, under an agreement with the City, to Rosetta Holdings,
who acts as the Course Controller, with maintenance being undertaken by City staff.
The Course Controller collects green fees, on behalf of the Council, in return for a
percentage commission.
In November 1987 the City entered into a five (5) year operating lease, with a five (5)
year option, with Rosetta Holdings. In 1996 the City granted Rosetta Holdings a
Deed of Extension to the lease. Further lease variations and extensions were
provided by the City, to Rosetta Holdings, in 1998 and 2003, with expiry in November
2007.
In July 2008, Council granted a further variation to and extension of the lease to
Rosetta Holdings for two years, with an expectation that the lessee would come
forward with a development proposal for the Course facilities (Club house, pro-shop
and driving range).
A proposal was developed by Rosetta Holdings and was considered by Council at its
July 2009 Ordinary Council Meeting. At that meeting Council resolved to ‘note’ the
proposal and for the City to engage a consultant to undertake a detailed business
plan and feasibility study to redevelop the facilities.
It is now necessary to resolve the Course operating lease with the City taking on
responsibility for determining the way forward for the future development of the
course (i.e. master plan, course upgrade and driving range/golf course etc).

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4. PREMISES LOCATION AND DESCRIPTION

The subject premises are situated on Lot 3817 Thelma Street (Crown Reserve
36435) and Lot 3858 Hayman Road (Crown Reserve 38794), Como. Specific
matters relating to the subject premises are listed in the following table:

Pro- Shop & Clubhouse, Maintenance

ITEM
Cart Store Bar & Kiosk Shed
Proposed area to be leased 469m² 252m² 48m²
MRS Zoning Reserved lands – Parks and Recreation
Local TPS Zoning Parks and Recreation
Management Order
Park, Recreation and Golf
Purpose
Land use Public Golf Course

Easements registered on the Crown Land title in

favour of the Water Corporation providing the right to
Encumbrances enter exercise certain pipeline, water, sewage and
stormwater rights.

Attached at “Appendix 1” is a map depicting the legal boundaries of Lot 3817 (Crown
Reserve 36435) and Lot 3858 (Crown Reserve 38794).

5. LEGISLATIVE REQUIREMENTS

5.1 DISPOSING OF PROPERTY

The process for disposing of property by a local government is detailed under the
provisions of Section 3.58 the Local Government Act 1995 (the Act). This includes
the requirements for “Major Land Transactions’.

Section 3.58 details that the City can only dispose of property:

(a) to the highest bidder at public auction; or

(b) to the person who at public tender called by the City, makes what is, in the
opinion of the City, the most acceptable tender, whether or not it is the
highest tender; or

(c) by private treaty, as long as before it agreeing to dispose of the property by

private treaty, it gives local public of the proposed disposition.

It is the City’s intention that it will dispose of the property by item (c), private treaty,
above, after it has complied with the requirements detailed in Items 5.2 and 5.3 of
this business plan.

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5.2 PREPARATION OF A BUSINESS PLAN

The provisions of Section 3.59 of the Act set out the process governing ’Commercial
Enterprises’ by local governments, including ’Major Land Transactions’. A ‘Major
Land Transaction’ is a land transaction that is not exempt under the Act, and where
the total value of:

(a) the consideration under the transaction; and

(b) anything done by the local government for achieving the purpose of the
transaction,

is more, or is worth more, than either $1,000,000 or 10% of the operating revenue of
the local government in the last completed financial year.

Before entering into a ‘Major Land Transaction’ the City is required to prepare a
Business Plan that includes an overall assessment of the land transaction and is to
include details of:

Its expected effect on the provision of services and facilities by the City;

Its expected effect on other persons providing services and facilities in the
district;

Its expected financial effect on the City;

Its expected effect on the City’s Plan for the Future;

The ability of the City to manage the performance of the transaction; and

Details of joint venture transactions.

The City anticipates that the total revenue generated from the leasing of the premises
will be in excess of $1 million over the term of the lease.

This Business Plan complies with the requirements of Section 3.59 “Commercial
Enterprises by Local Governments” of the Local Government Act 1995 (the Act) and
the Local Government (Functions and General) Regulations 1996.

5.3 PUBLIC NOTICE REQUIREMENTS

Section 3.59 of the Act requires the City to give state-wide and local public notice of a
major land transaction that is under consideration and invite submissions from the
public.

A notice is to be placed in the West Australian newspaper and local newspapers

circulating the district, following the Council’s decision to advertise this business plan
for public comment. It is also intended that notices will be placed on public notice
boards at various City owned facilities including the Administration Centre, Manning
and Mends Street Libraries and the City’s Operations Centre. A notice will also be
published on the City’s website www.southperth.wa.gov.au, together with a copy of
this document.

The Council is to consider all submissions received prior to deciding to proceed with
the proposed ‘Major Land Transaction’ that is the subject of this Business Plan.

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5.4 CONTAMINATED SITES ACT 2003

The Contaminated Sites Act 2003 was assented to on 7 November 2003 and
commenced operation on 1 December 2006. The object of the Contaminated Sites
Act is to protect human health, the environment and environmental values by
providing for the identification, recording, management and remediation of
contaminated sites in the State.

Section 4 of the Contaminated Sites Act 2003, defines ‘Contaminated’ as:

“(1) in relation to land, water or a site means having a substance present in or on

that land, water or site at above background concentrations that presents, or
has the potential to present, a risk of harm to human health, the environment
or any environmental value, unless;
(2) However, land, water or a site, or land, water or a site of a prescribed class or
description, is not contaminated where the regulations so provide.”

The Collier Park Golf Course has not been reported as a contaminated site and the
City is not aware of any contamination of the site. However, part of the site was an
inert rubbish tip. The old tip extends over what is known as the ‘Lake Course’ (north
east section of the Course)

6. ASSESSMENT OF MAJOR LAND TRANSACTION

6.1 PROPOSAL
The City’s objective for this Major Land Transaction is to dispose of the cafe/bar, pro-
shop, driving range facilities, cart store and hire area situated on Lot 3817 (Crown
Reserve 36435) and Lot 3858 (Crown Reserve 38794), by way of a commercial
tenancy lease, for a period of five (5) years, at the appropriate monetary
consideration indicated by prevailing market rates.
The principal terms for the proposed new commercial tenancy lease are:-

Lease Terms Description

Lessee Rosetta Holdings Pty Ltd

Leased premises Pro-Shop, offices, meeting/function room,
workshop, buggy park, cart park, kiosk
(cafe/bar area), cart storage shed.
Term Five (5) years commencing 1 July 2010;
Lease can be terminated by the City giving six
(6) months notice at any time on or after 31
December 2011.
Redevelopment Lease can be terminated by the City by giving
six (6) months notice at any time on or after 31
December 2011, if it proposes to redevelop the
golf course.

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Rent Rent is to comprise:

(i) a base rent;
(ii) a percentage rent in relation to ‘Pro-Shop
sales’; plus
(iii) a percentage rent in relation to sales of
‘Food & Beverages’;
 A different percentage will apply to each of
the percentage rents, and the percentage
rent will only be payable in relation to
revenue of a stated ‘threshold’.
 A different threshold will apply to each of
the two percentage rents.
Rent review  Base rent to be reviewed to CPI (Perth all
groups - March quarter) in years 2, 3, 4
and 5;
 Thresholds to be reviewed to CPI (Perth all
groups - March quarter) in years 2, 3, 4 and
5.
Rates and outgoings  All rates and outgoings to be paid by the
Lessee.
Maintenance and repairs  Lessee is responsible for maintenance,
excluding fair wear and tear.
 Structural repairs are to be City’s
responsibility.
Driving range revenue  The Lessee is to pay to the City 20% of all
driving range revenue
Green fees  All green fees are to be collected by
Lessee but belong to the City;
 The City is to pay a percentage fee to the
Lessee for collection of green fees. (9%)
Cart hire, club hire and coaching revenue The Lessee is to pay to the City 10% of all cart
hire revenue.
Insurance City to insure the buildings and structures, with
the Lessee to reimburse the City for the cost of
the insurance premiums.
Assignment Lessee has no right to assign the lease.
Legal costs Each party is to meet its own legal costs
Golf professional Lessee is required to have a golf professional
having an AA or AAA rating on the golf course.

6.2 EFFECT ON THE PROVISION OF FACILITIES AND SERVICES BY

THE CITY
6.2.1 Is the property currently providing any services?

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 BUSINESS PLAN
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Lot 3817 (Crown Reserve 36435) and Lot 3858 (Crown Reserve
38794) play an important role in the recreational services offered to the community,
in the form of Collier Park Golf Course, which is accessible to the public. It is a
popular public golf course, averaging over 9,200 patrons per month.
Annual attendances for the last five years are as follows:
2008/2009 107,374
2007/2008 104,288
2006/2007 107,404
2005/2006 106,351
2004/2005 103,545

6.2.2 What effect will disposal have on that service?

The premises have been operating under a leasing arrangement since 1987 and the
disposal will not affect the current service being provided to the community.

6.2.3 What affect will the proceeds from the disposal have on the budget and
service provision?
The proceeds from the lease of these premises will be allocated according to City
Policy P608 – Dividend Policy Collier Park Golf Course. The proposed lease rental
fee will be at prevailing market rates, with any potential increase supplementing the
City’s recreational service delivery and providing additional funds to develop the
course facilities in the future.
The proposed lease provides for the continuation of the use of the premises and
facilities to deliver recreational services to the community, in the form of a public golf
course and ancillary services associated with a golf course.

6.3 EFFECT ON OTHER PERSONS PROVIDING FACILITIES AND

SERVICES IN THE DISTRICT
It is not anticipated that the disposal by way of lease will affect any other person
providing services or facilities in the district in any different manner to current service
provision. The buildings and operation of the course has been under similar
arrangements since 1987.

6.4 EXPECTED FINANCIAL EFFECT ON THE CITY OF SOUTH PERTH

6.4.1 What are the effects on the budget in financial terms?

The premises are currently under a similar lease arrangement, with proceeds from
the lease rental being allocated in accordance with City Policy P608 – Dividend
Policy Collier Park Golf Course. The intent of this proposed lease is for this situation
to remain unchanged.

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The draft lease proposes a rent based on three elements:

(1) A per annum consideration be applied in the form of a base rent. The base
rent has been derived from a market valuation provided by a Licensed Valuer.
Provision has been included in the proposed lease document for appropriate
rent reviews to occur in years 2, 3, 4 and 5 of the lease period to ensure the
rent maintains parity with the prevailing market;
(2) A ‘Percentage Rent’ in relation to “Pro-Shop” sales. The Percentage Rent is
only payable in relation to revenue of a stated threshold; and
(3) A ‘Percentage Rent’ in relation to sales of “Food and Beverages”. The
Percentage Rent is only payable in relation to revenue of a stated threshold.
This proposed rent structure will provide the City with additional revenue from the
lease of these facilities.

6.4.2 What are the costs associated with the disposal?

Costs associated with the disposal include valuation costs, advertising costs and
legal costs associated with the preparation of relevant documentation including the
formal lease agreement.

6.4.3 Will the disposal have an effect on rates income?

The proposed disposal by way of lease will not affect rates income. Under the
existing lease agreement for the premises, the Lessee is responsible for the payment
of all rates and charges. It is proposed that this situation continue.

6.5 EFFECT ON MATTERS REFERRED TO IN THE PLAN FOR THE

FUTURE
The Local Government Act requires details to be provided in relation to the major
land transaction and its expected effect on matters referred to in the Strategic
Financial Plan, which is the City’s plan for the future.

6.5.1 What will the impact be?

The proposed disposal by way of lease will contribute to the City’s Corporate Plan.
The Collier Park Golf Course significantly contributes to the recreational activity
within the City by providing a high quality and challenging golfing experience to the
public.
In addition to having regard to the fees and charges in place at venues outside the
City, the full cost pricing principle in determining a pricing policy has been taken into
account in setting the fees and charges for use of the services and facilities provided
at the golf course. The income generated from the course will finance all of the
operating costs, with some funds being set aside in a reserve fund to assist meet
expenditure related to the courses enhancement and improvement.

6.5.2 Will any funds be specifically applied to any projects referred to within the
Plan?
Proceeds from the annual rental fee will be utilised to:
 Support the provision of recreational services and facilities within the City
through the payment of a dividend to the Municipal Fund; and
 Support the operational requirements and future infrastructure improvements
to the golf course through the transfer of funds to a designated reserve fund.

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6.6 ABILITY OF THE CITY OF SOUTH PERTH TO MANAGE THE

TRANSACTION
The proposed arrangement will be legally formalised through an exclusive use lease
agreement, between the City of South Perth and Rosetta Holdings Pty Ltd. The
formal lease agreement will be registered with 'Landgate' on the Crown Land Title.
The City has the ability and experience within its management structure to manage
the disposal transaction and the overall functioning of the facility and has done so
since the construction of the course.

6.7 DETAILS OF ANY JOINT VENTURE

Lot 3817 (Reserve 36435) and Lot 3858 (Reserve 38794) are Crown Land titles
owned by the State of Western Australia. Management Orders have been issued to
the City granting care, control and management of the land, with the power to lease,
subject to the consent of the Minister for Lands, for a maximum period of twenty one
(21) years.
Rosetta Holdings has an interest in the land, but only as far as those rights and
obligations are provided for under the existing lease agreement, which expires on 30
June 2010.
There is no joint venture interests associated with the land or premises.

7. VALUATION OF SUBJECT PREMISES

7.1 BASE RENT
The City has obtained a ‘sworn valuation’ from McGee’s Property, Licensed Valuers,
for the annual rental applicable to the premises.
McGee’s Property, in their report dated 2 February 2010, has advised that the market
value for the premises rental is:
Pro-Shop/Cart Store/ Maintenance Shed Base Rent $140,000 per annum
Kiosk/Clubhouse/ Base Rent $ 20,000 per annum
Total Base Rent $160,000 per annum

7.2 PERCENTAGE RENT

In addition to the base rent, McGees Property has recommended percentage
turnover rents on the following basis:
Cart Hire 10% of all sales
Pro-Shop Sales 5% of all sales in excess of $2.8 million turnover
Food and Beverage Sales 4% of all sales in excess of $500,000 turnover

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7.3 OTHER REVENUE DERIVED FROM GOLF COURSE OPERATIONS

The City will also generate income from two other sources associated with the
operations of the golf course:
(1) green fees from patrons using the golf course.
Whilst it is difficult to precisely estimate the total green fees that will be
collected annually, previous trends indicate that this could be in excess of
$1.6Million per annum.
The green fees are collected by the course controller in return for a percentage
commission based on total green fees collected. The current commission
percentage is 8% and it is proposed under the new lease to be increased to
9%.
(2) Fees from patron use of the driving range
Whilst it is difficult to precisely estimate the total fees that will be collected from
the use of the driving range, 2008/2009 trends indicate that this could be
approximately $34,500 per annum.
Currently the driving range fees are collected and retained by the course
controller. It is proposed under the new lease arrangement that Council will
pay an 80% commission to the course controller for the collection of all driving
range fees.

8. METHOD OF DISPOSAL
The disposal of the subject premises will be by way of a commercial tenancy lease
for a period of five (5) years, via a private treaty process to the current lessee,
Rosetta Holdings Pty Ltd.

9. COMMENTS ON BUSINESS PLAN

This Business Plan is being advertised for a period of two (2) weeks from the date of
notification in the West Australian (Saturday 5 June 2010) newspaper.
The Business Plan can be inspected:
 At the Administration Centre of the City of South Perth between the hours of
8:30am to 5:00pm Monday to Friday; and
 At the City’s Operations Centre, located at Thelma Street Como between the
hours of 8:30am to 5:00pm Monday to Friday; and
 On the City’s website at www.southperth.wa.gov.au
Copies of this Business Plan can be obtained by:
 Contacting Ms Julie Mason on 9474-0922; or
 Downloading the document from the City’s website at
www.southperth.wa.gov.au

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Submissions on the Business Plan are to made in writing and to be received no later
than 4:00 pm on Tuesday 22 June 2010.
Submissions are to be addressed to:

Chief Executive Officer

City of South Perth
Cnr Sandgate St and South Tce
SOUTH PERTH WA 6151

Att: Stephen Bell

Director Infrastructure Services

10. PROCESS FOLLOWING PUBLIC ADVERTISING

Following closure of the public advertising period, the Council will consider all
submissions made, and may decide (by absolute majority) to proceed with the Major
Land Transaction and disposition of property in accordance with the provisions of the
Local Government Act 1995.

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APPENDIX 1 – SITE PLAN

Lot 3817

Lot 3858

© City of South Perth – May 2010

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