Cape Otway Road Australia (CORA) - Planning · Cape Otway Road Australia (CORA) represents a major investment in the Great Ocean Road Region (“GORR” or the “Region”). It is

Cape Otway Road Australia (CORA)

Elite Sports Training facility, Accommodation and Retail Village in the Surf Coast, Victoria

Regional Development Victoria

Ernst & Young (EY) has been engaged on the instructions of CORA to prepare a business case for the Department of Regional Development Victoria (RDV) for the proposed CORA facility ("Project"), in accordance with the services agreement dated 26 September 2017. EY has prepared the Report for the benefit of CORA and RDV and has considered only the interests of CORA and RDV. Ernst & Young has not been engaged to act, and has not acted, as advisor to any other party. Accordingly, EY makes no representations as to the appropriateness, accuracy or completeness of the Report for any other party's purposes. Further, EY has prepared this business case in conjunction with, and relying on information provided by CORA. We do not imply, and it should not be construed that we have performed audit or due diligence procedures on any of the information provided to us. No reliance may be placed upon the Report or any of its contents by any recipient of the Report for any purpose and any party receiving a copy of the Report must make and rely on their own enquiries in relation to the issues to which the Report relates, the contents of the Report and all matters arising from or relating to or in any way connected with the Report or its contents. EY disclaims all responsibility to any other party for any loss or liability that the other party may suffer or incur arising from or relating to or in any way connected with the contents of the Report, the provision of the Report to the other party or the reliance upon the Report by the other party. No claim or demand or any actions or proceedings may be brought against EY arising from or connected with the contents of the Report or the provision of the Report to any party. EY will be released and forever discharged from any such claims, demands, actions or proceedings.

Ernst & Young’s liability is limited by a scheme approved under Professional Standards Legislation.

Contents

Executive summary ................................................................................................... 6

Background ............................................................................................................................... 6 Benefits ..................................................................................................................................... 6 Project options considered and recommended solution ............................................................ 7 Delivering the recommended solution ..................................................................................... 10

1. Background ....................................................................................................... 14

1.1 Cape Otway Road Australia ......................................................................................... 14 1.2 Government Funding and Planning Request ................................................................ 15 1.3 Great Ocean Road Region (GORR) ............................................................................. 16 1.4 Importance of tourism to the GORR ............................................................................. 18 1.5 Strategic Masterplan for the Great Ocean Road Region Visitor Economy .................... 18 1.6 This business case ....................................................................................................... 19

2. Problem ............................................................................................................. 21

2.1 Definition and evidence of the problem ........................................................................ 21

2.1.1 Problem 1: Lack of a built visitor offering in the GORR is impacting tourism yield

and experience ......................................................................................................................... 22 2.1.2 Problem 2: Increasing competition for major events is putting at risk Victoria’s

reputation as the sporting capital of Australia ............................................................................ 27 2.1.3 Problem 3: Limited meaningful employment opportunities in the Region are leading

to pockets of social and economic disadvantage ....................................................................... 33

2.2 Timing considerations .................................................................................................. 37 2.3 Consideration of the broader context ........................................................................... 38

3. Benefits ............................................................................................................. 40

3.1 Benefits to be delivered ................................................................................................ 40

3.1.4 Evidence of benefit delivery ........................................................................................ 44

3.2 Importance of the benefits to Government ................................................................... 44

4. Strategic Response options .............................................................................. 48

4.1 Method and criteria ...................................................................................................... 48 4.2 Strategic interventions .................................................................................................. 48

4.2.1 Response options ....................................................................................................... 50 4.2.2 Ranking of response options ....................................................................................... 50

4.3 Recommended response option ................................................................................... 53

5. Project options .................................................................................................. 55

5.1 Project Options Development ....................................................................................... 55 5.2 The Base Case ............................................................................................................ 56 5.3 Option 1: CORA ........................................................................................................... 56

5.3.1 Facilities...................................................................................................................... 56 5.3.2 Project Team .............................................................................................................. 57 5.3.3 Location ...................................................................................................................... 57 5.3.4 Funding, operating structure and revenues ................................................................. 58 5.3.5 Regulatory and Planning Requirements ...................................................................... 58 5.3.6 Timing ......................................................................................................................... 59

5.4 Option 2: A tourism development only .......................................................................... 61

5.4.1 Facilities...................................................................................................................... 61 5.4.2 Project Team .............................................................................................................. 61 5.4.3 Location ...................................................................................................................... 61 5.4.4 Regulatory and Planning Approvals ............................................................................ 61 5.4.5 Timing ......................................................................................................................... 61

5.5 Detailed Description of project options ......................................................................... 61

5.5.6 Accommodation .......................................................................................................... 63 5.5.7 Elite sports training facility ........................................................................................... 65 5.5.8 Sport Science Hub and Education Precinct ................................................................. 68 5.5.9 Retail and Commercial ................................................................................................ 69 5.5.10 Sport and Recreational for Public Use ......................................................................... 71 5.5.11 Organic Farm .............................................................................................................. 72 5.5.12 Residential development ............................................................................................. 72

6. Options Assessment ......................................................................................... 74

6.1 Stakeholder identification and consultation .................................................................. 74 6.2 Financial analysis ......................................................................................................... 80

6.2.1 Key Assumptions ........................................................................................................ 80 6.2.2 Capital Costs .............................................................................................................. 82 6.2.3 Revenue and Operating Expenditure ........................................................................... 83

6.3 Economic Impact Assessment ..................................................................................... 85

6.3.1 Construction phase economic impact .......................................................................... 88 6.3.2 Operation phase economic impact (Option 1) .............................................................. 88 6.3.3 Operation phase economic impact (Option 2) .............................................................. 93 6.3.4 Operation phase economic impact – Net Present Value of Options 1 and 2................. 97 6.3.5 Cost benefit analysis ................................................................................................... 97

6.4 Qualitative Socio-Economic and Environmental Impacts.............................................. 98

6.4.1 Economic impacts ....................................................................................................... 98 6.4.2 Social impacts ........................................................................................................... 100 6.4.3 Environmental impacts .............................................................................................. 101 6.4.4 Summary of Socio-Economic and Environmental Impacts ......................................... 101

6.5 Risk comparison ......................................................................................................... 102 6.6 Interdependencies ...................................................................................................... 102 6.7 Uncertainties .............................................................................................................. 103 6.8 Integrated analysis and options ranking ..................................................................... 103

7. Deliverability of recommended solution .......................................................... 106

7.1 Details of recommended solution ............................................................................... 106

7.1.5 Rationale .................................................................................................................. 106 7.1.6 Key project elements and delivery of project benefits ................................................ 107 7.1.7 Performance measures ............................................................................................. 107

Commercial and financial ...................................................................................... 109

7.2 Procurement............................................................................................................... 109

7.2.8 Major Delivery and Operational Partners ................................................................... 109

7.3 Risk assessment and management............................................................................ 112

7.3.1 Key project risks........................................................................................................ 113

7.4 Detailed Financial Information .................................................................................... 117 7.5 Funding sources ......................................................................................................... 123

7.5.1 Investor funding ........................................................................................................ 123

7.5.2 State Government Funding ....................................................................................... 123 7.5.3 Commonwealth Funding ........................................................................................... 124

7.6 Staffing impacts.......................................................................................................... 124

Management .......................................................................................................... 125

7.7 Governance and project management strategy .......................................................... 125

7.7.1 Project Development ................................................................................................. 125 7.7.2 Project Operation ...................................................................................................... 127

7.8 Stakeholder engagement and communications plan .................................................. 129

7.8.1 State Government ..................................................................................................... 129 7.8.2 Local Government and Agencies ............................................................................... 129 7.8.3 Community, Public and Adjoining Land Owners ........................................................ 129 7.8.4 Major Project Partners .............................................................................................. 130

Delivery .................................................................................................................. 131

7.9 Change management ................................................................................................. 131 7.10 Timelines and milestones ........................................................................................... 131 7.11 Readiness and next steps .......................................................................................... 133 7.12 Exit strategy ............................................................................................................... 133

Appendix A – Investment Management Standard Outputs ................................... 135

Appendix B – Stakeholders and Partners ............................................................. 136

Appendix C – Letters of Intent ............................................................................... 137

Appendix D – Government Funding Details .......................................................... 138

Appendix E – Capital Cost Plans ........................................................................... 139

Appendix F – Operating Costs and Revenues ...................................................... 140

Appendix G – Economic impact assumptions ....................................................... 141

Appendix H – Checklist and sign-off ..................................................................... 142

Appendix I – Detailed risk register ......................................................................... 143

Appendix J – References....................................................................................... 144

Appendix A – Investment Management Standard Outputs .........................................

Appendix B – Stakeholders and Partners ....................................................................

Appendix C – Letters of Intent .....................................................................................

Appendix D – Government Funding Details ................................................................

Appendix E – Capital Cost Plans .................................................................................

Appendix F – Operating Costs and Revenues ............................................................

Appendix G – Economic impact assumptions .............................................................

Appendix H – Checklist and sign-off ............................................................................

Appendix I – Detailed risk register ...............................................................................

Appendix J – References .............................................................................................

Cape Otway Road Australia (CORA) Page 6

Cabinet-in-Confidence

Executive summary

Cape Otway Road Australia

Background

Cape Otway Road Australia (CORA) represents a major investment in the Great Ocean Road

Region (“GORR” or the “Region”). It is comprised of two main elements: an improved tourism

offering for visitors and an elite sports training facility, the first of its kind in the southern

hemisphere.

CORA will provide much needed accommodation and a built tourism offering for the Surf Coast

Shire to cater for domestic and international tourists. The proposed development includes 4 and 5

star accommodation (a hotel, eco-lodges and homestead retreats), a retail village and sport and

recreational activities onsite. The retail village is proposed to include approximately 15 lots

showcasing the “Best of Australia”. Tenants are yet to be confirmed but could include a micro-

brewery, food and beverage offerings, a wellness facility, renowned retail brands, art galleries and

museum. CORA will also offer a range of sport and recreational activities for visitors including a

wave pool for avid and aspiring surfers and a gymnasium. The site will be connected by a bike trail

to Moriac town centre and seeks to support the reinstatement of Moriac train station on an existing

operational rail line.

In addition, CORA will incorporate an elite sports training facility aimed at attracting the world’s top

professional athletes and teams, corporates and every day athletes. The facility is expected to have

a global appeal and will promote Australia and the GORR to the world. It will cater for nine of the

top ten most popular sports (by participation) in Australia and, as a result, is planned to have

significant local appeal from Australian based elite sports teams with a proposed anchor tenant at

the site. The elite sports training facilities will be supported by a state-of-the-art sport science hub

(for research and development and athlete development and recovery). An educational precinct is

also proposed to be operated by a sports university partner.

The project has been developed over the last three years by a core project team with specialist

advice from MediaCom (on the sponsorship and revenue generation), Proleisure (on the project

business model and sports infrastructure requirements), Multiplex (on construction of the facility)

and Altus Group (on project construction and costing requirements).

The project’s total capital cost for the preferred option is estimated at $352.7 million (nominal) to be

predominately funded by private investors. This business case seeks support from the Victorian

Government for funding of facilitating infrastructure to the site ($29.6 million nominal) as well as

critical planning approvals. Government funds will be used to deliver infrastructure to the site

including telecommunications, sewer treatment plant upgrade, power, transport upgrades to the site

(road and bike path), professional fees and charges. The site is currently zoned Rural Conservation

& Farming Zone and will require rezoning to Special Use. Planning approval is proposed to be

referred to the Minister for Planning to expedite the approval process.

Benefits

Three core project benefits were identified in the ILM, they are:

• Benefit 1 – Improved tourism experience and yield

• Benefit 2 – Improved competitiveness to host major events in Victoria

• Benefit 3 – Improved well-being within the Region including better health (mental and physical), community pride and reduced social disadvantage



The business case also outlines the importance of the benefits to Government and the alignment of

the project with other Government priorities. The three benefits identified will be measured by key

performance indicators (KPIs) on an annual basis following completion of the project. The KPIs

include:

• Visitor numbers to CORA

• Spend per international visitor and length of stay

• Enhanced brand value and reputation of Victoria as a major sports event host

• Maintained or increased number of major sporting events in the state

• Reduced unemployment in the Region

The investment strongly aligns with key Government policies and strategies including The Victorian

Visitor Economy, Victoria’s 2020 Tourism Strategy, Shipwreck Coast Masterplan and the Great

Ocean Road Regional Strategy.

Project options considered and recommended solution

Project options considered

Three project options were identified that address the identified problems. These project options

were developed and assessed for consideration:

• Base Case – Do Nothing. The Base Case describes what will happen in the event of no investment

• Project Option 1 – (CORA) – An elite sports training facility, accommodation, wave pool and retail village in the Surf Coast, Victoria.

• Project Option 2 – Provides accommodation, wave pool and a retail village in the Surf Coast and is effectively a scaled down version of Option 1

The project is proposed to be located in Modewarre, within close distance of Geelong, Avalon

Airport and Melbourne Airport.

CORA plans to be responsible for the overall operation of the facility and will sign agreements with

a number of partners and tenants to manage parts of the site. The ambition of CORA is to

complement and enhance the strong regional network of organisations including Avalon Airport,

Deakin University, Geelong Football Club and natural tourism attractions such Bells Beach and the

Great Ocean Road to create a multiplier effect through a shared network that enhances each

organisation and the region as a whole.

The land is currently within the Rural Conservation Zone & Farming Zone. The proposed Planning

Scheme Amendment (PSA) will seek to rezone the entire CORA site to a Special Use Zone.

CORA’s proponents aim to start construction by mid-2018 and the facility will be fully operational by

2020-211. By 2024-25 it is expected that CORA will have reached a steady state of visitor numbers.

Options Assessment

A project options assessment was undertaken. This section is based on CORA’s financials and

accompanying assumptions.

Financial Assessment

Capital and operating costs cash flows (incremental to the base case) have been analysed for both

Project Option 1 and Project Option 2, Project Option 1 outputs are shown below. The estimated

capital costs for Option 1, the preferred option, are as follows:

1 The project is expected to be operational in the last quarter of 2019-20



Table 1 Project Option 1 Capital costs

Operating revenues and expenses (as provided by CORA) set out in the tables below for Option 1:

Table 2 Project Option 1 Operating revenue and expenses (nominal)

$(m) 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Revenues $11.5 $40.3 $44.9 $47.3 $49.7 $51.7

Expenses $3.9 $10.6 $11.3 $12.0 $12.8 $13.4

Net Revenue $7.6 $29.7 $33.6 $35.2 $36.9 $38.3

Economic Impact Assessment

The number of visitors to Economic Impact Region (as defined in Section 6.3) as a result of CORA

have been estimated by EY based on expected overnight and day visitation to the hotel and

accommodation, wave pool, retail and wellness facility. High scenario reflects CORA’s unadjusted

financial model as provided to EY, while the low scenario reflects sensitivities on estimated revenue

and expenses. Further detail on the sensitivities applied can be found in Section 7.4. Visitor

estimates are reflected in Table 3 below. This section is based CORA’s financials and

accompanying assumptions.

Table 3 Unique visitor number estimates to CORA

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Project Option 1 79,369 312,568 318,785 326,098 332,091 338,162

Based on visitation the direct and indirect economic impact resulting from visitor spend for Project Option 1 is provided below. EY has estimated the total visitor expenditure and then modelled these in REMPLAN software to calculate the direct and indirect additional output, value add and jobs created by the project options. A summary of the key economic outputs of this modelling are shown below after five full years of operations for (2024-25).

Table 4 Project Option 1 economic impact from visitation

2024-25 $(m) Direct Indirect Total

Output $47.6 $32.6 $80.2

Value add $20.0 $15.1 $35.1

Jobs 171 109 280

The economic impact shows that for Project Option 1 280 direct and indirect jobs are expected to be created in 2024-25, along with economic output of $80.2 million, value add of $35.1 million and a benefit cost ratio of 2.44.

Qualitative, Social, Economic and Environmental Assessment

A qualitative social, economic and environmental assessment was undertaken to assess those

benefits that could not be quantified. Key criteria in the assessment included provision of

Capital costs 2017-18 2018-19 2019-20 2020-21 Total

Accommodation 23,981,823$ 53,694,883$ -$ -$ 77,676,706$

Sports recreation 16,982,172$ 27,272,783$ -$ -$ 44,254,955$

Sports performance 14,282,610$ 53,824,098$ -$ -$ 68,106,708$

Media 965,315$ 3,744,373$ -$ -$ 4,709,688$

Commercial 983,889$ 2,069,526$ 11,926,823$ -$ 14,980,238$

Support facilities 1,157,546$ 7,615,853$ 8,850,856$ -$ 17,624,255$

Tertiary Education 3,390,820$ 3,508,409$ 39,209,557$ 5,518,252$ 51,627,038$

Other (business case and site infrastrucutre) 5,398,892$ 26,479,542$ -$ -$ 31,878,434$

Landscaping, siteworks and services 2,110,130$ 24,150,793$ 14,580,618$ -$ 40,841,542$

Organic farm 203,350$ 803,085$ -$ -$ 1,006,436$

Capital costs 69,456,549$ 203,163,344$ 74,567,855$ 5,518,252$ 352,706,000$



employment and up-skilling opportunities in the Region, other economic indicators, physical and

mental wellbeing, community engagement and environmental benefits. Project Option 1 is

assessed as delivering the greatest economic, social and community and environmental wellbeing.

Comparative Risk Assessment

A high-level risk comparison between the options was undertaken. The Base Case presents a

number of risks including reduced tourism yield, reputation risk to Victoria’s major events brand and

local community risks to employment opportunities in the Region. Comparatively, there were some

risks for Project Option 1 around attracting elite athletes to the venue, access (and potential

backlash) by the community to the facility and ability to attract the number and quality of staff

needed to operate the facility. However, overall the risk level of Option 1 was seen to be the lowest

as Option 1 positions the project globally and drives greatest revenue.

Stakeholder identification and consultation

The options assessment included a stakeholder identification and consultation. There has been

broad interest and in some cases support for the project from a range of potential key project

partners (Deakin University, Geelong Football Club, Epworth Hospital and local surf brands), local,

regional and state Governments (G21 Shires, RDV and DEDJTR), Members of Parliament, local

residents, adjacent landowners, industry representatives and potential users of the elite sports

training facility. Initial discussions have taken place with a number of potential local and

international investors. Discussions are also occurring with a range of brokers of which there has

been significant interest with all brokers keen to progress.

Integrated Options Analysis

The below table summarises the results from the financial analysis, economic impact analysis, qualitative socio-economic and environmental analysis, risk assessment and stakeholder considerations.



Table 5: Presenting the results of the options analysis

Base Case

(Do nothing scenario)

Project Option 1-

CORA

Project option 2 -

Tourism development only

Financial Analysis (incremental to the Base Case over 20 years) $ million nominal

Analysis period (years) 20 20 20

Capital Costs N/A $352.71 $222.79

Operating Position

Revenues

$1,204.43

$599.69

Less Expenses $311.58 $247.19

Operating Net Position ($m nominal) $892.85 $352.50

Operating Net Present Value (9.7%2 nominal discount rate $m)

$273.72 $107.13

Economic Impact Assessment (in full year of operation)

Direct and Indirect Economic Output $80.23 $69.80

Direct and Indirect Value Add $35.06 $30.50

Direct and Indirect Jobs 280 244

Socio-Economic and Environmental Score (weighted score)

Economic Impact 0.00 10.00 6.00

Social Impact 0.00 11.00 9.00

Environmental Impact 0.00 4.00 4.00

Total Weighted Score 0.00 3.70 2.80

Average Risk Rating

Risk rating (1 is very low risk, 5 is very high risk)

3.25 2.25 3.50

Stakeholders

Stakeholder support Strong support from all contacted stakeholders

Ranking 3 1 2

Option 1 is the preferred option. As shown above, Option 1 delivers the strongest operating position

with positive net operating position after 20 years of $893.85 million (nominal) and a NPV of

$273.72 million over 20 years for operating with a nominal discount rate of 9.7%. Project Option 1

also delivers $80.23 million of total economic output, total value add $35.06 million and total

additional 280 jobs. It also delivers the highest socio-economic score of 3.7 and the lowest risk

rating at 2.25 and is also strongly supported by stakeholders.

Delivering the recommended solution

Financial and Commercial

From a financial and commercial perspective a significant amount of work has been undertaken to

assess the risks and feasibility.

2 9.7% demonstrates the nominal interest rate applied based on a 7.00% real interest rate and inflation of 2.50% p.a.



A number of preferred suppliers have already provided significant input into the project and some

have been awarded preferred supplier status.

A risk workshop was undertaken to assess the range of risks associated with the project, a number

of risks and mitigation measures were identified. There are two project risks which have a risk

rating of High following mitigation. These risks relate to financial projections and a risk to

Government that land is rezoned but the CORA development does not go ahead and hence

planned economic benefit does not result.

Sensitivity Analysis

A detailed sensitivity analysis of CORA financial projections has been undertaken by EY. The

sensitivity analysis reviewed each of the key revenue streams of the preferred option and applied

reduced weightings to the revenue streams that EY believe are at risk. These include

sponsorship/naming rights, rental income for retail and commercial lots, anchor tenants and the

wave pool revenues. Even with this sensitivity analysis applied, the project remains cash positive

across all years, that is revenues are greater than costs. A summary of the sensitivities to operating

financial projections are provided below in Table 6, with details regarding the reasoning behind

these sensitivities provided in Section 7.4.

Table 6 Project Option 1 Operational Costs and Revenues EY sensitivity (Low scenario) ($ nominal)

2024-25 $(m) 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Revenues $0 $8.0 $24.7 $28.4 $31.2 $33.2

Expenses $0 $3.1 $9.1 $10.6 $12.7 $13.6

Net Revenue $0 $4.8 $15.6 $17.8 $18.5 $19.6

Based on the sensitised financial model, EY estimated the visitation to CORA and the associated

direct expenditure. Using REMPLAN, output, value-add and jobs were calculated for the Economic

Impact Region in 2024-25 (the first year of full operation after the ramp-up period) as per the table

below.

Table 7 Project Option 1 EY sensitivity (Low scenario) - economic impact from visitation

2024-25 ($m nominal) Low Scenario

Direct Indirect Total

Output (visitor direct expenditure) $34.5 $23.6 $58.1

Value add $14.5 $10.9 $25.4

Jobs 124 79 203

Management and Governance

Consideration has also been given to the management of the project, both through project delivery

and also into operations.

• Governance structures, roles and responsibilities have been developed and allocated for both

the project development phase and the project operational phase.

• While the stakeholder strategy is yet to be finalised, CORA have outlined a number of key

stakeholder and community groups which they intend to engage with. CORA have also

provided some high level communication activities for each stakeholder group.

Project Delivery

In terms of delivery of the project, the following has been outlined:

• A clear plan for how change on the project will be managed between the Project Manager and the CORA Board, as well as when and how RDV would be informed of any changes on the project.



• Timelines and milestones are outlined from now to the CORA facility being operational and include items such as: project funding, planning approvals, business cases and civil works.

• CORA have also outlined the next steps and an exit strategy for Government.

Government request

To date the State Government (Regional Development Victoria) has provided $100,000 to support the development of a business case. In addition, $3.29 million has been granted by the Commonwealth under the Regional Jobs and Investment Packages (RJIP). This grant demonstrates the Australian Government's commitment to stimulate economic growth in the GORR. While the next stages of the project will be predominately funded by private investors, $29.6 million (nominal) in funding is sought from State Government for facilitating infrastructure. This is will be used to fund infrastructure services to the site including telecommunication upgrades, a sewerage plant and power generation, as well as planning and professional fees (see full list and details in Appendix D).

Table 8 Breakdown of funding request to Victorian Government

2018-19 2019-20 Total

Capital costs 23,569,258 6,044,525 29,613,783



Section 1:

Background



1. Background

Summary

This section provides the background for the project. It includes a description of the projects scope, the funding and planning request to the Victorian Government, background on the Great Ocean Road Region (GORR) and outlines a number of challenges for the Region as identified in the Strategic Masterplan for the Great Ocean Road Region Visitor Economy (2015-2025).

Cape Otway Road Australia (CORA) represents a major investment in the GORR. It comprises of two main elements: an improved tourism offering for visitors and an elite sports training facility.

CORA will provide much needed accommodation and a built tourism offering for the Surf Coast Shire. CORA includes 4 and 5 star accommodation and a retail village onsite. The retail village is proposed to include approximately 15 outlets bringing together the “Best of Australia”. Tenants are yet to be confirmed but could include a micro-brewery, food and beverage offerings, a wellness facility, renowned retail brands, art galleries and a museum. CORA will also provide recreational activities for visitors including a wave pool for avid and aspiring surfers and a gymnasium. The site will be connected by a bike trail to Moriac town centre with CORA seeking the reinstatement of Moriac Train Station on the existing operational rail line.

In addition to being a major attractor of tourists, CORA is also an elite sports training facility. It aims to attract elite teams from around the world as well as provide a home base for Australian based elite sports teams, at least one of which may become an anchor tenant. The elite sports training facilities will be supported by a state-of-the-art sport science hub (for research and development along with athlete development and recovery) as well as an educational precinct proposed to be operated by a sports university partner.

The project has been developed over the last two years by a core project team with specialist advice from MediaCom (on the sponsorship and revenue generation), Proleisure (on the project business model and requirements for sports infrastructure) and Multiplex and Altus Group (on project construction and costing requirements).

The project’s total capital cost is estimated at $352.7 million to be predominately funded by private investors. This business case to government seeks support from the Victorian Government for funding of facilitating infrastructure to the site as well as planning approvals. Government funds will be used to deliver telecommunications, a sewerage plant, power and utilities, transport (road and bike path) upgrades to the site, as well as professional fees and charges. The site is currently zoned Rural Conservation & Farming Zone and will require rezoning to Special Use. Given it’s state and national significance, combined with the short time available to build CORA ahead of an overseas or interstate competitor, planning approval is proposed to be referred to the Minister for Planning.

The project aims to address a number of issues previously identified by Government in various strategies and policies in the GORR. In particular the Strategic Masterplan for the Great Ocean Road Region Visitor Economy 2015-2025, outlined a number issues limiting the economic benefits of tourism to the Region including; high visitation and low yield per visitor, limited seasonal dispersion, limited geographic dispersion, further product development and investment needed to match visitor demand and congestion in peak periods and at popular locations.

1.1 Cape Otway Road Australia

This business case outlines an exciting world-class investment in the Surf Coast Shire that has the potential to deliver significant benefits to Victoria and the GORR. Cape Otway Road Australia (CORA) is a unique accommodation, wellbeing and elite sports training facility that will attract a new, high yielding visitor market through an all-season destination whilst also satisfying the latent demand of existing tourists to the GORR. The project comprises of two main elements; an improved tourism offering for visitors and an elite sports training facility (and associated facilities).

Improved tourism offering

CORA will deliver much-needed accommodation infrastructure for visitors to the Surf Coast Shire, it is also expected to be a major tourism drawcard for the Region and Victoria. CORA will include the following elements for tourists and public visitors:

• Four and five-star accommodation for tourists in a range of hotel, eco-lodges and homestead retreats

• A retail village incorporating a range of food and beverage offerings, art and gallery facilities, a wellness spa (including treatment pools and wet areas), micro-brewery and retail outlets

• An arts precinct representing local, Indigenous, Australian & International Contemporary Art as well as the possible relocation of the Surf Museum from Torquay (within the retail village)

• A pier, boardwalk and public outdoor space to hold community events and a farmers’ market



• A wave pool and gymnasium for public use

• An organic farm to provide premium produce for restaurants, cafes and the food provedore onsite

• Cycle paths and helicopter pad

• It is CORA’s ambition that the development will help build a case for the Government to reinstate Moriac Train Station

Elite Sports Training Facility

In addition, CORA will incorporate an elite sports training facility that is aimed at attracting the world’s top professional athletes and teams, corporates and every day athletes. This facility will bring a new global focus on sport in Australia and the GORR. CORA caters for nine of the top ten most popular sports by participation in Australia: Soccer, Australian Rules, Netball, Tennis, Cricket, Basketball, Swimming, Rugby League and Athletics. The leading-edge facilities will

also cater for running and cycling.3

It is also proposed that the elite sports training facility will be used by Australian based elite sports teams as anchor tenants and this will be complemented and supported by a state-of-the-art sport science hub (undertaking athlete research and development) and an educational precinct, where a University Partner will have the opportunity to locate a number of their sports scientists, undertake research and development and teach a number of sports science university courses on site. There is expected to be mutual benefit for both the University partner and athletes visiting CORA.

The Elite Sports Training Facility is proposed to include:

• Sporting facilities including: MCG orientated AFL oval, two soccer pitches, rugby pitch, eight tennis courts, aquatic centre with 50m pool, fitness gymnasium, surfing wave pool, athletics track, beach volleyball sand pit, cycling paths, running and fitness paths.

• Sports performance hub includes physiotherapy, medical and consultation spaces and recovery, hydrotherapy and performance analysis suites as well as nutrition consultation and a performance gym.

• Media centre including rooms for press conferences, briefings and boardrooms.

• Sports Science Hub and University campus including teaching and lecture halls, administration offices, strength and conditioning room, changing facilities, sports studios, laboratories and clinical spaces for physio/physical therapy and rehabilitation.

• Hotel accommodation, approximately 40 rooms of the 128 room hotel will be able to be segregated from public guests for elite teams that require isolation when they visit.

Further information on the preferred project option can be found in Section 5.

1.2 Government Funding and Planning Request

This business case requests $29.6 million from the Victorian State Government for facilitating infrastructure to support CORA which has a total project value of $352.7 million.

Victorian Government funding is required for the connection of the following infrastructure services to the site, as well as planning and professional fees:

• Telecommunications upgrade

• Off-site sewer treatment plant located between the site and Moriac

3 CORA will also rely on cycling facilities located 10 km from site at AARC Proving Ground

“There is no question that CORA is badly

needed; this is going to provide a new

gateway to the region and it is going to be a

game changer.

We have 5.2 million visitors to the region

every year – 600,000 on coaches alone and

by providing new activities, CORA will

provide additional reasons for people to visit

and stay, as well as grow the market. It will

contribute to increasing the length of stay

and expenditure in the region”.

Wayne Kayler-Thomson

(Great Ocean Road Tourism Chair)



• Town water supply upgrade

• Solar power generation

• Upgrade to Cape Otway Road (including slip lanes)

• Bike path from CORA to Moriac town centre (off road path approximately 7km in length)

• Authorities charges

• Infrastructure design fees for the Government funded components

• Planning costs including (project management fees, architect, quantity surveyor, land surveyor, civil engineer, services engineer, landscape architect, traffic engineer, cultural heritage studies, development of a planning panel, fire checks and community engagement).

In addition to the funding request to Victorian Government, the proposal also requires rezoning the proposed site from Rural Conservation & Farming Zone to a Special Use Zone. CORA’s proposed timelines for the planning approvals is:

• Lodgement of Planning Scheme Amendment (PSA) request with Surf Coast Shire – 31st January 2017.

• Approval of PSA request – 1 July 2018.

CORA has been advised by MediaCom that there is a genuine risk that, should this project not receive timely planning approval, that the intellectual property within the proposal (and now publically available) could be lost to other Australians states or countries within the Asia Pacific region. For this reason as well as CORA’s state, national and global relevance the planning approval is proposed to be referred to the Minister for Planning. CORA expects a decision on the planning minister’s involvement by February 2018.

Further details of the request from Government are provided in Section 5 (which describes the project options).

1.3 Great Ocean Road Region (GORR)

The Great Ocean Road Region (“GORR” or the “Region”) is located on the south-west of the Victorian coastline. The GORR stretches from Torquay in the east to Warrnambool in the west, and northward to the Princes Highway. Its southern boundary is defined by the coast and the Great Ocean Road. It covers five local government areas – Colac /Otway, Corangamite, Moyne, Surf Coast and Warrnambool, with a population of around 120,000 people4. In coastal areas this base population increases in the high season due to a significant number of people who own or rent holiday homes, or use caravan parks in the high season.

4 Profile ID (2016) Census population data



Figure 1: Great Ocean Road Region

The GORR has some of the most picturesque views and landmark sites in the world. As a result, the GORR is a world-class destination and major drawcard for visitors to regional Victoria.

In 2015 the Region attracted over 5.2 million visitors per annum, with higher visitation rates than most other prominent Australia destinations including the Great Barrier Reef and the Blue Mountains, as shown in Figure 2. The most recent visitor numbers from the 2017 annual National Visitor Survey indicates that visitor numbers have grown to 5.8 million visitors per annum5.

Figure 2: Comparison of visitation to the Great Ocean Road Region with select competitors6

5 National Visitor Survey, Regional Expenditure Model (REX), Tourism Research Australia, year ending June 2017, released September 2017. 6 Strategic Master plan for the great ocean road visitor economy 2015-2025 (2015)



1.4 Importance of tourism to the GORR

Tourism is an important sector to the GORR. In 2015-16 it was estimated that tourism directly represented 5.9% of the GORR’s Gross Regional Product (GRP), 5.8% of its Gross Value Add (GVA) and 9.5% of employment in the Region as a direct result of tourism.

In addition, Great Ocean Road ranked 4th overall in the comparative importance of direct tourism GRP across Victoria’s tourism regions, demonstrating that for comparative purposes tourism is important to the GORR. In terms of industry size, Great Ocean Road supplies 3.6% of the state-wide direct contribution of tourism GRP.

Direct tourism employment in the Region was estimated at 6,700 (9.5% of employment in the Region). Including flow on effects, 9,200 jobs in total were generated by tourism in the region.

1.5 Strategic Masterplan for the Great Ocean Road Region

Visitor Economy 2015-2025

The Strategic Masterplan for the Great Ocean Road Region Visitor Economy 2015-2025 identified that the mix of very high visitation, short length of stay and low yield experienced at many locations in the Region requires a significant response.

The strategy identified a number of issues and opportunities affecting the capacity of the Great Ocean Road Region to achieve the full potential of its visitor economy.

These include:

• High visitation and low yield per visitor – significant growth in visitation to the Region over the last 10 years, especially day visitors, has not translated to an equivalent rise in visitor expenditure

• Limited seasonal dispersion – significant peaks and troughs through the year

• Limited geographic dispersal – heavy concentration of visitation along the coast and to the east of the Region, limiting economic benefits into the hinterland areas and the west of the Region

• Further product development and investment is required to match visitor demand – there is a need to improve the Region’s existing products services and facilities, including a lack of high quality accommodation to meet demand.

7 DEDJRT, Economic Contribution of Tourism to the Great Ocean Road (2015-16)

Table 9: Direct share of GRP by region 2015-16 (ranked by GRP share of economy7

To increase visitor yield, it is critical to improve many of the Region’s existing products, services and facilities, develop new ones and improve infrastructure to meet visitors’ expectations and preferences. There is also a lack of high quality accommodation to meet demand.

Strategic Masterplan for Great Ocean Road Region Visitor Economy 2015-25

Rank

#Region Direct GRP

Direct GRP as

a share of

economy

Direct GRP

share of

Victoria

1 Phillip Island 185 10.4% 1.6%

2 Victoria's High Country 254 6.9% 2.2%

3Daylesford and the

Macedon Ranges 152 6.0% 1.3%

4 Great Ocean Road 409 5.9% 3.6%

5Yarra Valley and

Dandenong Ranges 317 3.7% 2.8%

6 Mornington Peninsula 373 3.7% 3.3%

7 Grampians 168 3.5% 1.5%

8 Murray 476 3.4% 4.2%

9 Gippsland 341 3.0% 3.0%

10 Melbourne 8,071 2.8% 71.2%

11 Geelong and the Bellarine 299 2.6% 2.6%

12 Goldfields 295 2.3% 2.6%

3,270 3.70% 28.8%

11,340 3.00% 100.0%

Regional Victoria

Victoria



• Congestion in peak periods and at popular locations – This can significantly undermine the quality of the visitor experience in the Region, reducing length of stay and yield opportunities.

The CORA project aims to address a number of the issues identified above.

1.6 This business case

This business case provides a robust assessment of the proposed investment from a Government perspective. The purpose of this business case is to:

• Demonstrate the need for, and the benefits of the project.

• Assess the financial assumptions and cash flows for the project and undertake sensitivity analysis of these.

• Estimate the economic benefits of the proposed project for Government for the Region.

• Evaluate the other potential benefits of the project such as community, social, and environmental benefits.

• Determine and assess the level of project risk.

• Describe the proposed governance structure, timelines and stakeholder and community engagement and next steps for the project.

This report is structured in accordance with the business case requirements of the Victorian Department of Treasury and Finance (DTF) investment lifecycle. The remaining sections of this business case are structured in the following interrelated sections.

Business Case contents

Section Description

Section 2 Problems – outlines the problems that are driving the need for action

Section 3 Benefits – discusses the key benefits to flow from addressing the problems

Section 4 Response Options – presents the range of interventions available to respond and outlines the recommended approach

Section 5 Project Options - describes the project options considered for investment

Section 6 Project Options Analysis - Undertakes a financial, risk and qualitative socio-economic assessment of the options. This section includes an economic impact assessment and costs benefit analysis

Section 7 Deliverability of the Recommended Option - presents staging, procurement, governance, timelines, risk, sensitivity analysis of financial numbers and management of the recommended solution

Appendices Include the Investment Logic Map (ILM), Benefits Management Plan (BMP), Letters of Intent from Partners, detailed financial information on the proposal, risk register and other items.



Section 2:

Problem



2. Problem

Summary

This section describes the key project drivers and provides evidence for the problems identified in the Investment Logic Map (ILM).

This business case seeks funding from Victorian Government to fund facilitating infrastructure for CORA ($29.6 million) and planning approval.

The key drivers for this business case, as identified in the Investment Logic Map (ILM), are:

• Problem 1 - Lack of a built visitor offering in the GORR is impacting tourism yield and experience • Problem 2 - Increasing competition for major events is putting at risk Victoria’s reputation as the sporting

capital of Australia • Problem 3 - Limited meaningful employment opportunities in the Region are causing social and economic

disadvantage in some pockets

Problem 1

There have been numerous strategies and policies which have outlined the need for further luxury accommodation in the Region as well as a broader mix of tourism products, offerings and experiences which can attract people to the Region to stay overnight. Recent tourism data shows that while GORR is still clearly a very popular tourist destination, it has a low ratio of international overnight to international day visitors, as well as limited length of stay by those international visitors who do stay overnight. These two factors are impacting international overnight visitor yields achieved in the GORR. The key drivers for this problem are a lack of man-made multi-seasonal tourism products and experiences as well as luxury accommodation (4 and 5 star) which both meet their requirements and encourage them to extend their time in the Region. In addition, the missed opportunity to capture the international visitor economy is expected to become larger as the Chinese tourism market grows substantially over the coming years.

Problem 2

Melbourne is regarded as the sporting capital of Australia based on its sporting infrastructure and enviable calendar of world class sporting events. Victoria was a first-mover in terms of understanding the economic, cultural and branding value of hosting major sporting events. In recent years, the cost of attracting major events has increased significantly as interstate and international rivals have increased their willingness to bid for major sporting events. This demand pressure has increased the cost of bidding for events and for Victoria to retain its position as the sporting capital of Australia, the State Government has responded by increasing its investment in stadia and the major events bid fund. In order to maintain a comparative advantage, Victoria must consider how it can differentiate itself from competitor cities in Australia and Oceania. In addition, Victoria also lacks sufficient elite sports training facilities that visiting teams can access during their stay to prepare and recover at the appropriate high performance level.

Problem 3

The GORR’s stunning coastline and relaxed lifestyle have been a major drawcard for many of its local residents. However there are varying levels of social and economic disadvantage in the Region. While the coastal towns of Torquay, Jan Juc, Aireys Inlet, Lorne and Anglesea all have Social-Economic Indexes for Areas (SEIFA) scores above both the Greater Melbourne and G21 Region average, Winchelsea (located in the hinterland of the Surf Coast) is ranked in the bottom 20 percentile for the State. Winchelsea also suffers from high youth unemployment and has high levels of disengaged youths. Average household earnings in Winchelsea and parts of the hinterland are significantly below those of the rest of the Surf Coast Shire and the State. As a result, there are pockets of social and economic disadvantage within the Surf Coast, and locals suffer from lack of opportunity, mental and physical wellbeing.

2.1 Definition and evidence of the problem

The GORR is facing a number of problems that are driving the need for investment in the Region:

• Problem 1: Lack of a built visitor offering in the GORR is impacting tourism yield and experience.

• Problem 3: Limited meaningful employment opportunities in the Region are leading to pockets of social and economic disadvantage.

In addition to the specific regional problems noted above, a broader state-wide issue has been

identified:

• Problem 2: Increasing competition for major events is putting at risk Victoria’s reputation as the sporting capital of Australia.



2.1.1 Problem 1: Lack of a built visitor offering in the GORR is impacting tourism

yield and experience

The limestone stacks of the Twelve Apostles and coastal formations are amongst Australia’s best

known and most visited features.

While the GORR has experienced significant visitor growth over the past few years and now attracts approximately 5.8 million visitors per year, the most recent National Visitor Survey8 results (shown in Table 10 and Table 11) highlight a number of issues for the GORR. The 2017 visitor data is broken down into the eleven Visit Victoria campaign regions which provide a detailed breakdown and comparison of domestic and international visitation across eleven regions.

The 2017 data shows that while GORR is still clearly a very popular tourist destination, it is not reaching its economic potential. Broadly summarising the National Visitor Survey results show that GORR has:

• A low ratio of international overnight to international day visitors to the Region.

• Low length of stay for international overnight visitors.

• Low international overnight average expenditure by trip (predominantly driven by length of stay).

Provided in the tables over the page is our analysis of the Victorian regional visitation data that supports the above mentioned three key issues (highlighted in orange).

These impacts are largely driven by the following causes:

• Limited range of ancillary products, offerings and mix of experiences which provide international tourists with numerous reasons to extend their day and overnight visitation to the Region.

• Limited accommodation options at the upper end of the market which meet international visitor expectations.

• Limited capacity of the Great Ocean Road and connectivity within other attractions in the Region (those not located along the coastline and particularly those located in the hinterland) is limiting the Regions ability to accommodate the increasing number of visitors.

Analysis has also identified a future problem around being able to attract a significantly growing Chinese tourism market which GORR is currently unable to service with the current offering.

The remaining sub-sections of this chapter describes in more detail these causes and impacts.

8 National Visitor Survey, Regional Expenditure Model (REX), Tourism Research Australia, year ending June 2017, released September 2017.



Table 10 Tourism Trips by Victoria’s Campaign Regions 9

Table 11 Tourism Expenditure by Victoria’s Campaign Regions 10

9 Tourism Research Australia (TRA), (2017) National Visitor Survey 10 Tourism Research Australia (TRA), (2017) National Visitor Survey

Year ending June 30 2017 - Visitation comparative analysis

Overnight

Intrastate

('000)

Overnight

Interstate

('000)

Total

Overnight -

Domestic

('000)

('000)Total

Day Trip -

Domestic

Ratio of

Overnight to

Daytrip

visitors

Rank against

other regions

Total Overnight -

International

('000)

Total Day Trip -

International

('000)

Ratio of

Overnight to

Daytrip visitors

Rank against

other regions

Daylesford and the Macedon Ranges 509 151 660 1,925 0.34 9 18 24 0.72 1

Geelong and the Bellarine 1,182 222 1,404 3,842 0.37 8 52

Gippsland 1,676 265 1,941 3,595 0.54 6 80

Goldfields 1,530 299 1,829 4,528 0.40 7 48 223 0.22 4

Grampians 701 167 868 1,043 0.83 2 52

Great Ocean Road 1,746 314 2,060 2,824 0.73 4 220 712 0.31 3

Mornington Peninsula 1,248 168 1,416 4,684 0.30 10 61 165 0.37 2

Murray 1,735 531 2,266 3,002 0.75 3 60

Phillip Island 776 97 873 1,359 0.64 5 54 454 0.12 5

Victoria's High Country 1,217 321 1,538 1,755 0.88 1 35

Yarra Valley and Dandenong Ranges 829 164 993 4,159 0.24 11 50 525 0.09 6

Victoria's Campaign Regions

Year ending June 30 2017 - Expenditure comparative analysis

Average per

trip

expenditure -

Domestic

Overnight

Rank against

other regions

Average

length of stay -

Domestic

Overnight

Rank against

other regions

Average per

day

expenditure -

Domestic Day

Trip

Rank against

other regions

Average per trip

expenditure -

International

Overnight

Rank against

other regions

Average length

of stay -

International

Overnight

Rank against

other regions

Daylesford and the Macedon Ranges $393 4 2.3 10 $83 8 $625 7 n/a

Geelong and the Bellarine $355 6 2.6 7 $85 7 $1,586 1 18.3 3

Gippsland $291 9 2.8 5 $76 10 $326 9 8.2 7

Goldfields $275 10 2.4 8 $109 2 $650 6 13.9 6

Grampians $299 8 2.4 9 $99 4 $320 10 7.4 8

Great Ocean Road $422 1 2.9 3 $101 3 $490 8 4.7 9

Mornington Peninsula $328 7 2.9 4 $82 9 $1,062 3 18.7 2

Murray $356 5 2.7 6 $118 1 $1,353 2 25.9 1

Phillip Island $402 3 3.0 1 $88 6 $305 11 n/a

Victoria's High Country $406 2 2.9 2 $90 5 $902 5 17.9 4

Victoria's Campaign Regions



Limited range of ancillary products, offerings and mix of experiences which provide

international tourists with a number of reasons to stay overnight and extend their time in the

Region

The GORR offers world class natural attractions including the Twelve Apostles, Bells Beach, the

Great Ocean Road, Great Otway National Park, Loch Ard Gorge, Gibson Steps and numerous

hikes and trails. Essentially “free” natural attractions dominate most of the GORR. Key visitor

activities include going to the beach, viewing the twelve apostles, car touring, hiking and general

sightseeing. With most the major visitor activities in the GORR being outdoors, the desire to spend

time in the Region is highly seasonal and driven by environmental and weather conditions.

The Victorian Government has recognised the importance of Nature-based tourism, as one of the

fasted growing tourism sectors internationally, with the release of Victoria’s Nature Based Tourism

Strategy (2008-2012). This strategy aims to make sustainability the backbone of the industry and

increase the supply of high yield visitor experiences, as opposed to simply encouraging large

increases in visitor numbers.

While the GORR is one of the most visited regions in Victoria with over 5.8 million visitors per year,

it lacks a diverse range of complementary activities, commercial attractions and immersive

experiences needed to encourage a greater number of visitors to “stop, stay and spend” in the

Region. The lack of indoor activities in the Region can also impact the ability to attract visitors in the

winter months, or encourage them to stay for more than one day in the Region.

It is well known that there are large numbers of tourists who travel to the GORR in a single day to

visit the natural attractions. In 2017 there were approximately 3.5 million day visitors. While

domestic visitation to GORR performs well compared to other regions, there are a number of

underperforming indicators with regard to international visitation.

The latest National Visitor Survey highlighted the low ratio of international overnight visitors to international day visitors. Although data was not available to provide a comparison for all regions, Table 2 on the previous page shows that for every one international day visitor, only 0.31 international overnight visitor stayed in the GORR. Not only is this particularly low, but it also puts GORR behind Mornington Peninsula, Daylesford and the Macedon Ranges.

In addition, Table 11 highlights that the GORR has the lowest average length of stay for international visitors to all Victorian regions. The average stay for international visitors to the GORR is only 4.7 days compared with Mornington Peninsula at 18.7 days.

The limited ability to attract international visitors to the Region and increase their stay has been well

recognised by Government. A considerable amount of work has already been undertaken by

Government to understand why the ratio of overnight to day visitation is low and what can be done

to improve it. The Strategic Masterplan for the GORR Visitor Economy (2015-25) recognised the

need to enhance the current tourism offering, noting that:

‘While most strategic tourism plans aim to achieve continued growth in

visitor numbers, this Plan aims to increase yield by enhancing the visitor

experience. This will be achieved through improving existing experiences,

developing new products and services, and improving infrastructure.’

Additional products, services and experiences are needed in the GORR to provide a stronger

offering which encourages international visitors to stay overnight, and those that already stay

overnight to lengthen their stay in the Region.

Both the Mornington Peninsula and the Daylesford and Macedon Ranges regions have higher

international overnight to day visitation ratios as well as longer international visitor average stays. It

is clear also that these regions provide a broader range of experiences for visitors, including world-

class restaurants, galleries, activities, wellness experiences, wineries and accommodation.

Providing a broad mix of products, offerings and experiences entices people to visit not only for the

day, but to spend the night.



In comparison, the GORR offering is more heavily focused on natural attractions. These types of

attractions, which are generally shorter in nature and are daylight based activities can be completed

within a day. As such, they do not encourage international visitors to stay in the Region for an

extended period of time.

This lack of ability to convert international day visitors to overnight has a significant impact on

tourism yield. Whereas average international day visitor spend is estimated at $98, the average

international overnight visitor spend is estimated at $490 per trip in the GORR. In addition, other

regions such as the Mornington Peninsula achieve a total international overnight trip spend of

$1,062. As a result GORR is missing out on significant tourism spend when visitors limit their stay

to a day visit only.

Limited luxury accommodation options in the GORR and regional Victoria

The lack of high quality accommodation is also a key driver for the low ratio of international

overnight to day visitation in GORR. Whilst there are a range of hotels, bed and breakfasts and

lodges at the lower end of the market, there is limited luxury (4 and 5 star accommodation) in the

GORR and regional Victoria more broadly.

The prevalence of luxury accommodation is understood

to be a key deciding factor for a number of international

visitors. A lack of such facilities has been found to

discourage a large proportion of international travellers

from staying overnight in regional Victoria. Instead they

either chose not to travel to regional Victoria or

undertake day trips, as is again demonstrated Table 10.

As a consequence, a lack of accommodation options

which meet international visitor requirements, GORR is

unable to capture its share of the international markets.

There is also a potential reputational risk as the existing

stock of accommodation leads to compromised and

potentially suboptimal tourism experiences eventually

reducing satisfaction and impacting the reputation of the

GORR as a tourist destination. This threatens the regions ability to attract both first-time and repeat

visitors, with the risk that visitors will have underwhelming and compromised tourism experiences.

Lack of luxury accommodation also impacts GORRs ability to attract the growing Chinese

tourism market

Tourism Australia has undertaken a significant amount of work to understand and position the

Australian tourism offering for the Asian, and in particular, the Chinese tourism market. The latest

National Visitor Survey results highlighted that China’s total visitor spend in Victoria has grown

significantly over the last five years, and that the total spend by Chinese visitors in Victoria was the

largest of any country. Indeed, Chinese visitor spend in 2017 was greater than the combined value

of the next seven countries. As a result of China’s sheer size and potential for growth, this market

segment warrants significant attention.

Following Visit Victoria’s recent consultation process with the Victorian Regional Tourism Boards, the Great Ocean Road Regional Tourism Board lists ‘luxury accommodation offering’ as number one of its top three project priorities.

Source: Regional Development Victoria



Table 12 International visitation spend in Victoria (top 10 countries by total expenditure)11

In May 2012, the Victorian Government released Victoria’s China Tourism Strategy. The Strategy

confirmed that visitors from Asia will be the main contributor to international tourism growth in

Victoria over the coming years. The strategy estimated that the number of Chinese visitors would

grow from 500,000 to 2,643,000 Chinese visitors by 2024/25.

The aim of the strategy was to recognise and identify the key opportunities within the Chinese

tourism market. The Chinese Tourism Strategy found that …“In order to increase visitation to

regional Victoria, Victoria will also need to work on raising the quality of accommodation

with investors.” Investment in accommodation facilities in the region has not kept pace with

changing consumer demands and expectations, particularly for international tourists expecting

luxury accommodation when visiting world-class destinations. An excerpt from the China Tourism

Strategy is provided below.

The Victorian Government acknowledges the growing Asian tourism market and suggests responding by improving accommodation and supporting infrastructure in the ‘Victorian Visitor

Economy Strategy’12 report. An excerpt from the strategy is provided below.

11 TRA, National Visitor Survey (2017) 12 Victoria State Government Victorian Visitor Economy Strategy

Expenditure by International Total Expenditure

Visitors in Victoria

($ million)

Year ending June 2012 2013 2014 2015 2016 2017

China 885 1,085 1,274 1,755 2,251 2,614

New Zealand 329 341 341 399 426 458

Malaysia 284 268 348 326 377 413

UK 301 334 372 377 425 375

India 208 195 209 243 271 367

USA 212 236 260 251 336 338

Singapore 235 246 221 258 339 304

Hong Kong 141 187 192 210 235 267

Indonesia 174 205 195 165 230 213

Taiwan 126 93 91 118 126 177

Japan 85 103 94 93 146 158

Victoria’s China Tourism Strategy

International analysis shows that competitors who have invested heavily in refreshing existing

products or launching new products have seen strong growth in Chinese visitor numbers.

Singapore’s recently opened integrated resorts saw Chinese visitation increase by 35 per cent

in 2011. Macau has invested heavily in the development of several high quality resorts over the

last decade and supported this with major marketing campaigns. This resulted in visitor

numbers increasing from 9.5 million in 2001 to more than 23.0 million in 2010.

Victorian Visitor Economy Strategy

“The proportion of visitors from Asian countries who stay overnight in regional Victoria is low:

Singapore (16%), China (10%), India (10%), and Indonesia (8%). Products, accommodation and

infrastructure built in past decades may need renewal or updating to provide a more compelling

experience for both domestic and those visitors from new markets”

“Much of the global growth in demand is coming from Asian markets, especially China.

Consumers from Asia have diverse needs and aspirations. Growing this highly competitive

market will require us to deliver culturally responsive experiences. This includes improving

language services and the provision of appropriate accommodation, food and dining options”



With rapid growth expected from Chinese inbound visitation to the Great Ocean Road Region there

is a significant missed opportunity for the Region to capitalise on Chinese visitation in the area.

Limited capacity of the Great Ocean Road and connectivity to other attractions in the Region

will impact the GORR’s ability to accommodate increasing number of visitors

With close to 6 million visitors a year already, and with projections to increase to 7 million visitors

per year by 202513, Victoria's number one tourist attraction will become increasingly less accessible

over time.

The main road is severely congested during peak periods, with more than 22,000 cars a day

passing through the main roundabout in Anglesea14 (small coastal town located on the Great Ocean

Road). As a result, it is common for large traffic jams to stretch for kilometres and result in tourists

waiting hours to reach the popular spots along the Great Ocean Road. This has the potential to

create reputational risk and discourage visitors (both domestic and international from visiting).

Further contributing to the problem is the distinct lack of connectivity within the Region and

particularly into the hinterland. Visitation to the Region is largely concentrated along the coastline.

While there are some offerings in the Region away from the coastline (such as Brae Restaurant on

Cape Otway Rd), however the absence of connectivity between attractions, townships and products

makes it difficult to entice visitors to visit a number of these areas. This is particularly true when

there are large travel distances and time involved.

In 2017 The Hinterland Future Project Issues and Opportunities Report noted that:

“Other than natural assets, such as walking trails and sightseeing, and an emerging cluster

of food trail operations, there are a limited number of ‘attractors’ and tourism products

across the hinterland. There is also a limited number of supporting accommodation

facilities, which constrains the number of high-yielding overnight visitors”.

With limited knowledge of other offerings away from the main coastline, the majority of visitors

squeeze a limited number of key attractions into their visits along the coastline. Having planned

only a day trip, and with time and visibility constraints, they are unable to engage in experiences

that extend beyond the coastline into the hinterland region.

This type of visitation also results in significant travel times for those returning to Melbourne in the

afternoon peak as the Great Ocean Road is congested at peak times.

2.1.2 Problem 2: Increasing competition for major events is putting at risk

Victoria’s reputation as the sporting capital of Australia

To date Melbourne has developed a reputation as the sporting capital of Australia. There have been a number of factors which have driven this success including:

• Early recognition by Victoria of the economic, geo-political and social impacts of hosting major events.

• A dedicated and highly skilled organisation (Victorian Major Events Company or now Visit Victoria) focused identifying and bidding for major events from a whole of state perspective.

• Significant funds dedicated to bidding to host major events.

• Large scale investment by the Victorian Government in major sporting and stadia facilities,

These strategies and investments have been highly successful and have delivered significant

benefit to Victoria. However, a number of states are now adopting these strategies and as a result,

much of what previously differentiated Victoria, has now been commoditised.

The increased competition for major event content is multi-faceted and has impacted Melbourne’s

ability to attract major sporting events due to, but not limited to, the following factors:

13 The Age, (26 February 2016) Great Ocean Road: $3 million plan to ease congestion at Anglesea, 14 Great Ocean Road Tourism - Great Ocean Road update – August 2015



• Increasing recognition of the social and economic benefits of hosting major events by Melbourne’s competitors

• Competitors are increasing their investment in major front of house sporting infrastructure

• Demand pressure has increased the cost of bidding for events which has meant that Victoria’s event bid fund has increased substantially to attract major events to Victoria

• Competitors are increasing their organisational capacity to win and deliver events

• Elite international sports teams expect world class training and playing facilities to meet their commercial and high performance expectations, hence investment in back of house sporting training facilities will make a destination more appealing for the coaches and athletes

Victoria must now look to differentiate itself from its competitors by offering a unique selling

proposition to travelling sporting teams if it is to retain its reputation as the sporting capital of

Australia.

Increasing recognition of the social and economic benefits of hosting major sporting events

by Melbourne’s competitors

Melbourne has an international reputation for hosting large-scale sporting and cultural events. It

hosts one of the most impressive calendars of major sports events including the Australian Open,

Formula 1 Grand Prix, Spring Racing Carnival and the AFL Grand Final week. This calendar of

events also extends to the Great Ocean Road Region, with events such as the Cadel Evans Great

Ocean Road Race, Geelong Australia Day Regatta and the Rip Curl Pro at Bells Beach.

Melbourne’s proud history as a city of sport has been recognised in the “Ultimate Sports City”

awards. Melbourne has been awarded the biennial title of “Ultimate Sports City” three times (2006,

2008 and 2010). It has also finished second to London in the 2012 and 2014 awards and third to

New York City in 2016.

For a significant amount of time, Melbourne has understood and capitalised on the economic, social

and branding benefits of hosting large scale sporting and cultural events. However, growing

recognition of these benefits by other jurisdictions has resulted in significantly greater domestic and

overseas competition to host major events now than there was 10 years ago. In an attempt to

emulate these benefits, other Australian and international cities are beginning to invest more

funding, assets and resources to attract and host major events.

Competitors are increasing their investment in major front of house sporting infrastructure

To date, Victoria has been a leader in attracting and winning major events. Melbourne has some of

the most impressive stadia facilities in the world with 10 stadia within a 10 km radius of Melbourne’s

CBD which all have a capacity of 10,000 spectators or more. These include: the MCG, Etihad

Stadium, Melbourne Park, AAMI Park, Flemington Racecourse, Melbourne Sports and Aquatic

Centre and the State Netball & Hockey Centre.

However, numerous cities in Australia and overseas have followed Victoria’s lead by investing in

major front of house facilities and infrastructure. While the Victorian government has invested

significant amounts in sporting and event infrastructure over the past five years to remain an

attractive city to host events (Box 1), other states have substantially increased their competitive

position by also making significant recent investments.



Box 1: State Investment for Events

Victoria

- $950 million invested in the redevelopment of Melbourne and Olympic Park

- $93 million in Kardinia Park, Geelong

- $5 million toward developing an indoor sports arena at Bendigo Stadium

- $33 million redevelopment for Eureka Stadium (Ballarat)

New South Wales

- Investing $2.3 billion on their recently updated stadia strategy to demolish and rebuilt two of Sydney's major sports stadiums, Allianz Stadium at Moore Park and ANZ Stadium at Sydney Olympic Park and the cost of rebuilding Parramatta Stadium

Queensland

- $250 million on the new Townsville stadium

- Planned - new stadium in the Sunshine Coast

Western Australia

- $1.2 billion new Perth stadium which opened in January 2018

Victoria’s event bid funds have had to increase substantially to attract events to Victoria

A key component of Victoria’s capacity to win major events has been the commitment by the

Victorian Government through multiple funds. Based on publically available data we understand

these include:

• Circa $600 million major event funding over four years (includes Major Events Fund and direct funding for the F1 and Moto GP’s)

• $20 million Regional Events Fund (2016-17 to 2019-20) to secure and develop a strong calendar of regional events for Victoria that align with the State and regional tourism brands and can drive economic impact through the attraction of intrastate, interstate and international visitation.

• $8 million Significant Sporting Events Program (over four years – 2014 - 2017) which has been supplemented with an additional $3 million per annum since November 2014.

In 2015-16 the need to increase the funds available to

bid for major events due to competition was

recognised when the Major Events Fund received a

$20 million annual boost (over four years), a total of

$80 million to “strengthen the war chest used to

secure major events in Melbourne and regional

Victoria.”16

The NSW Government also recognises the

importance of tourism and events as a key economic

driver to the State's economy. This is demonstrated

by its commitment of $127.6 million in additional

funding over four years from 2015-2016 to secure more major events and expand marketing

activities to further enable NSW to remain competitive in the face of increased spend by other

States.17

Increasing organisational capacity to win events

The Victorian Major Events Company was founded in 1991 as part of a Victorian Government

initiative to attract international cultural and sporting events that require global state-of-the-art

facilities and infrastructure. As of 1 July 2016, Victoria’s major events and tourism company, Visit

Victoria, took on the functions of the Victorian Major Events Company and have assumed

responsibility for the State’s major event activity. Visit Victoria maintains an absolute commitment to

15 Budget Secures Victoria as Major Events Capital 16 Budget Secures Victoria as Major Events Capital (https://www.premier.vic.gov.au/budget-secures-victoria-as-major-events-capital/) 17 Destination NSW, Annual Report 2015-16

“Our war chest will ensure Victoria grabs the biggest and best events, to keep our economy strong.

Victoria is the major events capital of Australia, and our first budget will ensure we stay that way. Our major events keep our restaurants and hotels full, they grow tourism and create jobs”

Daniel Andrews – Premier of Victoria15



retaining its position as the world’s major events capital with a focus on making the best

investments in marketing and events that will grow the state’s visitor economy.

In response to Victoria’s first-mover advantage in the major events market, particularly through

Victorian Major Events Company, New South Wales established Destination NSW in 2011 as the

lead Government agency for the NSW tourism and major events sector. Destination NSW’s charter

is to achieve economic and social benefits for the people of NSW through the development of

tourism and the securing of major events. The establishment of Destination NSW saw the merger of

four Government-funded entities – Tourism NSW, Events NSW, the Homebush Motor Racing

Authority and the Greater Sydney Partnership – into a single entity.

Tourism and Events Queensland (TEQ) is the Queensland Government's lead marketing,

experience development and major events agency, representing the state's tourism and events

industries. TEQ operates on a national and international level, looking at new and innovative ways

to make the most out of emerging opportunities which benefit the Queensland’s tourism industry

and economy. TEQ is strengthening Queensland’s events calendar through attracting and securing

major events for Queensland, strategically investing in events that deliver the greatest benefits

across Queensland and maximising tourism opportunities associated with the Gold Coast

Commonwealth Games 2018 (GC2018). Working with key partners including the Gold Coast 2018

Commonwealth Games Corporation (GOLDOC), Tourism Australia, the City of Gold Coast and

Gold Coast Tourism to optimise the tourism value of GC2018. TEQ’s focus will be maximising

interstate and international visitation, length of stay and overnight visitor expenditure pre, during

and post GC2018.

Victoria’s interstate competitors are also using Melbourne’s expertise in hosting large scale events

and have adopted Melbourne’s model for their own events. This is evident by Gold Coast

Commonwealth Games Chairman Peter Beattie and chief executive Mark Peters consulting with the

2006 Melbourne Commonwealth games chairman Ron Walker about how to replicate Victoria’s

success from a delivery perspective.

As a result of increasing competition, Melbourne’s ability to attract major sporting events

has been impacted

As a result of improved competition by other states and cities around the world, Melbourne is

finding it more difficult to win the right to host a number of major events.

This was demonstrated in 2016, when increased competition from other cities saw Melbourne drop

out of the top 2 of the “Ultimate Sports City” award for the first time in 10 years. With Melbourne

coming third behind London and New York.

This, along with strong domestic competition, (as described in Box 2) has demonstrated that

Melbourne’s prior investment and bid funds are not as effective as they historically were. As an

example New South Wales added 110 sporting cultural and lifestyle events to its calendar since

2011 in an attempt to rival Melbourne.



Box 2: Evidence of competition from interstate rivals

Sydney wins bid to host 2017 World Polo Championship The NSW will host the 2017 World Polo Championship, a tournament that will see the world’s eight best nations compete for the world title in Sydney’s Hawkesbury region.

“The World Polo Championship is the sport’s most prestigious event and I’m thrilled Sydney has been chosen by the FIP as the host of the 2017 event. This is yet another major sporting event secured exclusively for our State by Destination NSW,” - Mr Ayres. Member for Hawkesbury. NSW was named Best Event State at the 2017 Australian Event Awards “We’ve always known that NSW is without doubt Australia’s premier destination for major events and now it’s official. This award demonstrates the NSW Government’s commitment to presenting a world class calendar of major events throughout Sydney and rural and regional NSW is paying dividends. More than 500 events have been secured for Sydney and rural and regional NSW by the NSW Government since March 2011 and these events have delivered an estimated visitor spend in excess of $3 billion to the state.” – Adam Marshal Minister for Tourism and Major Events NSW Arsenal Football club match in Sydney in July 2017 NSW Minister for Trade and Industry and Acting Minister for Tourism and Major Events, Niall Blair, today welcomed the reigning FA Cup Champions to Sydney. “It’s the first time Arsenal FC has played in Australia in 40 years and it promises to deliver a raft of benefits to NSW – we expect almost 28,000 domestic and international visitors to contribute more than $18 million to the state. Fans have travelled from around Australia and more than 15 other countries to see Arsenal face off against the best in NSW, with ticket sales indicating both games will be packed to the rafters.” The two-match tour was secured exclusively for Sydney by the NSW Government’s tourism and major events agency, Destination NSW. The tour continues the NSW Government’s record of attracting the world’s premier football teams to Sydney, with Arsenal joining a list including Manchester United, Chelsea, Tottenham Hotspur, Juventus and Liverpool who have all played in the Harbour city over the past three years.

X Games in Sydney in October 2018

Seven West Media and global Disney-owned sports network ESPN will bring extreme sports event X Games to Australia. The free-to-air broadcaster hopes the live event, to be hosted at Sydney's Olympic Park in October next year, will be the beginning of a regular stop for the X Games each year. X Games includes sports such as skateboarding, BMX and Moto X, with different events across disciplines like freestyle, street, park and Big Air.

The increased demand for major event content at a national and international level has created a

bidding war with rights holders. This is evidenced by Victoria’s willingness to increase the size of its

Major Events Funds, Regional Events Fund and Significant Sporting Events Program funds in order

to remain competitive.

There is a real risk that Government may not be able to successfully bid to host major sporting

events at a price that delivers economic, social and branding value for Victoria. Already there is

anecdotal evidence (i.e. examples provided in the above box) that Visit Victoria has passed on or

lost the bidding on a number of major events due to increasing costs to host events above their

perceived economic return to the state.

In order to remain competitive and retain Victoria’s reputation as the Australia capital of sport,

Victoria needs to investigate new ways to invest to attract teams and major sporting events to

Victoria and limit the commoditisation of hosting major events.

Conflicting requirements within major travelling sporting teams

International sporting teams that travel during the off season for exhibition games need to balance

the needs of the commercial team’s desire to optimise revenue against the coaching team’s desire

for optimal high performance training opportunities. The rights fee paid to visiting sporting teams

and broader commercial requirements are largely driven by the enthusiasm of spectators to attend

the events; and Victorians are renowned for their willingness to support major events.



From a high performance perspective, the stadia must be at the necessary standard to maximise

the event spectacle and minimise the risk of injury. In addition, the host city must be able to

demonstrate that it has highest quality training facilities to allow teams to include preparation for the

upcoming season, if they are wanting to attract international teams. Ideally, the requirements of

both the commercial and coaching teams of the international elite teams is not compromised and

the host city is viewed favourably by management, coaches and the elite athletes.

In the face of an increased bidding war for major events, cities must consider other ways of

attracting major events to Victoria by creating a unique selling proposition, which could encompass

the provision of an enhanced offer to visiting teams and athletes from both a cultural and high

performance preparation experience.

Based on research conducted by MediaCom, there is a gap in the Australian market for elite

training facilities that can be accessed by visiting teams and athletes in a tranquil and natural

setting. It is envisaged that Victoria could offer visiting teams and athletes a unique training

experience in addition to their rights fee. This would allow Victoria to bid with a distinct point of

difference by addressing the team’s dual requirements from a high performance & coaching view

point as well as a commercial perspective.

Based on MediaCom’s research, there are currently a number of high quality elite sports training

facilities in the world, these include:

• St Georges Park, UK

• IMG Academy, USA

• Ciudad, Spain

• Kompleks Sukan Negara, Malaysia

• Singapore Sports Hub, Singapore

An opportunity exists for a facility of the same calibre to be built in the southern hemisphere.

Australia’s existing elite sporting facilities are characterised by individual sport ownership, multi-

team congestion and an absence of international quality control. Despite Australia being home to a

number of high performance facilities, visiting teams are restricted in obtaining training venues that

meet their requirements due to a number of factors, including:

1. Quality Control - Teams have limited control over quality of pitch and facilities, while conflicting

sponsor branding can pose problems for some teams

2. Facilities are owned by elite sporting teams - Professional sporting teams do not want to

share facilities in their home countries with a competitor.

3. Congestion, Accessibility and Privacy - Australia’s elite facilities have long-term leases with

multiple tenants, making access and privacy limited.



2.1.3 Problem 3: Limited meaningful employment opportunities in the Region are

leading to pockets of social and economic disadvantage

The GORR’s stunning coastline and relaxed lifestyle have been major drawcards for many of its

local residents. The Surf Coast Shire is located within the GORR, it is one hour from Melbourne’s

CBD and 20 minutes south of Geelong’s CBD. As shown in Figure 3, the Surf Coast Shire is home

to nine distinct townships: Aireys

Inlet, Anglesea, Deans Marsh,

Fairhaven, Jan Juc, Lorne, Moriac,

Torquay and Winchelsea. The

proposed site for CORA is

Modewarre and the site borders

the Lake Modewarre, as shown in

Figure 3.

The Great Ocean Road, which

begins in Torquay, cements Surf

Coast Shire as an internationally

renowned tourism destination.

Forty-two per cent of all visitors to

the GORR (or 2.1 million visitors)

visit the Surf Coast Shire annually.

However, the majority of visitation

and, as a result economic and

social activity of the Surf Coast

region, is concentrated along the

coastline.

There are some pockets of social

and economic advantage in the

hinterland, however there are also

areas of significant disadvantage. These issues are described in more detail below.

Pockets of social disadvantage

Surf Coast Shire Socio-Economic Indexes for Areas (SEIFA) measures the relative level of socio-

economic disadvantage based on a range of Census characteristics. It provides a starting point to

obtain a general view of the relative level of disadvantage in one area compared to another. The

index is derived from attributes that reflect disadvantage such as low income, low educational

attainment, high unemployment and jobs in relatively unskilled occupations18. A lower score on the

index represents a high level of disadvantage. A higher score on the index means a lower level of

disadvantage.

The average SIEFA scores for the key destinations within the Surf Coast region, as well as the State and the G21 regional are provided below in Table 13. From the scores we can see that a number of the Surf Coast towns along the coast line score very well. Jan Juc is in the top 5 percentile for the State. Torquay, Aireys Inlet, Anglesea and Lorne also score relatively well with all towns predominantly in the top 30 percentile of the State. However, moving away from the coastline and into the hinterland shows that the results are less positive and consistent. While Moriac scores very well (in the top 9 percentile) Winchelsea scores very poorly. In fact Winchelsea is within the bottom 20 percentile of the State, putting it at significant disadvantage.

18 Profile ID, SEIFA disadvantage by LGA, http://profile.id.com.au/surf-coast/seifa-disadvantage-small-area?SeifaKey=40004

Figure 3 Map of the Surf Coast Shire

Proposed

CORA site



Table 13 Surf Coast Shire SEIFA (2011)19

Area 2011 Index Percentile

Jan Juc (township) 1,098.8 95

Torquay North 1,088.9 92

Moriac and District 1,087.1 91

Torquay - Jan Juc 1,080.1 89

Torquay 1,073.0 86

Surf Coast Shire Average 1,066.5 83

Aireys Inlet - Fairhaven and District 1,056.6 78

Anglesea 1,047.7 73

Lorne (township) 1,040.7 69

Greater Melbourne Average 1,020.3 57

G21 Region Average 1,002.6 47

Winchelsea (township) 935.6 20

These varied results of social disadvantage demonstrate the shires unique mix of residents of

varying socio-economic profiles. In particular, one longstanding trend is the significant increase in

new residents and retirees seeking a sea-change and moving to the coastal towns of the Surf Coast

for lifestyle factors. This has, in recent times, also driven the increase of property prices, impacting

on the ability of existing residents to afford to live along the coast.

Pockets of youth unemployment and disengagement

Youth unemployment and disengagement is also an issue in parts of the Surf Coast Shire. A more

detailed review of the Surf Coast Shire shows that there is relatively high unemployment in within

parts of the hinterland (Gherang and Modewarre) and also areas of disengaged youth in Moriac and

Modewarre.

Figure 4: Surf Coast Shire, Youth unemployment (aged 15-24) 201120

Figure 5 Surf Coast Shire, Disengaged Youth (aged 15-24) 2011

19 Profile ID, SEIFA disadvantage by LGA 20 Profile ID Surf Coast Shire 2011



Weekly Income and Labour Force Participation

As detailed in Figure 6, weekly household income in parts of the hinterland such as Winchelsea, are

significantly clustered toward the lower end of the range when compared to Surf Coast region as a

whole. This again demonstrates the significant variation of residents in the region. In 2016, nearly

40 per cent of Winchelsea households earned a weekly household income of less than $1000, this

compares with only 26.8 per cent for Surf Coast Shire and 31.8 per cent for Victoria.

Figure 6 Average household income for Winchelsea compared to Surf Coast Shire21

In addition, labour force participation rates for Winchelsea have remained low over the past 5 years

at 52.7 per cent. This is significantly lower than the Greater Melbourne area rate of 61.9% and also

lower than the Regional Victoria rate of 56.1%.22 Part time employment in Winchelsea in 2016

made up 40.2% of the workforce. This is also considerably higher than the Greater Melbourne area

rate of 35.3% and regional Victoria rate of 38%.23

These statistics highlight that people in the disadvantaged pockets of the Surf Coast Shire earn

significantly less than their coast bound towns, have lower levels of workforce participation and

higher levels of part time work. Anecdotally there appears to be a lack of high paying professional

employment opportunities in the Surf Coast Shire which has resulted in local residents needing to

work low paid or low skilled part-time roles within the region or commute to Geelong or Melbourne

to obtain more highly paid roles.

21 Profile ID, Surf Coast Shire (2016) 22 Profile ID, Winchelsea and Surf Coast shire (2016) 23 Profile ID, Winchelsea and Surf Coast shire (2016)

In November 2017, as part of the business case development process the following question was asked of a number of Surf Coast residents.

Have you been able to find meaningful work within the Surf Coast Shire? A selection of the responses are provided below:

• “No meaningful work in the Surf coast shire. I travel to Geelong for full time work” • “Not to the salary level I was previously paid in Melbourne. I have to work in Geelong to earn more. The

roles are not to the senior level I was working at in Melbourne.” • “No. My career experience is as a buyer and product manager …. There are limited opportunities to work in

a similar role in this region.”



In 2016 the Surf Coast Shire undertook a Youth Survey. There were 650 respondents aged 12 –

25 who undertook the survey which highlighted the following24:

• 1 in 3 young people in the Surf Coast region are looking for work and are unable to find it

• 15% of young people are not involved in any groups (sports, arts, music etc.)

• 52% said that the Surf Coast needs more employment opportunities

Changing demographics of the Surf Coast Shire

The significant growth in sea-changers relocating to the Surf Coast, coupled with limited

employment opportunities for young people, is having a dramatic effect on the demographics of the

region. Since 2011, while there has been overall population growth in the region the most

significant growth has been in the empty nesters (60 to 69) and seniors (70 to 84), which has

accounted for over 1,600 residents.

Figure 7: Change in age structure by age group in the Surf Coast between 2011 and 201625

Overall the region is ageing more rapidly and attracting fewer families thereby producing pressures

for local employment and services. Furthermore, there is a risk that the region will begin to invest in

fewer community facilities for young people and families – facilities which may assist in drawing

young people back to the region or assist mothers to re-enter the workforce, such as childcare

facilities.

Commuting to cities and homeworking

A significant portion of residents within the Surf Coast Shire are employed outside of the region and

must travel long distances to their places of work. If they choose, or are permitted, to avoid this

travel by working remotely this can create isolation and a disconnection from their workplace.

In 2016 the top employment sectors for Surf Coast Shire residents were health care and social

assistance; construction; education and training; retail trade; and accommodation and food

services26. However, not all local workers were able to be employed within the Surf Coast Shire as

evidenced by there being 12,488 eligible workers and only 7,150 full/part time positions available in

the Shire.27 Half of the employed people living in the shire commuted outside the shire for work and

required access to Geelong and Melbourne.

Some may choose to do this due to lack of local opportunities in their occupation and many sea-

changers may already have established employment in Melbourne or Geelong. Working locally has

favourable impacts on commuting time and may potentially increase time for family and work-life

24 Surf Coast Shire, 2016 Surf Coast Youth Survey Insights. 25 Profile ID, Surf Coast region (2016) 26 Profile ID, Surf Coast region (2016) 27 Surf Coast Shire, Health and Wellbeing Plan 2013-2017



balance. Post-modern society has brought a wider variety of work and leisure options and Surf

Coast Shire has a higher than average proportion working from home (7.8 percent of local workers).

This may be influenced by sea-changers working remotely and the higher than average proportion

of homes with internet connection, 28 however there are risks that this can in turn also lead to social

isolation.

Mental and Physical wellbeing of the community

Lack of employment opportunities in the local region can lead to reduced mental and physical well-

being of the community. The impact of a lack of meaningful employment is demonstrated through a

small survey that was undertaken Surf Coast residents in November 2017, as shown below.

In November 2017 following question was asked of a number of Surf Coast Residents.

Has a lack of meaningful employment opportunities had a negative impact on your well-being? (Physical and/or Mental health). If so please describe any impacts.

• “Yes. Financial concerns leading to stress etc.” • “Yes I have suffered a great financial loss moving here, my wages are 1/3 of what I earned before so I have

gone backwards and this has impacted on my self-esteem“

• “I feel like I am undervalued, and not being rewarded properly for the years of education and experience that I have.”

2.2 Timing considerations

The GORR is one of Australia’s most popular tourist destinations. However, as described above,

the Region faces a number of immediate issues:

• There is a low ratio of international overnight to day visitors attracted to the Region, and of those international visitors who do stay overnight, their length of stay is limited when compared with other regions. Without further investment in a broader mix of built tourism offerings and luxury accommodation, GORR is at risk of delivering a poor visitor experience, impacting the Region’s reputation and making it increasingly difficult to attract and capture overnight visitation from a growing and lucrative Chinese visitor market.

• Although Melbourne and Victoria have held a reputation as the sports capital of Australia, there is increasing competition from other states and cities in Australia and the southern hemisphere to host major events. With states and other international cities having also made major investments in front of house facilities, bid funds and organisational capacity, it is clear that Victoria needs to invest in a unique proposition that will separate it from the competition. Consultation with global sporting organisations and teams throughout the past three years has demonstrated that without further investment, Australia will be left behind.

• There are limited meaningful and/or professional job opportunities within the Surf Coast resulting in a number of local residents travelling significant distances for work, being underemployed or moving out of the Region. Providing local employment opportunities which retain talent in the Region is key to the continued economic and social benefit of the GORR more broadly.

Why act now?

The issues above have been well understood and documented. This investment presents a unique

opportunity for the GORR to create a “visitor destination”.

This business case presents Government with the opportunity to leverage government investment

by more than 10 times its initial investment. The investment will support a number of Government’s

social, economic and environmental strategies and policies as outlined in Section 3.2.

28 Surf Coast Shire, Health and Wellbeing Plan 2013-2017



2.3 Consideration of the broader context

The need to (and difficulties in) investing in regional tourism infrastructure has been well recognised

by the Victorian Government. To date, there has been inadequate investment in strategic tourism

infrastructure in regional Victoria, and this lack of investment has impacted regional Victoria’s ability

to capture market share of the visitor economy. The lack of investment in regional tourism facilities

is constraining economic growth in regional Victoria as well as impacting on the development of

sustainable regional communities.

The limited investment in regional tourism facilities is a reflection of the systemically higher risk

experienced by such investments, due to:

• State and local zoning and planning often have a bias against tourism development by zoning land use for residential, agricultural and environmental protection only with a reluctance to approve tourism developments or approve them within the required timeframe.

• Inadequate visitor yields in regional Victoria which may not support significant investment.

• Lack of ability to obtain funding and financing for tourism assets in regional Victoria.

As a result of these issues, the Victorian Government established the $103 million Regional

Tourism Infrastructure Fund (RTIF) to help grow and realise the potential of regional Victoria’s

visitor economy that attracts more than 14 million domestic and international visitors annually.

The RTIF’s main objectives are to:

• Increase visitation to regional Victoria and visitor yield by supporting strategic projects

• Boost regional tourism investment; and

• Drive new jobs across regional Victoria in the tourism sector

RTIF funds high-value projects that:

• Activate, create or redevelop tourism assets that demonstrate a significant impact on the visitor economy

• Attract increased visitors to the Region and increased visitor yield

• Deliver an improved experience for those who visit and reside in regional Victoria

• Stimulate or leverage private sector investment in regional Victoria

Projects which have recently received funding under the RTIF include:

• $300,000 towards the Walhalla Goldfields Railway Rail Motor Project;

• $500,000 towards the development of Australian Craft Beer Centre of Excellence in Ballarat;

• $1.5 million towards the Holgate Group Historic Hotel and Brewery Discovery Centre Expansion;

• $2.5 million towards the completion of the Great Stupa of Universal Compassion (Phases 1 and 2) in Bendigo;

• $2.56 million towards the Creswick Trails Project;

• $2.94 million towards development of the Winton Wetlands Indigenous trail project;

• $162,000 towards the construction of a new little penguin exhibit for the Ballarat Wildlife Park;

• $1.49 million towards the relocation and expansion of the Forrest Brewing Company;

At this stage, it is understood that Victorian Government funding for CORA may be provided under

the RTIF fund.



Section 3:

Benefits



3. Benefits

Summary

This section provides an overview of the benefits identified in the ILM, the importance of the benefits to the Government and the alignment of the project with other Government priorities.

The benefits that are expected to be delivered, by addressing the identified problems in the ILM, are:

• Benefit 1 – Improved tourism experience and yield. • Benefit 2 – Improved competitiveness to host major events in Victoria.

• Benefit 3 – Improved well-being within the Region including better health (mental and physical), community pride and reduced social disadvantage.

The three benefits identified will be measured by key performance indicators (KPIs) on an annual basis following completion of the project. The KPIs include:

• Visitor numbers to CORA

• Greater spend per visitor by increased length of stay and spend per stay • Enhancing Victoria’s brand value and reputation as a major sports event host • Maintaining or increasing the number of major sporting events in the state • Improved health outcomes and reducing unemployment for local Surf Coast residents

The investment strongly aligns with key Government policies and strategies including The Victorian Visitor Economy, Victoria’s 2020 Tourism Strategy, Shipwreck Coast Masterplan and the Great Ocean Road regional Strategy.

3.1 Benefits to be delivered

Regional Victoria, particularly the GORR has not seen an investment of this scale, breadth and

offering for a significant period of time. It is anticipated that this project will have wide ranging

economic, social and environmental benefits to the GORR as well as for Victoria more broadly. This

project will be critical in delivering an improved visitor experience for the Region, which in turn

generates increased visitor numbers and yield to the GORR. This is particularly important with the

growth of new markets in the Asian region which require revitalised products and services aligned

with their preferences. New investment and tourism infrastructure is required to realise these

products and services and to help achieve Victoria’s tourism potential.

It is anticipated that construction of the CORA elite sports, wellness and tourism facility will

generate the following benefits:

Benefit 1: Improved tourism experience and yield in the Great Ocean Road Region

Improved experience resulting in more overnight and longer stays by international visitors is

expected to result in higher yield

The CORA investment is expected to attract a greater

number of visitors to the GORR, as well as assist with

conversion of international day visitor to overnight

visitors.

CORA will leverage of the existing physical and built

assets to enhance the drawcards of the region and drive

tourism to the Region. CORA is expected to deliver a

number of complementary experiences to the current

natural-based tourism products currently available in the Region. The project will include a wide

variety of unique retailers, fine dining eateries, a sculpture trail, art galleries, luxurious hotels, health

and wellbeing and recreational activities such as the wave pool. These activities, combined with the

inclusion of four and five star accommodation, will assist in providing a more well-rounded tourism

experience for visitors and help create the GORR as a destination that requires several days (rather

than a day trip) to explore. In addition, the inclusion of luxury accommodation will meet Chinese

overnight visitor requirements. And this is expected to result in an increased overnight international

visitation, particularly when compared to daily international visitation.

The KPIs for Benefit 1 are

KPI 1 - Visitor numbers to the facility

KPI 2 - Greater spend per visitor by

increased length of stay and spend

per stay



CORA will provide a range of four and five star accommodation options for tourists. These include

128 hotel rooms, 37 eco lodges, and 24 retreat homesteads. Based on assumed occupancy and

guest density rates for the proposed accommodation (and as per the CORA financial model), this

accommodation will provide capacity for approximately 87,200 additional visitor nights in the

Region. CORA will also act as an attractor to the Region with its retail village (including wellness

facility) and the wave pool located on site.

In Section 6.3 of this report, EY has undertaken and estimation of the total visitors and the

economic impact to the surrounding region (referred to as the CORA economic impact zone29).

Total visitation to the site has been estimated by EY based on attraction due to accommodation,

retail and commercial (including wellness facility) and the wave pool. Visitor numbers were

estimated at between approximately 200,000 to 340,000 visitors to CORA by 2024-25 (allowing for

a ramp-up period). Some of these visitors to CORA would have already visited the GORR and

some others will also come from within the GORR. As a result, once these are taken into account, it

is estimated that there will be 126,100 to 216,500 new visitors to the CORA economic impact zone.

EY has estimated the expected direct economic impact of the facility to the region will be $67.6

million and indirect impacts of $47.6 million in 2024-25.

It is expected that the profile of CORA as an elite sports training and wellness facility, will create a

‘halo’ effect which will in turn attract international and interstate tourists and visitors to the GORR to

both visit and stay at CORA and in the Region. Visitors to the Facility will be able to stay and train in

the same location as international and national sports stars providing a unique hospitality and

sporting opportunity. It is expected this halo effect will allow the facility to both charge higher room

rates as well as achieve increased occupancy rates. In addition, the inclusion of the elite sports

training facility and its associated international branding may also assist with attracting international

visitors to the Region.

Regional boost by providing an inland travel route

CORA will not only serve as an attractor for tourists to come to the GORR in its own right, but it will

also act as a platform for tourists to explore neighbouring regional areas and the hinterland within

the GORR.

This will likely energise the regional areas as both domestic and international tourists are drawn

inland to stay and spend, and the benefits of tourism are more equally distributed from the currently

concentrated coastline into the hinterland. By providing an appealing inland route back to Geelong

and Melbourne, rather than backtracking along the Great Ocean Road, the visitor experience on the

Great Ocean Road will be improved as a result of less congestion and crowding of the idyllic road.

Benefit 2: Improved competitiveness to host major events in Victoria

The project is expected to deliver a competitive

advantage for Victoria when it comes to bidding for

major sporting events at both a national level and within

the Asia-Pacific region.

For many years, Victoria and Melbourne have been the

national and international leader in terms of “front of

house” sporting facilities and stadia. Melbourne is one of

the only cities in the world to have 10 world-class

sporting fields within a 10km radius.

This investment brings Victoria’s “back of house” sports training facilities to the same elite level

allowing Victoria to provide travelling teams for major sporting events with a more holistic offering,

this is expected to improve Victoria’s competitiveness to attract major sporting events as teams can

achieve the rare balance of commercial opportunity and pre-season preparation facilities. It is

expected that as part of the bidding process, Victoria in addition to offering world class facilities,

29 It comprises of the four closest LGA areas including Surf Coast, Colac-Otway, Corangamite and Golden Plains.

The KPIs for Benefit 2 are:

KPI 1 - Enhanced brand value and

reputation of Victoria

KPI 2 - Maintain or increase major

sporting events in Victoria



engaged crowds and financial incentives would also be able to offer teams and individual athletes

access to a unique high performance training and recovery facility in a tranquil and natural setting

(away from the prying eyes of the public for time either side of their key event commitments). Given

the facility will be the only one of its kind in Australia and the Southern Hemisphere, it is expected

that the high performance sports facility will provide a differentiating factor when bidding for events.

Attracting the right to host major sporting benefits brings significant economic, social and

community value to Victoria, these are described below.

Employment and economic contribution

• It is estimated that the major events industry in Melbourne is responsible for 3,035 FTEs. The gross economic contribution of the major events industry in Victoria based on a typical Major Events Calendar year totalled $2.2 billion. The wider economic impact large scale events is closer to $2.7 billion. 30

• Of the above benefits generated by Victoria’s Major Events Calendar approximately 70% can be attributed to major sporting events.

• Some examples of economic benefit resulting from sporting events can be found in Figure 8.

Figure 8 Examples of economic benefit resulting from sporting events in the GORR31

Improved reputation as the sporting capital of Australia

• Supports Melbourne’s ongoing reputation as the sporting capital of Australia, and is likely to result in coverage of high-profile sports stars and team training in Victoria.

• Victorians value an event even if they do not attend it. Social outcomes from major events such as the Olympic Games and international sporting events are often visible in the pride of the host nation’s population during the event.

• Table 14 provides strong indicators of these intangible benefits of Victoria’s Major Events Calendar.

30 EY, (2016) Victorian Major Events Company, Economic impact of the Victorian Major Events Calendar 31 Surf Coast Shire, (2016) Visitor Insights



Table 14 - Community Survey Data32

Statement Strongly Agree/

Agree

Civic Pride

Major events help put Melbourne on the map internationally 96%

You would recommend Victoria’s major events to others 92%

Major events do for Melbourne’s international profile what the Opera House does for Sydney, or the Eiffel Tower for Paris

89%

Liveability

As a Victorian, you value the opportunity to see the world’s best in art and sport 94%

Victoria’s major events give you a reason to stay in Victoria 78%

Industry networking and cohesion supporting future capacity to host major events

• The Government’s support of major events can be likened to a government program that fosters the development of an events industry cluster. Local businesses involved with the events are able to enhance their skills and expertise in organising world-class events as well as form networks with each other.

• This may have long-term industry benefits as a result of innovation, new collaborations and business relationships that would not have existed otherwise.

Benefit 3: Improved wellbeing within the Region including better health (mental & physical),

community pride and reduced social and economic disadvantage

Provide employment opportunities

The project is expected deliver up to 280 jobs on site

at CORA and within the region. On site jobs will be

required to operate the accommodation, retail and

commercial offerings, food and beverage outlets and

wave pool. In addition, CORA itself will require a

skilled management team to manage and operate

parts of the facility. As outlined in the proposed governance structure (see Section 7.7), CORA will

require the following skills within its own team: management, commercial, financial and accounting,

facilities management, marketing, promotions, IT, real estate, sponsorship management and more.

As a result, there is expected to be a range of employment opportunities at varying levels and with

varying skills. Total direct employment, as a result of CORA has been estimated at approximately

171 jobs (in 2024-25) with the remaining employment (109 jobs) resulting from employment in the

Region.

In addition to the ongoing employment associated with operating the facility, there will also be short

term employment resulting from the construction of the facility. The total capital cost of the facility is

estimated at $352 million, this is expected to result in an average of 472 jobs per annum between

2018-19 and 2020-21 with a high point of 1,095 jobs in 2018-19 and low point of 22 jobs in 2020-

21.

CORA is also expected to help address youth unemployment within the hinterland and to draw its

workforce from across the G21 region (encompassing Geelong though to Warrnambool). Improving

the employment opportunities will also provide a reason for those early on in their career to remain

in the Region. CORA will ultimately lead to a greater range of employment opportunities within the

Surf Coast Shire, instead of requiring local workers to travel to Geelong and Melbourne. This

project will assist in keeping talented and highly skilled workers in regional areas.

32 EY, (2016) Victorian Major Events Company, Economic impact of the Victorian Major Events Calendar

The KPI for Benefit 3 is:

KPI 1 – Reduce Youth unemployment



Provision of community infrastructure

The project is proposed to include a number of community facilities including a childcare facility for

the community. The childcare facility at CORA will provide space for at least 90 children and is

expected to assist skilled workers with access to childcare facilities allowing them to return to or

undertake full or part-time professional roles, where they may not be able to currently. This will

deliver social and economic benefits for those returning to work as well as deliver economic activity

to the Region.

Community physical and mental wellbeing

The facility will also have a strong focus on mental and physical wellbeing and provide recreational

and health facilities for the local community. This will help support regional areas through:

• Provision of sport and active recreation facilities which build community cohesion and provides people with social networks, making a significant contribution to Victoria’s liveability.

• Provision of a place for the community to gather and hold community events and by doing this supports community cohesiveness.

3.1.4 Evidence of benefit delivery

Key Performance Indicators (KPIs) are used for each of the benefits identified in the Benefits

Management Plan (Appendix A).

3.2 Importance of the benefits to Government

This project aligns with several Victorian Government policies around growth planning and tourism,

as well as the overall long-term economic and social development of Melbourne and Victoria. In

particular:

• Tourism:

• Victorian Visitor Economy Review (July 2016)

• Victoria’s 2020 Tourism Strategy

• Victorian Visitor Economy Strategy Action Plan 2016-2020

• Shipwreck Coast Master Plan

• Strategic Masterplan for the Great Ocean Road Region Visitor Economy 2015-2025

• Regional

• Victoria’s Regional Statement (Nov 2015) – RDV

• Great Ocean Road Region Strategy (GORR)

• G21 Regional Growth Plan

• Sporting

• Active Victoria – A strategic framework for sport and recreation in Regional Victoria

• Community Well-Being

• G21 Health and Well-Being Plan

• G21 Regional Growth Plan (2013)

A summary of the alignment of the CORA project with government policies and strategies is

presented in the following table.



Table 15: Alignment between the CORA project and Victorian Government policies and strategies

Policy Alignment Project alignment with policy

Victorian Visitor Economy Strategy

• Improved experiences for visitors from Asia with innovative accommodation offerings

• Building on the potential of regional and rural Victoria

• Encourage more Melbournians and Australians to travel to regional Victoria, providing a more compelling experience for visitors to these destinations

High

This project will:

• Provide international visitors with luxurious, world- class accommodation close to the Great Ocean Road in regional Victoria.

• CORA will also assist in easing the pressure on the coastal region and attract visitors to tour inland areas.

• Expand the experience of tourists visiting the coastal region and attract visitation inland by offering a wide range of activities and unique experiences. The development will include a wide variety of unique retailers, world-class sporting facilities, fine dining eateries, luxurious hotels and a number of health focused recreational facilities.

Victoria’s 2020 Tourism Strategy

• Ensure the benefits of tourism are spread across the state (i.e. to regional Victoria)

• Develop and promote unique experiences • Support investments which enhance the

State’s nature based tourism products (associated accommodation development)

High

This project will:

• Create a major tourism attraction in Victoria • Provide travellers, especially international

travellers, unique and authentic Australian experiences.

• Support and provide access to other regional destinations, and establish a hub for the inland region.

• Expand the experience of tourists visiting the coastal region and attract visitation inland by offering a wide range of activities and unique experiences.

Strategic Masterplan for the Great Ocean Road Region Visitor Economy 2015-2025

• Heavy concentration of visitation to the coast poses a challenge to increase dispersal to the hinterland, spreading economic benefits of tourism and reduce visitation pressures along the coast.

• Need to build activity/experience based products to capitalise on natural attractions.

• Additional accommodation to meet demand, including 4 to 5 star standard integrated resort located in hinterland and/or coastal locations.

• Attract investment in new built attractions which are consistent with the attributes of the Region and its destinations (e.g. wellness centres).

High

This project will:

• Promote inland routes and ease congestion and pressure on the Great Ocean Road by providing tourists with a reason to use the inland routes on their return to Melbourne. This will both assist in reducing visitation pressures on the coast and spread the economic benefits of tourism.

• Establish a luxurious hub for tourists to visit while touring the Region and provide an attractive alternative for staying on the coast.

• Assist to distribute the economic benefits of tourism which are currently concentrated on the coast to inland regions.

Shipwreck Coast Master Plan

• Support and enrich the coast’s local and hinterland communities.

• Create a distinctive visitor experience for a world-class destination.

High

This project will:

• Assist to distribute the economic benefits of tourism which are currently concentrated on the coast to inland regions.

• Create a unique visitor experience with a wide range of activities in one central hub easily accessible to tourists visiting Victoria.

Great Ocean Road Region Strategy

• Develop and promote inland routes. • Enhance the Great Ocean road as a world-

class travelling experience.

High

This project will:

• Promote inland routes and easy congestion and pressure on the Great Ocean Road by providing tourists with a reason to use the inland routes on their return to Melbourne. This will both assist in reducing visitation pressures on the coast and spread the economic benefits of tourism.



Policy Alignment Project alignment with policy

Victorian Government (September 2010) Victoria’s Tourism and Events Industry Strategy 2020

Tourism 2020 calls for cooperation between industry and the Australian and State and Territory Governments to address the barriers to industry growth. It is a whole of government approach to improve the industry’s productive capacity. It focuses on creating a policy framework that will support industry growth and provide industry with the tools to compete more effectively in the global economy and to take advantage of the opportunities that Asia presents.

High

This project will:

• Provide Victoria with a world class asset to attract interstate and international visitors with ever-increasing expectations for unique and exciting experiences. The project will allow Victoria to remain competitive and seize the opportunity to attract tourists from Asia, and will deliver economic benefits and growth to regional Victoria.

Plan Melbourne 2017-2050: Metropolitan Planning Strategy, Department of Environment, Land Water and Planning (2017)

Plan Melbourne’s vision for the city is guided by nine principal supports by seven outcomes, with the seventh outcome being: regional Victoria is productive, sustainable and supports jobs and economic growth.

High

This project will:

• Provide regional Victoria with a sustainable and long term source of employment and economic growth. The project will both attract more tourists to Victoria, and also assist in distributing the benefits of tourism to parts of regional Victoria.

Victorian Visitor Economy Strategy (2016)

This Strategy sets out the direction for Visit Victoria (the entity responsible for ensuring Victoria remains the national leader for tourism and major events)

High

This project will:

• Contribute to maintaining Victoria’s reputation as the national leader of tourism by expanding the experience of tourists visiting the coastal region and offering a wide range of activities and unique experiences.

G21 Health and Well-Being Plan (2013-2017)

G21 is the formal alliance of government, business and community organisations working together to effectively manage growth in the Geelong region. The health and well-being plan aims to 1) Improve opportunities for increased access and uptake of physical activity 2) strengthen advocacy for increased community connectedness and social inclusion 3) Collaborate on building evidence based planning and practice

High This project will:

• Act as a regional hub of health, wellbeing and physical fitness.

• CORA will provide the local community with the services and facilities necessary to vastly improve their physical and mental wellbeing.

• Allow the surrounding regional areas to connect more as a community and develop socially inclusive bonds.

G21 Regional Growth Plan

The Geelong Region Plan, developed by the five G21 councils and endorsed by all levels of Victorian government, provides a clear vision for the G21 region. Direction 3 of the Plan focuses on Strengthening our communities.

• Build strong and safe communities • Encourage healthy and active lifestyles • Increase appreciation of diversity, arts and

culture

• Improve access to services, infrastructure and affordable housing

• Address disadvantage

High This project will:

• Encourage a greater focus on physical and mental wellbeing

• Support the arts and creative sector within the Surf Coast region, by the inclusion of a number of galleries within CORA including the relocation of the Surf Museum



Section 4:

Strategic Response

options



4. Strategic Response options

Summary

This section provides an overview of the strategic interventions, strategic options for consideration and recommends the most viable strategic option. Various project options are then developed from the preferred Strategic Options (as outlined in Section 5).

All strategic interventions for addressing the identified problems were considered and evaluated to determine the following five most viable Strategic Response Options:

• Strategic Response Option 1 – Business as usual/Do nothing • Strategic Response Option 2 – Reduce social disadvantage in the GORR • Strategic Response Option 3 – Enhance tourism attractions in the GORR • Strategic Response Option 4 - Enhance Victorian offering through elite sport • Strategic Response Option 5 - Utilise sports and wellbeing to improve the tourism offering in the GORR

The strategic response analysis identified Strategic Response Option 5 as the preferred strategy to address the problems and deliver the three project benefits outlined in the ILM. This strategic option will deliver the most benefits addressing lack of quality and quantity tourism attractions; improved health and wellbeing; and reduce social disadvantage in pockets of the local community. Strategic Response Option 5 also supports Victoria’s reputation as the sporting capital of Australia. The viability of Option 5 is dependent upon the development of a world-class facility which not only attracts elite athletes but also provides significant draw card for local, interstate and international tourism to the Region.

Strategic Response Option 5 includes the following key strategic interventions:

• Government support for industry development in the Region • Investment in high yield tourism assets • Improved quality and quantity of accommodation in the Region • Investment in independent world class sporting facilities

Further details of the strategic options assessment is presented below.

4.1 Method and criteria

Following the Department of Treasury and Finances (DTF) Investment Management Standard for

Strategic Response Options Analysis, the criteria used to select the potential strategic interventions

for inclusion in this analysis were as follows:

• Ability to respond to the cause of the problem

• Ability to deliver the benefits

• Cost, timeliness, and feasibility.

This section presents the individual strategic interventions identified to address specific problems,

the strategic options (combinations of strategic interventions) and a recommendation on the

preferred Strategic Options.

4.2 Strategic interventions

A broad range of alternative interventions have also been identified and assessed as part of the Business Case development process. The table below presents these interventions and their links to the problems identified in the ILM.



Table 16: Strategic interventions

Strategic Interventions Description

Link to ILM problems

Problem 1

Lack holistic visitor offering in the Great Ocean Road Region is

impacting tourism

experience and yield

Problem 2 Increasing

competition for major events is putting at risk

Victoria’s reputation as the sporting capital

of Australia

Problem 3

There are limited meaningful

employment opportunities in the Region and

these are causing social and economic disadvantage

1. Government supports industry development in the Region

Government grants to industry will promote industry growth in the Region and support local employment opportunities.

� �

2. Explore and invest in community infrastructure options

Local buildings and programs will assist in developing the Region and providing local employment options

� �

3. Increase welfare support for local residents

Increasing welfare by providing greater employment opportunities for local residents

�

4. Invest in high yield tourism assets

Investing in high yield tourism assets will provide a sustainable and secure return over the medium to long term.

� �

5. Improved quality and quantity of accommodation

Improving quality and quantity of accommodation to improve the capability of the Region to provide visitors a world class experience

� � �

6. Increased support for VIS and AIS programs and facilities

Increased support for VIS/AIS programs to build a reputable health and fitness industry in the Region

� �

7. Increased financial support to secure major events

Increased financial support will provide the means for regional Victoria to attract major events and interstate/international visitors.

� � �

8. Invest in independent world class sporting facilities

Building world class sporting facilities will both build the reputation of the Region and attract interstate and international visitors.

� � �



4.2.1 Response options

No single intervention typically addresses all problems. Rather, a combination of interventions is

required. Five strategic options have been identified based on combinations of the identified

interventions, as outlined in the following table.

Table 17: Strategic interventions and response options

Response options

Option 1 Option 2 Option 3 Option 4 Option 5

Interventions Business as usual /

Do nothing

Reduce social disadvantage in the Great Ocean Road

Region

Enhance tourism

attractions in the Great

Ocean Road Region

Enhance Victorian offering

through elite sport

Utilise sports and wellbeing

to improve nature based

tourism offering in the Great Ocean Road Region

Government supports industry development in the Region

40% 20% 20% 20%

Explore and invest in community infrastructure options

40%

Increase welfare support for local residents

20%

Invest in high yield tourism assets 40% 20% 30%

Improved quality and quantity of accommodation in the Region

40% 30%

Increased support for VIS and AIS programs and facilities

10%

Increased financial support to secure major events

20%

Invest in independent world class sporting facilities

30% 20%

As Option 1, “Do nothing” is not a viable solution, it has been removed from the list of potential

options in the assessment below

4.2.2 Ranking of response options

An evaluation of the response options was undertaken. The assessment includes consideration of how well the options delivered against the benefits, option risks, dis-benefits and timeframe.

This analysis is presented over the page.



Table 18: Evaluation of response options

`

Response options

Option 2 Option 3 Option 4 Option 5

Benefits Reduce social disadvantage in the Great Ocean Road

Region

Enhance tourism attractions in the Great

Ocean Road Region

Enhance Victorian offering through elite

sport

Utilise sports and wellbeing to improve

tourism offering in the Great Ocean Road

Region

Percentage of full benefit to be delivered 41% 51% 48% 73%

1 Improved wellbeing within the Region including better health (mental and physical) and community pride and reduced social disadvantage

35% 4/5 1/5 2/5 3/5

2 Improved tourism experience and yield in the Region 45% 1/5 4/5 2/5 4/5

3 Improved competitiveness to win the right to host major events in Victoria 20% 1/5 2/5 4/5 4/5

Total (out of 15) 6/15 7/15 8/15 11/15

Total (weighted %) 41% 51% 48% 73%

Risks

Great Ocean Road Region does not deliver on its desired economic activity to the detriment of local residents and businesses

High Med High Low

Victoria loses its status as the sports capital of Australia High High Medium Low

Great Ocean Road Region becomes dependant on government subsidies and handouts

High Low Low Low

Environmental damage to the Great Ocean Road Region Low Med Low Med

Dis-benefits

Negative impacts that are certain to occur as a direct consequence of implementing this option.

Increased ongoing costs to government to support the Greater Ocean Road

Region.

- - -

Cost

Government Capital Cost Medium Medium Medium Low

Government Ongoing Costs Ongoing government support required

N/a or minimal Ongoing government support required

N/a or minimal



Private Sector Investment None or Low High Low High

Timeframe for delivery

Years to deliver or provide support Ongoing 3-5 years 1-3 years 3-5 years

Ranking

1-4 4 2 3 1



4.3 Recommended response option

Strategic Option 5 is the preferred option. This option is likely to deliver the most benefit including addressing lack of quality and quantity tourism attractions, improved health and wellbeing, reduced social disadvantage for the local community as well as supporting Victoria’s reputation as the sporting capital of Australia.

The viability of Strategic Option 4 is dependent upon the development of a world-class facility which not only attracts elite athletes but also provides significant draw card for local, interstate and international tourism to the Region. Strategic Option 4 also does not address the pressing problem of a lack of quality and quantity tourism attractions and facilities.

Strategic Option 3 involves private sector investment (and potentially some government investment) in tourism facilities (accommodation and other attractions) in the local region, but does not address the social disadvantage nor does it address risks to Victoria’s reputation as the sports capital. This option will also be considered further in the project options analysis as a comparator to Strategic Option 5.

Strategic Option 2 only addresses issues around social disadvantage and relies fully on ongoing government support to do so. Strategic Option 4 improves Victoria’s competitiveness for elite sports but does not address local disadvantage issues in the Great Ocean Road Region. For these reasons these options are not further investigated.

The recommendation is for Strategic Option 4 and Strategic Option 2 proceed to a full study to validate the viability, socio-economic benefits and financial benefits. Strategic Option 5 and Strategic Option 3 will be tested fully in the detailed project options analysis. Strategic Option 1 (do nothing scenario) will also be considered as a Base Case.



Section 5:

Project options



5. Project options

Summary

This section provides an overview of the project options considered. Three project options were developed and assessed for consideration:

• Base Case – Do Nothing. The Base Case describes what will happen in the event of no investment • Project Option 1 – CORA – An elite sports training facility, accommodation and retail village in the Surf Coast,

Victoria. • Project Option 2 – Provides accommodation and a retail village in the Surf Coast

Project Option 1 is the preferred option. The preferred option has been developed over a two year period with input from Daryl Pelchen Architects, Proleisure, MediaCom and Multiplex. The project is proposed to be located in Modewarre, within close distance of Geelong, Avalon Airport and Melbourne Airport.

Project Option 1 includes the following components:

• Accommodation for visitors and elite athletes comprising of a 4 and 5 star low rise hotel with 128 rooms, 22 eco-lodges and 15 lakeside surf eco-lodges and a wellness facility

• Retail and Commercial Village comprising of approximately 15 tenants and potentially incorporating: food and beverage offerings, an art gallery and sculpture trail, retail outlets and a micro-brewery

• Elite sports training facility – including sporting facilities such as: MCG orientated AFL oval, soccer pitches, cricket field, rugby pitch, tennis courts, aquatic centre, sprung floor gymnasium, fitness gymnasium, athletics track, beach volleyball sand pit, cycling paths, running and fitness paths and media centre

• Sports science hub and educational facility • Sports and recreational for public use (gym and surfing wave pool) • Organic farm • Residential development of 48 lots with housing, half of these will be available as accommodation for visitors

(Retreat Homestead), the remaining will be sold

• Cycle paths and an on-site helicopter pad • It is CORA’s ambition that the development will help build a case for the Government to reinstate Moriac Train

Station (on an existing rail line).

Project Option 2:

• Project Option 2 is a scaled down version of the CORA facility where the elite sport components of the project will not be constructed. This includes sporting facilities, the sports science hub and the educational facility

• Option 2 will still provide accommodation, residential and retail offerings as well as the wave pool.

CORA plans to be responsible for the overall operation of the facility and will bring in a number of partners and tenants to manage parts of the site.

The land is currently within the Rural Conservation Zone & Farming Zone. The proposed Planning Scheme Amendment will seek to rezone the entire CORA site to a Special Use Zone. CORA’s proponents aim to start construction by mid-2018 and the facility will be operational by 2020-21. By 2025-26 it is expected that CORA will have reached a steady state of visitor numbers.

Further analysis and assessment of the Project Options is provided in Section 6.

5.1 Project Options Development

This section provides descriptions of three Project Options which will be considered as part of this business case. The three Project Options are:

• The Base Case: Describes the “do nothing” case; what would happen in the case of no investment.

• Project Option 1: The proposed CORA development, incorporating both a tourism offering and elite sports training facility

• Project Option 2: A tourism development only (no elite sports training)

Each of these project options are described in more detail below.



5.2 The Base Case

The Base Case is effectively the status quo or ‘do nothing’ option. There are no proposed works

and hence no capital costs associated with this project option. The Base Case also does not

address the problems identified in Section 2.1.

As discussed earlier, it is expected that under the Base Case, without additional investment in the

built tourism offering in the GORR, there would continue to be a low ratio of international overnight

to day visitors in the Region. In addition, those international visitors who do stay overnight would

continue to limit their average length of stay. This will continue to impact the Region’s ability to

generate higher yield and economic activity from international tourists.

In addition, Melbourne and Victoria’s ability to attract major sporting events is expected to continue

to become increasingly difficult in a progressively more competitive landscape. With a greater focus

on bid fund and limited budget available, this will begin to impact Victoria’s ability to win the rights to

host major sporting events and eventually our reputation as the sporting capital of Australia.

Without increasing the size of the bid fund and/or a unique proposition which enhances our bidding

strategies, Melbourne is likely to be left behind.

There will continue to be limited meaningful employment opportunities within the Surf Coast Shire

and this is likely to ingrain the pockets of social and economic disadvantage within the Region.

Without additional employment drivers it will be difficult to reduce the pockets of youth

unemployment within the Region. In addition, a number of residents within the Region will either

have to continue to travel significant distances to obtain work, if these distances become too great

then the Surf Coast Shire may have difficultly retaining skilled labour in the local area.

5.3 Option 1: CORA

Option 1 is the Cape Otway Road Australia (CORA). CORA is a unique accommodation, wellbeing retreat and elite sports training facility that will attract a new, high yielding visitor market to the GORR.

5.3.1 Facilities

Project Option 1 includes the following proposed components:

• Accommodation for visitors and elite athletes comprising of a 4 and 5 star low rise hotel with 128 rooms, 22 eco-lodges and 15 lakeside surf eco-lodges and a wellness facility

• Retail and Commercial Village comprising of approximately 15 tenants and potentially incorporating: food and beverage offerings, an art gallery and sculpture trail, retail outlets and a micro-brewery

• Elite sports training facility – including sporting facilities such as: MCG orientated AFL oval, soccer pitches, cricket field, rugby pitch, tennis courts, aquatic centre, indoor sports hall for basketball and netball, fitness gymnasium, athletics track, beach volleyball sand pit, cycling paths, running and fitness paths and media centre

• Sports science hub and educational facility

• Sports and recreational for public use (gym and surfing wave pool)

• Organic farm

• Residential development of 48 lots with housing, half of these will be available as accommodation for visitors (Retreat Homestead), the remaining will be sold to help support investor return in ramp up phase

• Cycle paths and an on-site helicopter pad

• It is CORA’s ambition that the development will help build a case for the Government to reinstate Moriac Train Station (on an existing rail line)

CORA will occupy more than 240 hectares (600 acres) of which 80 hectares (200 acres) will be set aside for conservation. We will work with Trust for Nature to put a covenant on the land that CORA will manage.



A more detailed description of each of the project elements above is provided in Section 5.5, a site plan for Project Option 1 CORA is provided over the page in Figure 8. Further work and demand assessment will be undertaken to assess these components for their viability.

5.3.2 Project Team

The CORA project team have developed the proposed option over a three year period. The options have been developed with significant input from:

• Daryl Pelchen Architects – Daryl Pelchen Architects bring experience designing residential, commercial, and educational projects. Daryl Pelchen is one of the Directors of CORA and has lived in the Surf Coast Shire for five years.

• Proleisure ––Proleisure have extensive experience developing and running state to the art sports infrastructure in Australia and globally and have provided input to the design requirements for the sporting facilities at CORA. Nick Garcia from Proleisure is the proposed Project Director and will continue to be supported by a Proleisure team in Australia, New York and Manchester. The CORA project has encouraged Proleisure to open an Australian office in the region and recruit at least one more person (ideally locally) for the next phase (until 1 October 2018) of the project

• MediaCom Sport & Entertainment – one of the world’s leading global media and sponsorship agencies, MediaCom have provided input on all commercial revenue, focusing on sponsorship strategy and sales and corporate and international sport usage revenues.

• Multiplex – is a leading global contractor with experience creating large-scale buildings and landmarks. Multiplex are the preferred construction contractor and have provided engineering and technical direction into the development process.

5.3.3 Location

CORA will be located in Modewarre. Key destinations from Modewarre are:

• Deakin University (Waurn Ponds) and Epworth Hospital – 15 to 20 minutes

• Bells Beach and the Great Ocean Road - 25 minutes

• The 12 Apostles - 95 minutes

• Geelong City Centre – 20 minutes

• Avalon Airport - 35 minutes

• Melbourne CBD – 75 minutes

• MCG and Melbourne Park - 80 minutes

• Melbourne Airport – 80 minutes



Figure 9 Key destinations from Modewarre (map)

5.3.4 Funding, operating structure and revenues

CORA plans to be responsible for the construction and overall operation of the facility and will bring in a number of partners and tenants to manage parts of the site. Key elements of the funding, operational structure and revenues are:

• CORA will seek private sector investment to fund the capital costs needed to build the facility.

• It is currently planned that CORA would run the accommodation facilities (however these may be contracted out at a later date) and there would be room night revenue from visitors and elite athletes

• A separate sports operator will take over the elite sports training facilities and CORA would receive rent for these

• CORA will lease out all other components of the site to separate operators/partners who will pay CORA rent. These include:

• A university partner to operate the educational precinct

• A medical partner to operate the sports science hub

• A wave pool operator to operate the Surf Wave Pool

• A gymnasium and childcare operators for these respective facilities

• Leasing of retail, arts, food and beverage spaces within the village (it is also possible that a property operator may be brought in to manage this on CORA’s behalf)

• A food and beverage operator to run the food and beverage dining for elite athletes

• Sponsorship revenues for the site, which will provide corporate sponsors with a host of benefits, including IP, branding rights, access to the elite sports training facilities for corporate retreats and client functions

• Obtaining an Australian anchor tenant/s (sports team) for the facility

5.3.5 Regulatory and Planning Requirements

The land is currently within the Rural Conservation Zone & Farming Zone. The proposed Planning

Scheme Amendment will seek to rezone the entire CORA site to a Special Use Zone.



Since late 2015 the CORA project team have been engaging with the Surf Coast Shire and

Regional Development Victoria (RDV) to establish the detailed work that is required to support this

major proposal. The tasks have included:

• A range of supporting planning documents necessary for the detailed planning assessment of the proposal, which has included:

• A Flora & Fauna Assessment prepared by Ecology & Heritage Partners.

• A Hydrology Assessment prepared by Water Technology.

• A Traffic Impact Assessment prepared by Traffix Group.

• A Preliminary Cultural Heritage Assessment prepared by Ecology & Heritage Partners.

• A Land Capability Assessment prepared by MacLeod Consulting.

• A Servicing Infrastructure Assessment prepared by SMEC.

• A Landscape Masterplan prepared by Tract Consultants.

• A fire risk assessment by Terramatrix Pty Ltd

• Cultural heritage panel will be established

• Subsequent to the completion of the Flora & Fauna Assessment further detailed investigations are being undertaken to establish any potential triggers for an EES or an EPBC Referral. A Cultural Heritage Management Plan is currently commencing being undertaken.

• A Concept Masterplan has been prepared by Tract Consultants with the assistance of Williams Boag Architects.

• Preliminary community engagement was undertaken in the first week of December 2017 to gain an understanding of the community views.

5.3.6 Timing

CORA’s proponents aim to start early works by mid-2018 and the facility will be operational by the last quarter of 2019-20 (CORA timeline). By 2025-26 it is expected that CORA will have reached a steady state of visitor numbers. CORA are keen to showcase the facility while global leaders of sport are in the APAC region around the 2020 Tokyo Olympic and Paralympic Games. It is most likely that a delegation would look to visit immediately following the games, which would be mid / late August. However, it may also be possible to schedule pre-games delegation visits which would be late June early July 2020.



Figure 10 Site Plan for CORA (Option 1)



5.4 Option 2: A tourism development only

Option 2 involves tourism development only on the site.

5.4.1 Facilities

Option 2 is a scaled down version of Option 1. Option 2 excludes the following components of Option 1’s scope:

• Elite sports training facility - including sporting facilities such as: AFL oval, soccer pitches, cricket field, rugby pitch, tennis courts, aquatic centre, sprung floor gymnasium, fitness gymnasium, athletics track, beach volleyball sand pit, cycling paths, running and fitness paths and media centre

• Sports science hub

• Education precinct (University)

The following items remain in Option 2:

• Accommodation for visitors comprising of a 4 and 5 star low rise hotel with 128 rooms, 22 eco-lodges and 15 lakeside surf eco-lodges and a wellness facility located within the hotel

• Retail and Commercial Village comprising of approximately 15 tenants and potentially incorporating: food and beverage offerings, an art gallery and sculpture trail, retail outlets, surf museum and a micro-brewery

• Sports and recreational for public use (gym and surfing wave pool)

• Organic farm

• Residential development of 48 lots with housing, half of these will be available as accommodation for visitors (Retreat Homestead), the remaining will be sold to help support investor return in ramp up phase as this will still be necessary in Option 2

• Cycle paths and on-site helicopter pad.

CORA will occupy more than 240 hectares (600 acres) of which 80 hectares (200 acres) will be set aside for conservation and 25 hectares (60 acres, the area previously set aside for the elite sports facilities) will become general farming.

We will work with Trust for Nature to put a covenant on the land that CORA will manage.

5.4.2 Project Team

Without the elite sports training components, the project team would consist of Daryl Pelchen Architects and Multiplex.

5.4.3 Location

CORA will be located in Modewarre, as per Option 1.

5.4.4 Regulatory and Planning Approvals

As per Option 1.

5.4.5 Timing

As per Option 1, the facility is expected to be operational by 2019-20.

5.5 Detailed Description of project options

This section provides more detail on each of the key components of the project options. Table 19 below provides a summary of the eight key components of Project Option 1 and which are present in Option 2.

Table 19 Summary of components in each option



Base Case

Option 1 – CORA

Development

Option 2 – Tourism

Development Only

Accommodation - Yes As per Option 1

Elite Sports Training Facilities - Yes No

Sports Science Hub - Yes No

Education Precinct Yes No

Retail and Commercial - Yes As per Option 1

Sports and Recreational Facilities for the Public - Yes As per Option 1

Organic Farm Yes As per Option 1

Residential development - Yes As per Option 1



5.5.6 Accommodation

CORA will offer the highest standards of professional elite training facilities, including the capacity

for athletes and teams to stay on-site during training periods in purpose-built accommodation that

supports and amplifies their health and wellbeing.

Extending this, CORA’s innovative concept invites the discerning active public to use elite athlete

facilities to enhance their own health and performance, as well as the opportunity to stay in

accommodation designed specifically for elite athletes, an opportunity available nowhere else in

Australia. CORA aims to assist its guests live healthy lives to deliver peak performance, the

accommodation offering is a core component of the CORA offering, and provides a unique point of

difference from other accommodation offerings, not only within the Region, but within Australia.

All rooms within the CORA development will feature:

• Private en-suite

• Ergonomic, plus-size bed with sports performance mattress to optimize sleep and recovery

• Black-out blinds

• Advanced air filtration

• Hypo-allergenic flooring and materials

• Temperature and lighting systems for individual control

• Electrical wiring and fixtures designed for minimal noise and disruption

• Power rain showers in bathrooms

Scope

Accommodation will be available across three categories, offering a total of four different types of

rooms. All accommodation categories will be made available to both sporting and public markets,

enabling maximum flexibility to sell room inventory.

Hotel:

• 128 hotel rooms, ranging from 28m2 to 75m2 suites with ability to sell as two rooms to increase flexibility of inventory

• Two-storey (Ground Floor + 1st Floor)

• Majority 4 star rooms, with top floor 5 star rooms and option to privatize access for elite athlete and team bookings.

• Fully serviced

• Positioned similar to Andaz hotel (part of the boutique luxury Hyatt brand) or more upmarket than the current Even hotel brand (healthy hotel brand from Intercontinental hotel group).

Lodge:

• 22 Eco Lodges and 15 Lakeside Surf Eco Lodges

• Each Eco Lodge will be a stand-alone, luxury 5 star 70m2 lodge featuring two bedrooms and en-suite with terrace and shared living space (no kitchen facilities)

• Eco Lodges are of same design and footprint, difference in room types is due to the positioning of the lodge on the site – those with more attractive views (Lakeside Surf Eco Lodges) command a rate premium

• Fully serviced

• Positioned similar to Jackalope (Mornington Peninsula), Soho Farmhouse (Oxfordshire, UK), Orchard Keepers (Mornington Peninsula)

Villa:

• 24 Homestead Retreats, 180m2 in size

• 5 star, 4 bedrooms with full kitchen facilities, indoor/outdoor living areas and terrace.

• Designed to accommodate families, addressing a currently underserved market in the region

• Limited services, with self-catering facilities

• Positioned similar to Ocean House (Great Ocean Road)



Integration with other facilities

The accommodation component of CORA is a critical element of creating an immersive, supportive

environment that assists in achieving wellness and peak performance, whether for elite athletes or

the active public. CORA will emphasise sleep and recovery as well as other wellness features

embedded within the accommodation facilities. CORA will:

• Set the benchmark for world-class standard for wellness as a way of living.

• Differentiate the facility from its competitors by offering a proposition currently unavailable in the Australian market.

Operation

• Currently financial projections have assumed that CORA would operate the accommodation facilities themselves. There is also the opportunity to appoint an operator to manage the accommodation facilities.

• To this end the project team has been in positive discussions with Lancemore Group, one of the leading operators in Victoria of boutique regional hotels including a substantial conferencing market. Lancemore have expressed interest in taking on management of all CORA accommodation and wellness components, operating the facilities on management agreement basis.

Figure 11 Hotel Accommodation (128 rooms for public and athletes)

Assessment of Demand

Based on domestic market analysis by Maurph, MediaCom and EY, CORA accommodation is

anticipated to both tap into existing demand for leisure travel in the Region, as well as grow the

visitor pie by attracting new markets including athlete audiences, wellness tourists, leisure visitors

interested to travel for arts and culture, sports and active fitness vacations, food and wine,

corporates and event groups.

Development of elite athlete-quality accommodation represents a unique proposition. It is

anticipated that the elite sports training facility will create a “halo effect” to attract significant

visitation from the active and health conscious leisure markets. These include families, couples and

groups, as well as corporate market demand seeking mental and/or physical performance programs

for team building, leadership and incentives.

The need for 4 and 5 star accommodation options to meet current and projected demand in the Surf

Coast Shire and GORR and has been identified across all levels of relevant government: local,

regional and State (See Problem 1). Importantly, there is a need to disperse overnight



accommodation offerings beyond the existing overcrowded Great Ocean Road coastal route, to

support dispersal of visitor traffic inland and to formulate a circuit.

CORA supports existing government strategy to attract Lifestyle Leader consumer markets

motivated to travel for wellbeing. According to the Global Wellness Institute33, wellness tourism is

defined as travel involving activities to maintain or improve one’s health and wellbeing. The sector

is worth over half a trillion US Dollars per year globally, it comprises of:

• Primary wellness tourism (travel for the sole purpose of health and wellness) and

• Secondary wellness tourism (wellness activities during any type of travel);

CORA targets both primary and secondary markets. Research demonstrates that wellness tourists

have a higher average spend than typical tourists and are a rapidly growing sector worldwide.

Between 2013 to 2015, Australia was ranked number one in the world as the fastest growing

market for wellness tourism trips (domestic and international), expanding 36.7% per year during this

period.34

This is reflective of Australia’s international reputation for clean air, its pristine environment,

premium quality food, as well growing appetite for wellness-oriented leisure travel in the domestic

market.

5.5.7 Elite sports training facility

CORA is a revolutionary athlete-focused sports training facility. Based on global research by MediaCom, CORA will be one of just six elite sports training facilities of this standard and design in the world, and the first in the Southern Hemisphere. CORA’s focus is elite sports training, rather than a game day stadium or spectator sport venues. In this way it will provide much needed ’back of house’ training facilities for travelling as well as local teams.

Scope

The elite sports training facility will include:

• MCG-orientated AFL oval

• Two soccer pitches

• Rugby Union and League pitch

• Eight tennis courts

• Aquatic centre with 50m pool

• Fitness gymnasium

• Athletics track

• Beach volleyball sand pit and running hill/stairs

• Cycling paths

• Running & fitness paths

CORA hotel accommodation as outlined above comprises 128 rooms over three levels. The elite athletes will have the opportunity to use the top level of the hotel (offering 5 star private accommodation for visiting teams). This level of the hotel can be zoned off to provide privacy needed by these travelling teams.

As described above, athlete’s rooms will be designed for optimum sleep and recovery, including blackout blinds, orthopaedic mattresses and soundproofing. The benefit of the CORA model is that the rooms will have a high quality and luxurious finish, as opposed to the functional minimalist appearance that most other athlete accommodation has. This means that the room will have as much appeal to big name athletes who want to relax and recover after a hard day’s training as well as a business executive and their family that are looking to do the same on a family holiday.

33 Global Wellness Institute, (2017), Global Wellness Economy Monitor report, 34 Global Wellness Institute, (2017), Global Wellness Economy Monitor report,



The elite sports training facility will also offer food and beverage including locally sourced food from CORA’s own organic farm, ensuring the best possible quality food to help athletes achieve optimum performance.

Operation

Currently financial projections have assumed CORA will receive revenues from visiting teams for

• Accommodation

• Food and beverage

• Pitch hire

• Media room hire

Additional revenue sources will include:

• Anchor tenancies as well as usage by other Australian major sports teams on an ad hoc basis

• Use of the facilities by both domestic and international corporate hire

• Naming rights and sponsorship revenue

In order to deliver these revenues the following would be required:

Anchor tenancy

CORA intend to sign a contract with an anchor sports tenant. To date, the Geelong Football Club has expressed a desire both privately to CORA, and publically through the media, for a long-term partnership that will provide them access to CORA and provide them with an extension of their facilities at Kardinia Park and Waurn Ponds at Deakin University. Beyond providing long-term income to CORA, anchor tenants also help to build the halo effect that will attract sports fans to stay at CORA as well as validate the quality of the proposition for elite athletes around the world.

Commercial Partner

CORA has partnered with MediaCom, a market leading media and communications agency in the

sports and entertainment sector. MediaCom has advised that they can conduct a global search for

a portfolio of like-minded brands to partner with CORA, pay sponsorship revenues and provide in-

kind merchandise or services.

MediaCom have advised that they have spoken to some of the world’s leading sporting

organisations to determine the requirements for a facility like CORA. These requirements have

been incorporated into CORA’s final design and proposition. MediaCom have advised that this will

assist them in selling the CORA proposition to sports teams and brands globally.

Figure 12 An example of elite sports training facilities gymnasium




The proponent group identified the need for a facility like CORA in the southern hemisphere based on research undertaken by MediaCom including discussions with leading global sports teams and rights holders, and the experience from Proleisure’s long term involvement in designing, operating and building some of the leading elite sports facilities in the world. They have identified a need for an elite sports training facility for warm weather training which can operate during the northern hemisphere winter. Key requirements for the elite sports market include:

• Proximity to major sports events - often tying pre-season and event training regimes around major event competition or exhibition games in the off-season

• Proximity to international travel links (international airports and/or private landing facilities)

• A ‘clean & healthy’ environment comprising of clean air, open space and good quality food

• The ability to access all required elements from a single base (training, dining and recreation in one controlled environment)

• Athlete centric gyms to enable training through leading sports science and medical support

Within any sporting calendar, teams take time to pull athletes out of their daily routine and climate to enhance their performance. Whilst the approach differs from one sport to another, to take the example of a big European soccer team, it will often include:

• May - Post Season tour: Training, team building and friendly matches

• July- Pre-season training: Conditioning, skills development, integrating new players, friendly matches or participation in non FIFA Tournaments e.g. The International Champions Cup

• December/January - Warm weather training / mid-winter break: exhibition match

• Ad Hoc: Tours with selected players, management team development camps, player recovery

When we consider this demand across the nine major sports that CORA will cater for on a domestic and global level along with the staggering of their respective competitions throughout the year, we anticipate significant year-round usage from elite teams, leagues, bodies and athletes looking for outstanding sports training facilities and the opportunity to switch off and recharge. See usage timeline below.

It is CORA’s intention that a leading global company such as Proleisure operate these elite sports training facilities to ensure consistent quality and product evolution in line with market demand.

Figure 13 Timeline of activity for sports in Australia



5.5.8 Sport Science Hub and Education Precinct

Scope

The scope of the education precinct and the sports science hub is yet to be finalised. It is expected that the next phase of design will occur alongside the preferred university partner, it will likely incorporate several sports science laboratories and a Hypoxic chamber. The sports science hub will focus on:

• Fitness, health and development

• Athlete performance

• Athlete training

• Rehabilitation (post any surgery) and services such as physio.

Operations

To deliver and operate the sports science hub and education precinct CORA will partner with a major university and a medical partner.

Benefits

The benefit of having this facility located next to elite athlete performance facilities are that it will act as an incubator for the symbiotic relationship between athletes and sports scientists; across R&D as well as athlete development and rehabilitation. From early conversations with Deakin University CORA believes there is an opportunity to create a campus at CORA. This tertiary location will offer teaching staff the chance to work at a world leading facility, designed around the needs of the university, but close to world-class athletes. Staff and students will be able to immerse themselves in the theory and practical aspects of their course and it provides opportunities for collaborations for R&D between scientists and athletes such as the one that exists between Melbourne City FC and La Trobe University in Melbourne.

Following conversations CORA has had with potential tenants, we believe there is an opportunity for the university components to be run by Deakin and the sports medicine and rehabilitation to be run by Epworth hospital. This would provide the opportunity to keep diagnosis and intervention (at the existing Epworth Hospital) and locate rehabilitation at (CORA Epworth hospital site).

Figure 14 Sports Science Hub and Education Precinct



5.5.9 Retail and Commercial

Scope

Unlike typical destination attractions where retail in included to tap into visitor footfall, CORA’s retail

and commercial precinct has been planned by the CORA team to be a drawcard in its own right.

The retail and commercial offering, featuring 15 lots, will emphasize CORA’s rural, healthy lifestyle

and creative values and will appeal to the conscious consumer. A key driver behind the retail and

commercial offering is to promote ‘Brand Australia’ to the rest of the world. As a result the mix will

include the best of Australia in terms of food, homewares, arts, surf brands and others. The offering

highlights a combination of local, national, world-famous brands and others regionally recognized

and emerging. All brands will honour the local heritage of the Region, provide the highest quality

craftsmanship, encompasses the maker spirit and create a unique experience.

Food & Beverage

• A planned mix of food and beverage tenants. These are yet to be confirmed but could include a microbrewery, a selection of paddock-to-plate restaurants for a variety of cuisines and budgets, a bakery to supply the restaurants onsite and retail to consumers, patisserie items and sandwiches, a gelateria showcasing farm-fresh milk-to-ice cream demonstrations and a fresh food market hall that invites local community farmers and providores to sell their own produce including cheese, meat and wine.

Specialist Retail

• Lifestyle retail including quality homewares that honour Australia, brand flagship concept stores for bath and body, athleisure and swimwear that offer best in class product

Arts

• Two world-class art galleries: one indigenous, one showcasing contemporary Australian and International art,

• A Sculpture Trail to enable global artistic collaborations

• Artist in Residence program to nurture the next generation of artists and host demonstration events.

Wellness Centre

• Designed as a must-do, all-season activity. Located as a sanctuary remote from other facilities, the Wellness Centre will cover two floors will and wrap around an interior fragrance garden.

• Ground floor services include reflexology foot massage, yoga, pilates and meditation. The upper floor will offer exclusive body and facial treatments together with beauty salon and grooming services. To encourage guests to stay all day, a raw bar will offer healthy spa cuisine.

• CORA’s interior heat/steam circuit will be centred around a cosy fireplace featuring hammam, rasul mud rooms, salt cave and hot stone walks inspired by the volcanic evolution of the Region, together with a snow room and ice fountain.

• By day it will offer an accessibly-priced signature experience and at night it will host intimate performance events such as private concert series for CORA hotel guests.

Surfing Museum

• CORA has established some interest from the Surf Coast Shire Council around a possible relocation of the existing surfing museum in Torquay to CORA, the Surfing Museum celebrates the spiritual home of Australia’s surfing and trace development of the sport’s history.

• The facility is envisaged to be deeply immersive featuring digital and highly interactive displays.

Cooking School

• Will offer a program of cooking classes and a platform to host notable chefs to demonstrate optimal transformation of farm fresh produce into creative cuisine.



Support Services

• Child Care: For at least 90 children, to offer convenient services and enable support for local parents to participate in CORA’s workforce and business community.

• Distribution Centre: To offer ‘Click and Collect’ services for each tenant for ease of purchasing.

Integration with other facilities

The retail and commercial component intends to complement and enhance the elite sport focus

providing athletes with somewhere to decompress around training. It will also be an attraction in

itself, attracting visitors to CORA, providing them with a range of stimulating experiences not

available elsewhere.

This component of the precinct will provide good balance to the technical and physical aspects of

the sports and fitness education that CORA offers. This component of the development will support

athletes to master mindfulness, nutrition and enhance their creativity. This is collectively expected

to promote ‘Flow’ states in athletes. Neuroscience research supports findings that peak

performance, cultivated by elite athletes, artists and entrepreneurs, is achieved when functioning

within the state of ‘Flow’. Assembling this cross-pollination of disciplines is central to CORA’s

unique positioning, enabling translation of elite training methods to the wider public while

introducing new methods of constructive, creative downtime to athletes that serve to improve their

performance.

In turn, over time the unique combination CORA operators and activities available can facilitate

CORA to become a research and think tank to share the latest findings on enhancing elite

performance across disciplines. This would have the potential to establish CORA as an influential

voice to complement its Sports Education component.

Operations

Operationally, the retail village will function in a similar way to a shopping centre model with CORA

group marketing services promoting the destination via marketing contributions from tenants. A

digital marketing platform will be available to either plug into existing tenant websites or offer a web

portal for sale of online product for emerging brands and local businesses.

Each element of the precinct will be carefully curated to showcase aligned brands with concept-

driven, immersive experiences designed to leverage omni-channel retail (similar to Ham Yard

Village by Firmdale Hotels in the UK). This omni-channel strategy enables access for local

business to a global marketplace, marketing the unique values and community of CORA / Cape

Otway region.

Crucially, the particular mix of established tenants bring a substantial ready collective customer

database available to CORA to tap into from day one of opening, affording significant immediate

exposure to manage the risk and support the quick ramp-up of the retail component of the project.


The upmarket yet small-scale offering will be presented within a retail village concept, featuring

Australian rural vernacular design to encourage year-round visitation by:

• Day visitors: Offering signature experiences that educate through entertainment and interaction, showcasing some of Australia’s best-loved and emerging brands and artists and their stories.

• Overnight Guests: High quality accommodation with a comprehensive overall offering that makes CORA a holiday destination. A number of activities will occur on site that are exclusive to overnight guests, such as performances within the Wellness Centre, available only to those staying at CORA to encourage overnight stay and develop winter attractions.

• Athletes: To complement and enhance their training by providing immersive creative activities that allow athletes to decompress while engaging in activities that promote achieving focus and peak performance.



• Corporates: For companies seeking to create the edge in leadership for their people, CORA will offer holistic programs stemming from athlete mind-body training methods integrated with nutrition and creativity as a model for integrated healthy living.

This component of CORA is also pivotal to instigate opportunity for the regional community in terms of employment options but equally important in creating a platform to market and distribute handcrafted products and foster locally-owned businesses. CORA has been modelled on international destinations that have achieved notable success in regenerating regional community through art, culture and retail. Such as Hauser & Wirth Somerset (Bruton, UK), Naoshima Island (Japan), Marfa (Texas, USA), Babylonstoren (South Africa), Fogo Island (Newfoundland, Canada) and MONA (Berriedale, Tasmania).

5.5.10 Sport and Recreational for Public Use

Scope

There will be two key sports facilities for public use. These are:

• Wave pool for surfing

• Gymnasium

CORA will include a state of the art wave pool, generating up to 1,000 waves per hour, up to 2m

high (refer Figure 15). The Wave pool is the same size as an AFL oval and CORA have consulted

with URBNSURF who have estimated that the pool will attract 478 people per day. This will be a

mix of people free surfing, undertaking lessons and general admission (for viewing). Revenues also

include admission, lessons, hire of surfboards and wetsuits, membership revenue and events and

functions revenue. This figure has been derived from benchmarks from other facilities around the

world.

Operations

CORA is speaking with two of the leading wave pool designers to find the most suitable and interested operator.


Demand for the wave pool has been assessed by URBNSURF and Proleisure have conducted specific discussions with the surf industry. The wave pool is expected to have a number of audiences including:

• Surf Industry: R&D and Athlete Development. CORA have had conversations with Rip Curl and Quiksilver who have both expressed an interest in partnering with this facility due to its proximity to their headquarters in Torquay and major World Surf League tournament, the Bells Beach Pro. They have also expressed an interest in using it as a facility for both R&D and / or athlete development. CORA have also had discussions with Adam Robertson, CEO of Surfing Victoria who is enthusiastic about the opportunity to use the wave pool for elite surfer training

• Elite Athletes: Post training relaxation. It is expected that some of the athletes using elite sports training facilities will have an interest in undertaking some surfing while in the Region. The risk of injury is greatly reduced in a wave pool compared with the open ocean; as a result it is expected that many coaches and managers will allow athletes to use the Wave Pool as a recreational facility to blow off some steam after a hard training session

• Learners: Research shows that learners in a wave pool can not only stand up, but also learn to traverse a wave in their first lesson, a feat that can take months in the open ocean. Research also shows twice as many people would take up surfing if it were in a controlled environment such as a wave pool.

• Intermediate surfers: Are a target market, The wave pool will provide the opportunity to improve performance through coaching and video analysis. The wave pool will target the large surfing community in Victoria and also the visiting tourists that stay in the hotel on ‘surfing training camps’. The wave pool will allow users to practice in the wave pool, before they take their refined skills to the nearby famous beaches of the Surf Coast.



Figure 15 Wave pool and Eco Lodges

5.5.11 Organic Farm

The organic produce grown on the CORA farm will be served in restaurants onsite. Prepared by signature chefs with a focus on healthy food and demonstrating the quality and purity of the Region’s produce and the local environment.

Early discussions with Marcus Oldham College, a local tertiary agricultural institution, have indicated that there is interest in being involved with CORA. It is intended that the organic farm provide both educational and promotional benefits for the Regions capacity and reputation as a ‘food bowl’.

While Proleisure have stressed the relevance of good food to athletes, MediaCom’s analysis of the facilities ability to utilise elite sport and signature chefs via social media to amplify the Region’s capacity to produce exceptional food products is particularly attractive globally.

5.5.12 Residential development

In total 48 eco-village retreat homesteads will be developed on the site. It is proposed that 24 of these will be sold to help mitigate financier risk and the remaining 24 will be available to rent as family accommodation for CORA.

MediaCom’s research indicates that there are a number of elite athletes who travel with family members and this form of accommodation will specifically address their requirements.

All individual dwellings are planned to include a shared productive landscape such as veggies patches and/or orchards, under CORA management. These will help serve the restaurants. The residences are to demonstrate best practice Environmental Sustainable Design with those to be sold targeting purchasers with a similar sensibility to that which will inform CORA.

The dwellings are aiming to achieve Leadership in Energy and Environmental Design (LEED) platinum standard through sustainable practices that have minimal impact on the environment. It is anticipated that they will include both ‘on site professionals’ and commuters characterised by a want to seek CORA’s lifestyle offering and membership access to many of CORA’s facilities.



Section 6:

Options

Assessment



6. Options Assessment

This section of the business case assesses and compares the three project options and determines a preferred option. They comprise of:

• Option 1 (Preferred) - Complete option including Surf Park and public gym, Accommodation, Retail, Elite Sports (training, research, teaching), Media Centre, Organic Farm

• Option 2 – As per preferred option excluding elite sports (training, research, teaching)

• Base Case - Do nothing

The details of the preferred option are discussed in more detail in Section 7.

The assessment includes the following sections:

• Stakeholder identification and consultation: An overview of stakeholder interests and their likely positions or preferences as they relate to the options considered.

• Financial Assessment: An incremental whole of life costs compared to the Base Case (do nothing). This analysis includes the capital costs, operating revenues, operating costs and asset maintenance costs.

• Economic Impact Assessment: This section considers the economic impact on the surrounding region as a result of the project. An economic impact assessment has been undertaken for both Project Options 1 and 2. Assessment estimates the direct and indirect output, value add and jobs.

• Socio-economic and environmental assessment: This section considers the economic, social and environmental impacts of Project Option 1 and Project Option 2 compared to the Base Case. This assessment is mostly qualitative, but relies upon quantitative data where it is available. All benefits (social, economic and environmental) are scored using agreed criteria and weighting to deliver a non-financial benefits score.

• Risk comparison: This is a high level comparison of the risks which differentiate each of the project options.

These assessments are undertaken in the following sections, after which a preferred option is determined.

6.1 Stakeholder identification and consultation

As the project has been in development for two years, a significant amount of stakeholder and community consultation has already occurred. As can be seen Table 20 there are a wide range of stakeholders to the project including project partners, local and state governments, regional bodies, state and commonwealth tourism agencies, Victorian service delivery departments, the public and local community, central agencies and investors.

CORA have been in discussion with the Surf Coast Shire and the Victorian Government about the project for approximately two years. On Wednesday 22 November 2017, CORA held a public launch event that introduced the project to a number of stakeholders and the community.

CORA also intend to partner with a number of key organisations, and whilst it is too early to confirm who these partners will be, CORA has spoken with a number of organisations based in the Region, who they feel offer the best brand and operational fit for the CORA vision. Broadly speaking these cover two areas;

• Larger scale, longer-term strategic partnerships such as an Educational, Medical and Professional Sporting Team partners.

• Local and regional partners and suppliers for the retail village that represent CORA and cement the ‘Brand Australia’ proposition

Table 20 below outlines the key stakeholders, their interest in the project and project options (where applicable), as well as the consultation that has occurred to date. The proposed ongoing consultation and management of stakeholders is presented in Section 7.9.



Table 20: Stakeholders

Stakeholder Interest in project Consultation to date and any views of stakeholders

Key Project Team Members

Proleisure Proleisure, are a provider of leadership and expertise in the development of world leading sports infrastructure & leisure management.

Proleisure will be the facility and project manager (also referred to as the Owner Representative) and will be responsible for oversight over the project during delivery and facility operation following commissioning.

CORA have closely engaged with Proleisure and have designated that Proleisure will be the lead agency who will drive the project for the next phase (Dec 1 – Oct 1, 2018), overseeing all component parts with the interests of the entire project in equal measure.

Preferred Option is Option 1.

MediaCom MediaCom Sport & Entertainment, is a sport and entertainment sponsorship division of MediaCom. It utilizes brand, sector, consumer, and sponsorship insights to help clients drive maximum scale, impact, and efficiency from their investments in sport and entertainment.

MediaCom will be responsible to lead and attract commercial revenue through sponsorships and sport usage. To date they have provided estimates of what they believe is reasonable and in the operational phase they will be responsible for achieve the targets set. MediaCom will receive a commission on all commercial revenues generated.

CORA have agreed with MediaCom that they will have exclusive responsibility for the sponsorship sales strategy, planning and execution for all CORA sponsors. They will also have non-exclusive responsibility for sourcing international sports teams to visit and train at CORA including media.


Key Project Partners

Deakin University Deakin University, is a Melbourne based university with a campus in Geelong. Deakin has a world leading reputation in the academic areas of sports science and sport management.

Deakin’s primary interest in partnering with CORA is to enhance the university’s international ranking, thereby attracting & retaining the world’s best academics and improving the student outcome- experience.

CORA has held two meetings with Vice Chancellor Jane den Hollander, Kean Selway (COO) and her team (including Prof. David Shilbury.)

CORA advise that there is strong interest from Deakin on a long-term partnership that will encompass sports performance development and educational opportunities including R&D. Both parties have agreed to further workshops to identify scale of opportunity and details of involvement. The first of these is scheduled for Feb 1st.and will include Proleisure, Daryl Pelchen and key people from Deakin including Kean Selway, Professor David Shilbury and Professor David Crawford.

A letter of intent from Deakin is provided in Appendix C – Letters of Intent


Geelong Football Club The Geelong Football Club (GFC) is a professional AFL club based in the city of Geelong.

GFC is interested in developing a partnership with CORA to provide an alternate training venue and sports science research opportunities. GFC already have a partnership with Deakin University for training facilities.

CORA held a workshop with Brian Cook, Bob Gartland and Simon Lloyd (and Justin Reeves previously) where it was identified that there may be an opportunity for a long-term partnership between CORA and GFC. Details of the partnership are yet to be discussed and confirmed but are likely to be focused on an anchor tenancy or arrangement for use of training facilities for GFC.

Brian Cook has since publically supported CORA and the GFC ambition for a long-term partnership.





Epworth Hospital Epworth Hospital is a provider of acute medical, surgical and rehabilitation services in Melbourne and Geelong. Epworth Geelong is a not-for-profit, private hospital, combining more than 95 years of Epworth HealthCare’s experience. With an expert team of local staff and doctors who provide an outstanding healthcare facility of choice for Greater Geelong and South West Victoria. Epworth Geelong is the closest major health precinct to the CORA development at Modewarre. Epworth are interested in exploring a mutually beneficial partnership.

Initial meetings held with Epworth CEO Damian Armour indicate that Epworth is supportive of CORA and are keen to discuss how they can collaborate.


Rip Curl Rip Curl is a major Australian designer, manufacturer, and retailer of surfing sportswear and accompanying products, and a major athletic sponsor.

Rip Curl is a potential key partner of CORA and one of the strategic users of the surfing wave pool.

In an initial meeting held with Neil Ridgway, Chief Brand & Commercial Officer, Rip Curl established their interest in the project using the facility for developing elite athletes as a minimum. Both parties agreed to work together to define other opportunities in the coming weeks.

Marcus Oldham – organic farm

Marcus Oldham, operates a 200 hectare farm property at Waurn Ponds on the edge of Geelong near the subject site.

Early discussion have begun to discuss the opportunity to be the primary supplier of local organic produce for the CORA development.

Initial conversations had with Bruce Wilson, Chairman of Marcus Oldham College.

Marcus Oldham attended the launch and expressed an interest that Marcus Oldham be the Organic Farm Partner.

Local, State and Commonwealth Government

Surrounding Shires (Surf Coast Shire, Colac Otway Shire, Queenscliff Shire, City of Greater Geelong, Golden Plains Shire)

CORA will be located at Modewarre, which is part of the Surf Coast Shire. Surrounding shires including all G21 members: City of Greater Geelong, Colac Otway Shire, Queenscliff Shire and Golden Plains Shire.

These shires will provide CORA with a source of key visitor groups as well as providers of staffing and supplies for the CORA’s construction and ongoing operation. CORA will continue to engage with and obtain support from surrounding shires.

Multiple meetings including four formal Councillor presentations and close liaison with the executive over the past 24 months regarding both planning considerations and ‘project fit’ within the municipality.

Most significantly, Council has resolved to provide in-principle support for a request for rezoning and to write to the Minister seeking his intervention on the matter, which, if approved would allow for expedited timelines to meet the required project deadline as nominated by MediaCom.

G21 G21 is the formal alliance of government, business and community organisations working together to effectively manage growth in the Geelong region.

The CORA development will be a significant tourism and employment hub and contribute toward developing regional Victoria.

Given the projects regional significance, all five Municipalities within the G21 (including Surf Coast, City of Greater Geelong, Queenscliff, Golden Plains and Colac Otway) have been consulted on multiple occasions and as represented by the CEO Elaine Carbines offer broad project support.

City of Greater Geelong

The City of Greater Geelong caters for a population of approximately 230,000. Geelong will provide a significant source of visitation, staffing and suppliers to CORA. CORA will continue to engage with and obtain support from the City of Greater Geelong.





Regional Development Victoria is the lead agency in developing rural and regional Victoria. They are part of the Department of Environment, Land, Water and Planning.

Their focus is to support the Government’s vision of creating a stronger regional Victoria through job creation, better infrastructure and new investment.

The CORA development will be a significant tourism and employment hub and provide a strong economic contribution for regional Victoria. CORA will continue to engage with RDV throughout the course of the project.

Ongoing meetings have taken place with various RDV and State Government representatives including Unni Menon, Kathy Timmins and Hadden Finger locally and Bill Renehan (Tourism Victoria), John Panozzo and Amy Chan (Invest Victoria) who have provided feedback on the project.

Members of Parliament

Significant consultation has been undertaken with several Members of Parliament and their offices to obtain in principle support in a number of electorates.

Full briefings have been made with Tim Pallas, Lisa Neville, John Eren, Wade Noonan, Megan Berry (Jaala Putlford COS), and Christine Couzens, who have all indicated preliminary project support.

Other political briefings have included Richard Marles, Joanne Ryan, Sarah Henderson, Julie Bishop, Richard Riordan, Andrew Katos, Andrew Herrington and Steve Bracks who have all provided strong project endorsement and support.

Department of Economic Development, Jobs, Transport and Resources (DEDJTR)

The Department of Economic Development, Jobs, Transport and Resources works across multiple portfolios to increase jobs, investment, exports and opportunities in Victoria. The department provides an integrated and strategic approach to stimulate innovation, competitiveness, confidence and sustainability in Victoria's economy.

Full briefing with Justin Hanney.

Department of Treasury and Finance (DTF) and the Department of Premier and Cabinet (DPC)

The DTF is responsible for coordinating the effective management of Government assets.

DTF is interested in ensuring that the proposed project delivers a net benefit to the community and that it can deliver on the proposed scope and outputs within the estimated budget and agreed timelines.

DTF is also interested in ensuring that the project does not result in an increased ongoing financial burden to Government.

No consultation with DTF and DPC at this stage.

Department of Environment, Land, Water and Planning (DELWP)

The Department of Environment, Land, Water and Planning (DELWP) is a state government department responsible for protecting the environment, management of natural resources, managing water resources, planning, local government, fire and emergency management and property and land titles in the state of Victoria.

The DELWP will be closely involved in this Business Case and many other aspects of CORA’s construction.

Mark Gregory (DELWP) together with Surf Coast representatives Bill Cathcart (Planning Man.), Matt Taylor (Economic & Dev. Man.) and Keith Bailie (CEO) have provided the planning task list which via expert reports has identified no reasons why the development should not proceed.




Sport and Recreation Victoria (SRV)

Sport and Recreation Victoria (SRV) is a division of the Department for Victorian Communities.

SRV maximizes the economic and social benefits provided to all Victorians by the sport and recreation sectors through:

• Ensuring greater access and opportunities for sport and recreation participation by all Victorians;

• Maintaining Victoria's reputation as Australia's leading sporting and major events state;

• Improving the quality of community sport and recreation facilities;

• Strengthening the capacity of sport and recreation organisations; and

• Reinforcing the enriching role that sport and recreation plays in people's lives.

CORA has not engaged with SRV to date, however they intend to engage with them as the project progresses.

Visit Victoria Visit Victoria leads the Victorian tourism, business and major events sector. Visit Victoria focus is to revitalise the visitor economy to generate $36.5 billion in visitor spending by 2025 and support more than 320,700 jobs.

Visit Victoria’s prime objective is to drive Victoria to become Australia’s number one tourism destination by delivering strong and sustainable growth across the sector.

Both Damian de Bohun (GM), and Peter Bingeman have been briefed by one of the project’s international project proponents MediaCom and have indicated strong early support.

Public, Community and potential users

Surrounding land owners

Land owners will have a vested interest in ensuring that their own land value is not negatively impacted because of the CORA development. They will also be concerned by impacts during construction as well as during operation.

Various formal and informal meetings have been conducted with the immediate land owners.

Generally, all have expressed project support except for seven of the rural residential households in Connies Lane. Individual project briefings and will receive formal community engagement on December 4, 2017.

Ongoing consultation will aim to address their planning concerns given they are the most affected parties. Whilst it has taken time and understanding, negotiations with these parties are now broadly positive.

Indigenous groups Indigenous groups will have a close relationship with CORA to ensure that any cultural artefacts or sacred sites uncovered throughout the site testing and construction process are preserved and not damaged.

While preliminary cultural assessments have been made by Ecology & Heritage Partners, a Cultural Heritage Management Plan is currently being prepared together with the local Reconciliation Action Plan (RAP).




Industry Briefings A number of the CEOs and elite training leads from a range of sports have been consulted to ensure the project understands their requirements as well as the interest in a local world class athlete training facility.

While no direct communication has been made with government operated facilities, all industry briefings have been strongly supportive, including:

• Hugh Seward (Aust. Tennis Open Doctor)

• Bruce Kaidor (OMG Dir.),

• Anthony Moore (CEO Basketball Aust.)

• Gerard Murphy (Leading Teams)

• Gerry Ryan (Orica Scott)

• Ben Crowe (Unscripted)

• Craig Hill ASTN,

• Frank Bausch (Former USA swimming coach)

• Rohan Goetzke (IMG Dir, USA)

• Mark England (Team GB)

• Scott Munn (CEO, Melbourne City FC)

• Sir Howard Bernstein (Ex CEO, Manchester City Council)

Investors

Project investors/Banks

Investors and banks will be interested in the success of the project to ensure that they are paid back their investment, as well as any interest or returns over the course of the investment/loan life.

CORA have held conversation with a number of financial houses. Negotiations are still ongoing, with five parties shortlisted to assist with funding acquisition.

No firm commitments have been provided at this stage. It is expected that planning approval will be required before obtaining financing for the project.

Cape Otway Road Australia (CORA) Page 80 Cabinet-in-Confidence

6.2 Financial analysis

This section presents the capital and operating impacts (operating costs and revenues) for each project option compared to the Base Case, based on cost and revenues prepared by CORA. EY has undertaken a sensitivity analysis of these projections and that analysis is presented in Section 7.4 (Financial Analysis of the Preferred Option).

6.2.1 Key Assumptions

The financial analysis in this section includes:

• Capital costs based on costs plan prepared by Altus Group Quantity Surveyors (Altus Group)

• Operating revenues based on forecast provided by Maurph, Colliers and URBNSURF

• Operating costs based on forecast provided by Maurph, Colliers and URBNSURF

• Asset maintenance costs using similar facilities as benchmarks

Appraisal Timeframe

• 20 year assessment period

• Costs presented are incremental to the Base Case.

Capital Cost assumptions

Altus Group (qualified Quantity Surveyors) have prepared a detailed cost plan of the capital costs. Costs are based on recently tendered similar projects with appropriate allowances for site works, locality, design contingency, construction contingency and escalation. Subsequently it is Altus Group’s view the construction costs estimates are +/-10%.

A summary of the project costs is provided below and the detailed cost plan for both Options 1 and

2 are presented in Appendix E.

Key capital cost assumptions:

• Project capital costs include all accommodation, sports recreation, elite sports training, media, commercial and retail, support facilities, education precinct, site works, landscaping and site infrastructure.

• Costs are based on the masterplan drawings, detailed schedules of accommodation and benchmarking of similar facilities

• Detail design will continue in 2018 with construction to be completed over a two year period from 2018 to 2020.

• The construction is not currently planned to be staged resulting in the facility being operational in 2019-20

• The follow assumptions have been made as part of the cost plan:

• Authorities charges - 0.5%

• Escalation to tender - 3%, based on 12 months (November 2017 tender)

• Escalation during construction - 2.25% (based on 18 months construction)

• Design contingency - 5%

• Contract contingency - 6%

• Consultant fees - 8%

Operating Revenues

• Key sources of information for operating revenues were:

• URBNSURF (Surf Park / Wave Pool)

• Colliers International (real estate rental values)

• MediaCom (sponsorships and naming rights)

• EY has provided benchmark data to support occupation rates and room rates for the accommodation

• Maurph (visitor numbers, room occupancy and rates)


Sources of Revenue:

• Most of the revenue for CORA is rental income, as CORA intend to lease out the various components of the facility to long term partners (university precinct, sports science hub, wave pool, food and beverage, retail and commercial)

• The financial model shows that accommodation will be run by CORA, however it is likely a specialist hotelier will operate the accommodation (see Appendix G for room rates, occupancy and other accommodation information)

The key sources of revenue in order of their size are shown below.

Table 21 Breakdown of key revenues

Key revenue categories

Proportion of total Revenue

(2024-25)

Accommodation revenue (public overnight stay and athlete visitation) 40%

Sponsorships and naming rights 20%

Sport recreation services (e.g. wave pool, gym) 17%

Elite training facility and media (e.g. professional sports facility hire, sports hub rental, media centre and athlete food & beverage)

10%

Education (rental from tenant university) 8%

Commercial/retail rental (rental from food & beverage, retail outlets and galleries/other spaces) 5%

TOTAL 100 %

• The key partners / tenants will underpin the majority of revenue with additional revenue sourced from:

• Hiring sporting facilities to international and domestic teams

Operating Expenditure

• Key operating expenditures (in order of their size) are:

• Facilities management and operations (landscaping, support facilities)

• Facility Operations (a management team and land tax, non-recoverable rates and facility marketing costs)

• Accommodation servicing for all types of accommodation

• Asset maintenance of key buildings and facilities

• Retail lease outgoings

• Key sources of information for operating expenditures are:

• Market analysis of leasing costs provided by Colliers

• Market analysis of accommodation services by Maurph

• Wave pool operating expenses provided by URBNSURF

Table 22 Breakdown of key expenses

Key expense categories

Proportion of total expenses

(2024-25)

Accommodation (outgoings and maintenance) 57%

Facility management 22%

Commercial/retail expenses (outgoings, maintenance and management) 8%

Elite training facility and media (maintenance) 7%

Education (maintenance) 4%

Sport recreation (wave pool outgoings) 2%

TOTAL 100 %


Ownership and Management Structure and Costs

• CORA anticipate a site wide ownership and that it will enter long term lease arrangements with key partners / tenants such as university, health operators, elite teams, retailers and hoteliers.

• The CORA entity will be run by a management team governed by a Board of Directors. Key management roles and responsibilities included costs are a Chief Executive Officer, Chief Financial Officer, Chief Commercial Officer, Chief Operations Officer, Human Resources Director and function heads.

• Likely long term tenants who will assume operating costs for these facilities include:

• University partner

• Medical partner

• Local elite team

• Hotelier

• Retail tenants

• Art gallery tenants

• Restaurants and micro-brewery

6.2.2 Capital Costs

Project Option 1 – Capital Costs

The project capital costs for Project Option 1 have been estimated by Altus Group (Quantity Surveyors) and are summarised below in Table 23. Further detail is provided in Appendix E – Capital Cost Plans

Table 23 Project Option 1 Capital Costs ($ nominal)

Project Option 2 – Capital Costs

The project costs for Option 2 are provided below in Table 24. Project Option 2 excludes the following items:

• Elite sports training facility (Sports Performance)

• Media Centre

• Tertiary Education

• Sports Science Hub

The capital costs for Option 2 are shown below.

Table 24 Capital Costs Project Option 2 ($ nominal)

Capital costs 2017-18 2018-19 2019-20 2020-21 Total

Accommodation 23,981,823$ 53,694,883$ -$ -$ 77,676,706$

Sports recreation 16,982,172$ 27,272,783$ -$ -$ 44,254,955$

Sports performance 14,282,610$ 53,824,098$ -$ -$ 68,106,708$

Media 965,315$ 3,744,373$ -$ -$ 4,709,688$

Commercial 983,889$ 2,069,526$ 11,926,823$ -$ 14,980,238$

Support facilities 1,157,546$ 7,615,853$ 8,850,856$ -$ 17,624,255$

Tertiary Education 3,390,820$ 3,508,409$ 39,209,557$ 5,518,252$ 51,627,038$

Other (business case and site infrastrucutre) 5,398,892$ 26,479,542$ -$ -$ 31,878,434$

Landscaping, siteworks and services 2,110,130$ 24,150,793$ 14,580,618$ -$ 40,841,542$

Organic farm 203,350$ 803,085$ -$ -$ 1,006,436$

Capital costs 69,456,549$ 203,163,344$ 74,567,855$ 5,518,252$ 352,706,000$

Capital costs 2017-18 2018-19 2019-20 Total

Accommodation 23,535,470$ 53,676,893$ -$ 77,212,363$

Sports recreation 16,666,097$ 26,765,177$ -$ 43,431,275$

Commercial 965,577$ 2,031,008$ 11,704,839$ 14,701,424$

Support facilities 930,874$ 6,124,510$ 7,117,674$ 14,173,059$

Other (business case and site infrastructure) 5,298,407$ 26,968,088$ -$ 32,266,495$

Landscaping, siteworks and services 2,070,856$ 23,636,582$ 14,309,242$ 40,016,680$

Organic farm 199,566$ 788,138$ -$ 987,704$

Capital costs 49,666,848$ 139,990,397$ 33,131,755$ 222,789,000$


6.2.3 Revenue and Operating Expenditure

Project Option 1

The project will result in a number of operating revenues and expenses. The first five years of

revenues and expenses for Project Options 1 and Project Option 2 as advised by CORA are

provided below. All numbers are presented in (nominal terms).

Full details of all project costs and revenues over a 20 year period are provided in Appendix I –

Costs and Revenues.

Table 25 Project Option 1 (CORA) operating revenues and expenses first five years of operation ($Nominal)

2019-20 2020-21 2021-22 2022-23 2023-24

Revenue

Accommodation

Hotel income (public and visiting teams) $2,548,683 $6,295,274 $6,768,503 $7,564,400 $8,445,909

Public lodges and homesteads income $3,266,744 $8,247,171 $9,181,748 $9,997,134 $10,767,445

Commercial

Food & beverage rental income $72,834 $323,950 $774,027 $793,378 $813,212

Retail rental income $210,130 $572,888 $1,659,726 $1,701,219 $1,743,749

Services infrastructure rental income $0 $56,908 $229,054 $234,781 $240,650

Media

Media Centre hire income $53,184 $107,697 $110,390 $113,149 $115,978

Sport recreation

Wave pool rental income $1,836,839 $7,393,278 $7,578,110 $7,767,563 $7,961,752

Gym, pool and studio rental income $111,976 $450,705 $461,972 $473,522 $485,360

Elite training facility

Performance infrastructure rental income (pitch

hire, sports science, corporate hire, Australian

sports club usage and athlete F&B)$1,187,190 $4,778,438 $4,897,899 $5,020,346 $5,145,855

Sponsorships and naming rights income $2,282,229 $9,185,974 $9,415,623 $9,651,013 $9,892,289

Education

Tertiary facility rental income $0 $2,842,717 $3,861,357 $3,957,891 $4,056,839

Total revenue $11,569,809 $40,254,999 $44,938,410 $47,274,397 $49,669,038

Expenses

Accommodation

Hotel outgoings -$1,156,968 -$2,860,521 -$3,083,641 -$3,461,541 -$3,879,959

Accommodation maintenance -$121,743 -$297,345 -$304,778 -$312,398 -$320,208

Lodges and homestead outgoings -$908,466 -$2,293,715 -$2,554,588 -$2,782,190 -$2,995,726

Commercial

Commercial maintenance (retail, F&B and services) -$23,326 -$94,758 -$97,127 -$99,555 -$102,044

Commercial management - function heads -$171,522 -$392,103 -$401,906 -$411,953 -$422,252

Rental outgoings (retail, F&B and services) -$119,550 -$478,200 -$478,200 -$478,200 -$478,200

Management

Facility maintenance (landscaping and support assets) -$96,259 -$566,371 -$580,530 -$595,044 -$609,920

Facility operations (management team and overheads)-$1,035,423 -$2,069,432 -$2,121,168 -$2,174,197 -$2,228,552

Media

Media centre rental outgoings -$9,500 -$19,000 -$19,000 -$19,000 -$19,000

Sport recreation

Wave pool outgoings -$72,928 -$296,256 -$303,662 -$311,254 -$319,035


Elite training facility maintenance -$218,516 -$887,678 -$909,870 -$932,616 -$955,932

Education

Tertiary facility maintenance $0 -$335,953 -$457,726 -$469,169 -$480,898

Expenses -$3,934,201 -$10,591,332 -$11,312,196 -$12,047,117 -$12,811,725

Net total $7,635,609 $29,663,667 $33,626,214 $35,227,280 $36,857,313


Project Option 2

Table 26 Project Option 2 (Tourism Offering Only) operating revenues and expenses first five years of operation ($Nominal)

2019-20 2020-21 2021-22 2022-23 2023-24

Revenue

Accommodation

Athlete hotel income (public and visiting teams) $1,509,088 $3,749,796 $4,096,219 $4,699,972 $5,367,622

Public lodges and homesteads income $2,337,319 $5,927,460 $6,658,365 $7,293,498 $7,890,178

Commercial

Food & beverage rental income $72,834 $323,950 $774,027 $793,378 $813,212

Retail rental income $210,130 $572,888 $1,659,726 $1,701,219 $1,743,749

Services infrastructure rental income $0 $56,908 $229,054 $234,781 $240,650

Sport recreation

Wave pool rental income $1,836,839 $7,393,278 $7,578,110 $7,767,563 $7,961,752

Gym, pool and studio rental income $111,976 $450,705 $461,972 $473,522 $485,360

Total Revenue 6,078,187$ 18,474,985$ 21,457,474$ 22,963,932$ 24,502,524$

Expenses

Accommodation

Athlete hotel outgoings -$905,453 -$2,249,878 -$2,457,731 -$2,819,983 -$3,220,573

Accommodation maintenance -$121,743 -$297,345 -$304,778 -$312,398 -$320,208

Lodges and homestead outgoings -$812,707 -$2,061,225 -$2,316,286 -$2,537,930 -$2,744,679

Commercial

Commercial maintenance (retail, F&B and services) -$23,326 -$94,758 -$97,127 -$99,555 -$102,044

Commercial management - function heads -$96,522 -$392,103 -$401,906 -$411,953 -$422,252

Rental outgoings (retail, F&B and services) -$119,550 -$478,200 -$478,200 -$478,200 -$478,200

Management

Facility maintenance (landscaping and support assets)-$96,259 -$566,371 -$580,530 -$595,044 -$609,920

Facility operations (management team and overheads)-$442,211 -$1,784,716 -$1,829,334 -$1,875,067 -$1,921,944

Sport recreation

Wave pool outgoings -$72,928 -$296,256 -$303,662 -$311,254 -$319,035

Total expenses 2,690,700-$ 8,220,851-$ 8,769,555-$ 9,441,385-$ 10,138,855-$

Net total 3,387,487$ 10,254,133$ 12,687,919$ 13,522,547$ 14,363,669$


6.3 Economic Impact Assessment

This section of the business case outlines the economic impact of the Project Option 1 and Project Option 2.

Economic impact analysis measures the impact of a project or policy change in terms of economic

activity, with the metric expressed in terms of changes to output, gross domestic product (GDP) / Gross Regional Product (GRP), employment and other economic indicators. Three common

indicators of an economic analysis are:

• Gross output - Market value of goods and services produced, often measured by turnover/revenue. Gross output is also referred to as ‘gross economic contribution’

• Value added - Market value of goods and services produced, after deducting the cost of goods and services used (a proxy for GDP or GRP)

• Jobs - Number of jobs generated by an industry or attraction.

All three measures are valuable in their own right. Industry output is a measure of production, value add is a measure of wealth generation, and arguably, employment is a measure of the distribution of income. Economic impact studies generally involve two broad steps:

• Calculation of direct impacts (‘economic shocks’) – this step involves the measurement of all direct (incremental) expenditures or productivity improvements to a region (such as a State economy or local economies) as a direct result of the initiative, netting off any substitution expenditure in the economy.

• Calculation of indirect (wider) impacts – Direct economic impacts will have associated indirect or flow-on impacts for the rest of the economy. For instance, injections in tourism expenditures in the accommodation sector will have downstream impacts through an increase in expenditure in industries connected with the accommodation sector, and so on. This can be modelled using multiplier (input/output) analysis.

The economic analysis has been undertaken using REMPLAN software that takes the direct expenditures inputs and predicts other direct measures as well as the indirect impacts of

infrastructure developments or policy changes. REMPLAN is an economic analysis software package designed for use by economic development practitioners. REMPLAN modelling provides the ability to calculate the value of gross regional product and to assess likely economic

contributions of proposed changes. REMPLAN can foster an understanding of the interdependent nature of the local economy.

The Economic Impact Region

The economic impact analysis has been undertaken on a regional basis. The proposed region for

the analysis is shown in Figure 16. It comprises of the four closest LGA areas to the site including

Surf Coast, Colac-Otway, Corangamite and Golden Plains. For the purpose of the economic impact

analysis this is referred to as the “Economic Impact Region”.

The Economic Impact Region excludes Geelong and the Bellarine Peninsula as it was important to

capture visitation from Geelong to the CORA site and the immediate surf coast region. CORA

creates a unique tourist attraction that induces spending within the Economic Impact Region and

offers a detour form the coastline location for those passing through the region e.g. visitors

travelling to the Surf Coast or the Twelve Apostles. By excluding Geelong our analysis includes the

impact of visitors from Geelong and the Bellarine Peninsula either visiting CORA specifically, and

staying overnight, or visiting CORA for the day.

In addition our analysis will still pick up the jobs created in the region, even if these jobs are taken

by those who live outside the region.


Figure 16 Economic Impact Analysis for Economic Impact Region

The economic impact of this project is considered in two phases:

• Construction phase

• Operations phase.

The construction phase impact is the economic impact from new construction activity, while the

operations phase impact is the economic impact from new interregional visitation (i.e. intrastate,

interstate and international visitation to the Economic Impact Region). Figure 17 provides an

overview of our approach, with further details presented in the sub-sections that follow.

Exclusions from the analysis

Until CORA finish discussions with education partners in the next phase of the project, it is not yet

clear what activity will occur in the Educational Precinct. From early tenant discussion, it is

estimated that there will be some employment on the site as well as the potential for students to

also be based on the site, however no estimates have been provided at this stage. In addition, it is

also very likely that many of the regular visitors to CORA Education Precinct would come from

inside the Economic Impact Region and as a result, would not be counted as additional economic

activity.


Figure 17 Overview of economic modelling approach



6.3.1 Construction phase economic impact

The construction phase impact is the economic impact from the construction of new tourism infrastructure. This short-term impact is generated through new construction activity and is measured using government and private sector capital contribution.

The Victorian Government capital contribution is included in our analysis of the construction costs on the basis that in the absence of the CORA project the government funded component of the construction costs may be diverted to other government projects outside the Economic Impact Region35. The assumption is that in the absence of this project, these private sector funds would likely not be invested in the region or Victoria and so the private and commonwealth funding has also been included.

The following direct expenditure impacts were included in the REMPLAN modelling and the direct and indirect economic output, value add and jobs generated were calculated.

Table 27 Phasing of construction cost by category

Project Option 1 Project Option 2

Construction costs $352 million $255 million

The results of the economic impact from the construction of the Project Options 1 and 2 are shown

below. The results show that the greatest direct and indirect impacts from construction occur in

2017-19. The tables also demonstrates an economic impact from construction in Option 1, brings

over 40% more jobs to the region than Option 2.

Table 28 Project Option 1 Economic Impact from Construction

2018-19 ($m) 2019-20 ($m) 2020-21 ($m) Total ($m) Total ($m)

Direct Indirect Direct Indirect Direct Indirect Direct Indirect All

Output $272.6 $247.7 $74.6 $67.8 $5.5 $5.0 $352.7 $320.5 $673.2

Value add $60.4 $101.5 $16.5 $27.8 $1.2 $2.1 $78.2 $131.3 $209.5

Jobs (avg.) 339 756 93 206 7 15 146 326 472

Table 29 Project Option 2 Economic Impact from Construction

2017-19 ($m) 2019-20 ($m) 2020-21 ($m) Total ($m) Total ($m)

Direct Indirect Direct Indirect Direct Indirect Direct Indirect All

Output $189.7 $172.3 $33.1 $30.1 $0.0 $0.0 $222.8 $202.4 $425.2

Value add $42.0 $70.6 $7.4 $12.3 $0.0 $0.0 $49.4 $83.0 $132.3

Jobs (avg.) 236 526 41 92 0 0 92 206 298

6.3.2 Operation phase economic impact (Option 1)

The operations phase economic impact highlights new visitation to the Economic Impact Region as a result of CORA. The economic impact assessment considers that there are three key attractors or reasons to visit CORA.

• To stay in the hotel and associated accommodation overnight and to use the elite sports training facility

• To visit the wave pool

• To visit and retail, commercial or wellness facility.

35 Although considered neutral at the state-wide level, there will be economic impacts at the regional level.



EY has undertaken a bottom up approach to estimate the total number of new visitors to CORA and the Economic Impact Region. This ensures that the visitation calculations are consistent with financial modelling approach as well as the effective capacity of CORA’s accommodation.

Calculation of visitation is undertaken in a number of steps. There are two main types of visitation at CORA:

• Overnight visitation to CORA – overnight visitors come to CORA, use the hotel and many may also use the recreational sports facilities (e.g. wave pool) or visit the retail, commercial and wellness facilities.

• Day visitation at CORA – Day visitors come to CORA to visit the wave pool and the retail, commercial and wellness facility or both.

There will also be some new day visitors to CORA, who extend their stay and stay overnight within the Economic Impact Region but do not stay at CORA. These are considered to generate additional economic benefit to the region.

The key steps in the methodology are described below.

Step 1: Calculate the total number of visitor nights and unique hotel visitors per annum to CORA

The total number of visitors who stay at CORA on an annual basis has been calculated using the below financial modelling assumptions for accommodation from CORA, see Appendix G for full overnight stay assumptions. These estimated occupancy rates, average room density and average length of stay assumptions appear consistent with benchmark data for the GORR and regional Victoria more broadly. As a result EY has not applied any sensitivity to these in our financial analysis. EY has assumed a delay in the opening date of the project and this results in a difference in occupancy rates in 2023-34.

Table 30 Key assumptions driving overnight visitation

Number of

lodges/rooms

Average guest

density

Occupancy rates for 2024-

2536 (all scenarios)

Total visitor nights at

CORA per year

Average length of

stay

Total number of unique

overnight visitors to

CORA per year

Hotel (public) 128 1.7 56% x 365 44,477 2.5 17,791

Eco Lodge 22 2.3 54% x 365 9,973 2.5 3,989

Lakeside Surf Eco Lodge 15 2.3 54% x 365 6,800 2.5 2,720

Retreat Homestead 24 5.5 48% x 365 23,126 2.5 9,251

Visiting teams 128 1 6% x 365 2,803 4.9 568

Total 87,180 34,319

Step 2: Calculate the total and unique numbers of day visitors for the wave pool

The number of wave pool users has been estimated based on the CORA financial model assumptions. The CORA financial model estimates that there will be 478 wave pool users per day or 174,470 wave pool users per year37.

However, not all wave pool users can be counted as additional visitors to CORA, as some of the wave pool users will have already been included in the overnight visitor category. As a result, it has been assumed that 30% of overnight visitors (87,180) also use the wave pool. This may appear low however it takes into account that overnight visitors stay on average 2.5 days, but are unlikely to use the wave pool 2.5 times during their stay.

36 Accommodation occupancy ramps up over a five year period. This is the first full year following ramp up 37 Daily wave pool visitation has been applied over 365 days as the seasonal location is expected to draw high visitation during normal summer shut-down periods – this may vary.



Given the uncertainty around wave pool visitation (i.e. no market demand study has been undertaken to date for this particular product offering in the GORR or the Economic Impact Region), EY has developed both a high and a low scenario. The high scenario mirrors the CORA financial modelling assumptions and the low scenario mirrors the financial sensitivity analysis which is presented in Section 7.4

Table 31 Key assumptions driving wave pool visitation calculations

Low wave pool visitor

estimates (2024-25)*

High wave pool visitor

estimates (2024-25)*

Daily wave pool visitors 239 478

Annual wave pool visitors 94,504 181,30838

Overnight visitor cross over (30%) of visitor nights per annum

25,058 26,154

Wave pool visitation (day visitors only) 69,446 155,154

* First year of full operation following ramp up period

Step 3: Calculate the total number of retail, commercial, food & beverage and wellness facility day users

There was little information available to calculate the estimated number of visitors to the retail, commercial and wellness facility for day users. There is also a level of uncertainty around the number of people who will travel from outside the region to CORA to visit the retail, commercial and wellness facility on its own. As a result a low and high scenario for visitation was also calculated.

The high scenario reflects the CORA financial projections. The CORA financial model estimates rental income for approximately 15 retail lots will be approximately $2.6 million per annum (2023-24). To estimate the number of visitors required to sustain this level of retail rental income, EY has assumed an average rent to revenue ratio of 15%, which results in an estimated gross retail revenue of approximately $18.2 million per annum. This ratio is based on benchmark data for average rent to revenue ratios for this mix of retail outlets, which range from 5% and 20% of total operating revenue, with the higher end of the range being for smaller retail operations.39

Daily tourist spend for the Economic Impact Region is estimated at $90, as per Tourism Research Australia’s latest visitor survey data for the GORR in 2016.40 It is assumed that day visitors to CORA would spend approximately 75% (50% in low scenario) of this total daily spend at the CORA facility (equating to approximately $69 for day visitors to CORA in the High Scenario).

Extrapolating the above assumptions, the estimated number of annual visitation to the retail, commercial and wellness equates to approximately 291,000 per annum. However, this number does not represent unique visitation as it is highly likely that a portion of those visiting the retail, commercial and wellness facility will also visit the wave pool and/or the hotel. As a result, the following crossover assumptions were made:

• 50% of day wave pool visitors also visited the retail, commercial and wellness facility.

• 75% of overnight hotel guests visit the retail, commercial and wellness facility.

Again both high and low scenarios were estimated for day visitors to the retail, commercial and wellness facility. A summary of the assumptions and calculations are provided below.

38 The assumed annual visitation of 478 per day (i.e. 174,470 per annum) increase to 181,308 due to increase wave pool visitation from annual incremental accommodation occupancy 39 Relative Costs of Doing Business in Australia: Retail Trade – Productivity Commission Research Report, September 2014 40 Great Ocean Road – Market Profile: Year Ending December 2014, Tourism Victoria



Table 32 Key assumptions driving day visitation to the retail, commercial and wellness facility

Low retail estimates (2024-25) High retail estimates (2024-25)

Daily retail, commercial and wellness visitation

537 799

Annual retail, commercial and wellness visitation

196,100 291,651

Wave pool visitor cross over (50%) of day visitors per annum

34,723 77,577

Overnight visitor cross over (75%) of visitor nights per annum

62,644 *65,385

Retail only visitation per annum 98,733 148,689

* Note that the High Scenario overnight visitor cross over is based on slightly higher occupancy rates as the CORA financials for the High Scenario are assumed to commence operations one year earlier than the Low Scenario

Step 4: Determine the number of unique overnight and daily visitors and the proportion new visitors to the Economic Impact Region

From the above calculations we have estimated the assumed number of unique visitors to the Economic Impact Region. However not all of these will be new to the region. Some of these will be residents from within the Economic Impact Region visiting CORA and others may have planned a trip already but now choose to stay at CORA rather than other accommodation. The adjustments for these are provided below.

Table 33 Total and unique day and overnight visitation to Economic Impact Region (low and high scenarios)

Low scenario (2024-25)

Total number of nights or visits to

each category (significant overlap

between categories)

Total annual unique visitor

numbers

Proportion of unique visitors

which are new to the Economic

Impact Region

New unique visitation to the

Economic Impact Region

Overnight 83,525 32,857 75% 24,643

Wave pool 97,153 69,466 75% 52,085

Retail 196,100 98,733 50% 49,367

Subtotal n/a 201,036 126,094

High scenario (2024-25)

Total number of nights or visits to

each category (significant overlap

between categories)

Total annual unique visitor

numbers

Proportion of unique visitors

which are new to the Economic

Impact Region

New unique visitation to the

Economic Impact Region

Overnight 83,525 34,319 75% 25,739

Wave pool 181,308 155,154 75% 116,366

Retail 291,651 148,689 50% 74,344

Subtotal n/a 338,162 216,449

Step 5: Calculate the direct expenditure of new unique visitation to the region from 2020-21 to 2039-40

Based on the unique visitation determined above we have applied the growth rate 2.5% per annum from CORA’s financial model to daily spend, rack rates and retail revenue. In addition, we have applied the increasing occupancy rates at CORA accommodation as per the financial model and grown day visitation to wave pool (low scenario only) and retail, commercial & wellness areas of CORA by Victoria’s forecast population growth (1.3% p.a.). The table below demonstrates new



unique visitation to CORA, average daily spends, length of stay, resulting direct expenditure and ultimately the net present value as at the commencement of 2018-19 based on operations from 2019-20 to 2039-40.

Table 34 Total day visitor direct spend in the Economic Impact Region (low and high scenarios)

Low Scenario

direct expenditure (2024-25) High Scenario

direct expenditure (2024-25)

Day visitation to CORA (new to the Economic Impact Region)

101,451 190,710

Daily spend per day visitor in Economic Impact Region

$104 $104

Day visitor direct spend (‘000) $10,589 $19,905

Table 35 Total overnight visitor direct spend in the Economic Impact Region (low and high scenarios)

Low Scenario



Overnight unique visitation to CORA (new to the Economic Impact Region)

24,643 25,739

Average length of stay 2.54 2.54

Daily spend per overnight visitor Economic Impact Region

$34041 $349

Overnight visitor direct spend (‘000) $21,270 $22,787

Step 6: Estimate the number of day visitors to either the wave pool or retail who may stay overnight in the Economic Impact Region, but not a CORA.

There will be some day visitors that come to CORA for the wave pool and retail, who do not stay the night at CORA but do stay the night in the region. In order to capture this addition overnight spend the following assumptions were made.

Table 36 Additional overnight visitation (within the Economic Impact Region but not at CORA)

Low Scenario



Day visitation to CORA (new to the Economic Impact Region)

101,451 190,710

Proportion of which may stay overnight in the Economic Impact Region (but not at CORA)

40% 40%

Average length of stay in the Economic Impact Region

1.0 1.0

Incremental additional expenditure of each additional visitor (difference between day and overnight expenditure) – Victoria GORR (2016 inflated)

$65 $65

Total additional expenditure (‘000) $2,635 $4,954

Step 7: Run the REMPLAN economic impact.

The following table summarises the total direct expenditure in the regional as a result of CORA. That is a summary of the direct expenditure components discussed in Steps 5 and 6.

41 Slight variance in daily spend between low and high scenarios ($340 and $349 respectively) are the result of hotel rates being one year behind in low scenario compared to the high scenario. This is due to the sensitised operational start date (one year later) in the low scenario.



Table 37 Total visitor direct spend in the Economic Impact Region – Project Option 1 (low and high scenarios)

Low Scenario direct expenditure

(2024-25) (‘000) High Scenario direct expenditure

(2024-25) (‘000)

Day visitors to CORA - direct expenditure in the Economic Impact Region (new to region)

$10,589 $19,905

Overnight visitors to CORA - direct expenditure in the Economic Impact Region (new to region)

$21,270 $22,787

Day visitors to CORA that extend their stay in the Economic Impact Region

$2,635 $4,954

Total incremental direct expenditure in the Economic Impact Region

$34,494 $47,646

The direct visitor expenditures estimates set out in the previous table were then modelled in the REMPLAN software to calculate the direct and indirect additional output, value add and jobs created by the project options. Output measures the direct and indirect spend on goods and services within the Economic Impact Region from visitors who are new to the region. Value add is a measure of wealth generation, it is the difference between the value of output and the value of intermediate inputs (capital, intermediate goods and raw materials). Value add comprises of wages, gross operating surplus and taxes earned by government. Jobs are the total number of additional full-time, part-time and casual jobs generated by CORA’s operations expressed in terms of Full Time Equivalent (FTE).

Table 38 Project Option 1 (low scenario) Economic Impact from visitation

2024-25 ($m)


Output $34.5 $23.6 $58.1

Value add $14.5 $10.9 $25.4

Jobs 124 79 203

Table 39 Project Option 1 (high scenario) Economic Impact from visitation

2024-25 ($m)


Output $47.6 $32.6 $80.2

Value add $20.0 $15.1 $35.1

Jobs 171 109 280

6.3.3 Operation phase economic impact (Option 2)

We have followed the same approached noted in Option 1 to estimate the economic impact of Option 2 and utilising the financial model for Option 2 as prepared by CORA. The key changes to our economic impact assumptions compared to Option 1 are as follows:

• Decreased occupancy rates and room rates at public and athlete accommodation (i.e. hotel, lodges and homestead) as a result of having no elite training facility in Option 2. This can also be considered as the result of removing the Halo Effect of elite sports

• Higher cross-over percentage for overnight visitors to both wave pool and retail driven by fewer overnight visitors and no alternate attractions (elite sports training facilities)

EY has not considered a sensitised version of Option 2 as the option is not considered the preferred option. As such sensitivity is performed for Option 1 only.



Table 40 Key assumptions driving overnight visitation (Option 2)

Number of

lodges/rooms

Average

guest

density

Occupancy

rates for 2024-

2542 (low

scenario*)

Total room

nights at

CORA per

year

Average

length of

stay

Total

number of unique

visitors to

CORA per

year

Hotel (public) 128 1.7 52% x 365 41,300 2.5 16,520

Eco Lodge 22 2.3 50% x 365 9,235 2.5 3,694

Lakeside Surf Eco Lodge 15 2.3 50% x 365 6,296 2.5 2,519

Retreat Homestead 24 5.5 44% x 365 21,199 2.5 8,480

Subtotal 78,030 31,212

Table 41 Key assumptions driving wave pool visitation (Option 2)

Option 2 wave pool visitor estimates (2024-25)*

Daily wave pool visitors 478

Annual wave pool visitors 181,30843

Overnight visitor cross over (40%) of visitor nights per annum 31,212

Wave pool visitation (day visitors only) 152,406

Table 42 Key assumptions driving day visitation to the retail, commercial and wellness facility (Option 2)

Option 2 retail estimates (2024-25)

Daily retail, commercial and wellness visitation 752

Annual retail, commercial and wellness visitation 295,138

Wave pool visitor cross over (50%) of day visitors per annum 76,203

Overnight visitor cross over (90%) of visitor nights per annum 70,227

Retail only visitation 148,708

Table 43 Total and unique day and overnight visitation to Economic Impact Region (Option 2)

Option 2 (2024-25)

Total number of

nights or visits to each category

(significant overlap

between categories)

Total annual

unique visitor numbers

Proportion of

unique visitors which are new to

the Economic

Impact Region

New unique

visitation to the Economic Impact

Region

Overnight 78,030 31,212 75% 23,409

Wave pool 183,618 152,406 75% 74,354

Retail 295,138 148,708 50% 114,304

Subtotal n/a 332,326 212,068

42 Accommodation occupancy ramps up over a five year period. This is the first full year following ramp up 43 The assumed annual visitation of 478 per day (i.e. 174,470 per annum) increase to 181,308 due to increase wave pool visitation from annual incremental accommodation occupancy



Table 44 Total day visitor direct spend in the Economic Impact Region (Option 2)

Option 2 direct expenditure (2024-25)

Day visitation to CORA (new to the Economic Impact Region) 188,658

Daily spend per day visitor in the Economic Impact Region $104

Day visitor direct spend (‘000) $19,691

Table 45 Total overnight visitor direct spend in the Economic Impact Region (Option 2)


Overnight unique visitation to CORA (new to the Economic Impact Region)

23,409

Average length of stay 2.5

Daily spend per overnight visitor in the Economic Impact Region) $288

Day visitor direct spend (‘000) $16,856

Table 46 Additional overnight visitation (within the Economic Impact Region but not at CORA)


Day visitation to CORA (new to the Economic Impact Region) 188,658

Proportion of which may stay overnight in the Economic Impact Region (but not at CORA)

40%

Average length of stay in the Economic Impact Region) 1.0

Incremental additional expenditure of each additional visitor (difference between day and overnight expenditure)

$65

Total additional expenditure (‘000) $4,901

Figure 47 Total visitor direct spend in the Economic Impact Region – Project Option 2

Direct expenditure (2024-25)

(‘000)

Day visitors to CORA - direct expenditure in the Economic Impact Region (new to region)

$19,691

Overnight visitors to CORA - direct expenditure in the Economic Impact Region (new to region)

$16,856

Day visitors to CORA that extend their stay in the region $4,901

Total incremental direct expenditure in the Economic Impact Region $41,448

Table 48 Total economic Impact from visitation - Project Option 2

2024-25 ($m)


Output $41.5 $28.34 $69.8

Value add $17.4 $13.1 $30.5

Jobs 149 95 244



6.3.4 Operation phase economic impact – Net Present Value of Options 1 and 2

Using annual direct and indirect output and value add over the evaluation period, we have also calculated the net present value (NPV) of each economic metric for Option 1 (low and high scenarios) and Option 244. See NPV summary table below.

Table 49 NPV of all project options for the evaluation period (20 years)

NPV (2019-20 to 2039-40) $m

Option 1 (low) Option 1 (high) Option 2

Output (total NPV over evaluation period) $427.5 $639.1 $558.8

Value add (total NPV over evaluation period) $186.8 $279.3 $244.2

Average jobs per annum 243 322 282

6.3.5 Cost benefit analysis

The economic impact assessment above describes the change in economic activity as a result of the project options. The assessment does not measure the incremental benefits of the project compared to its incremental costs (also known as economic efficiency).

To measure economic efficiency and to determine whether a project is net beneficial, a full cost-benefit analysis (“CBA”) needs to be undertaken. The key principle of CBA is to convert the project’s costs and benefits into present value dollar terms. A decision of whether the project is desirable can be informed by whether the project delivers benefits that are over and above its costs.

The scope of this business case does not extend to undertaking a full CBA of each of the project options. A qualitative analysis assesses a range of other project benefits in Section 6.4. The benefit-cost ratio (BCR) analysis was undertaken which indicatively assesses the potential state-wide BCR of each option based on the financial, economic and construction impacts described in the previous section of this business case.

Table 50 BCR Analysis all options (net present value)

*Residual value has been calculated based on a useful life of 40 years from the date of commencement of operations

Comparison of results

Option 2 has the highest BCR of 2.5, marginally higher than Option 1 by 0.06. It is noted that Option 2 has significantly reduced capital costs as the elite sport element has been stripped out. The net present value of net benefits, however, is significantly higher in Option 1 ($549.8 million) through increased revenues generated from the elite sport elements of the facility and through direct

44 Nominal discount rate of 9.7% has been used based on an inflation rate of 2.5% (as per CORA financial model) and a 7% real discount rate as per Department of Treasury and Finance, Economic Evaluation Guidelines.

Benefits / Costs Option 1 Option 1(S) Option 2

Capital costs 286,980,344-$ 286,980,344-$ 182,786,171-$

Operating expenses 96,131,328-$ 88,067,353-$ 75,850,198-$

Costs (total) 383,111,673-$ 375,047,697-$ 258,636,369-$

Operating revenue 141,772,684$ 50,769,734$ -$

Direct expenditure (visitation) 346,034,102$ 231,465,134$ 302,581,232$

Value-add (visitation) 254,642,232$ 170,332,340$ 222,665,800$

Value-add (capex) 170,473,358$ 170,473,358$ 108,579,366$

Residual value* 20,027,681$ 21,081,770$ 12,650,613$

Benefits (total) 932,950,056$ 644,122,335$ 646,477,011$

Benefit cost ratio (BCR) 2.44 1.72 2.50

Net present value 549,838,384$ 269,074,638$ 387,840,642$



expenditure of visitors to CORA and the Economic Impact Region. Further consideration of the qualitative benefits for each option is provided in 6.4.

6.4 Qualitative Socio-Economic and Environmental Impacts

The CORA project team has developed a benefits assessment criteria to capture the social, economic and environmental impacts of the project. The criteria and their weighting are summarised in Table 51. These criteria reflect the critical social, economic and environmental requirements of the project and align with the broader project objectives and intended benefits outlined in the ILM.

Table 51: Benefit assessment criteria

Criteria Supports Weighting

Economic criteria (50%)

Delivers an economic return for the State

• Delivers an economic return to the State for their investment in the project.

30%

Provides opportunities for higher valued employment

• Provides opportunities for upskilling for local residents to improve their job prospects

10%

Addresses youth unemployment and underemployment issues

• Provides employment opportunities in the region with a focus on youth employment opportunities

• Provides enabling services and infrastructure which encourage workforce participation and facilitates people working in the local area (e.g. Provision of additional rental housing and childcare facilities)

10%

Social and Community (40%)

Health and wellbeing • Physical wellbeing of visitors and the local community

• Mental wellbeing of visitors and the local community

20%

Engages the community • Social participation and cohesion

• Collaboration and innovation

• Civic pride

10%

Preserving the surfing cultural heritage of the surf-coast

• Promotes and complements and preserves the surfing history and culture of the region (Bells Beach)

10%

Environmental (10%)

Provides an environmentally sustainable solution

• Addresses existing environmental issues such as preservation of lakes and forest areas in the region

5%

• Preserving the existing landscape as far as possible 5%

6.4.1 Economic impacts

Project Options 1 and 2 will deliver economic benefits to the Economic Impact Region and likely also the state compared to the Base Case.

Delivers an economic return for the State Governments investment

• Project Option 1 is expected to deliver significant economic benefit to the local region as well as to the State. Project Option 1 is expected to create at the peak of construction up to 339 direct and 756 indirect jobs, contributing total direct and indirect output of $673 million and value add of $209 million over three years. In addition, Project Option 1 is expected to reach full operation by 2024-25, at this time it is estimated to generate economic output of between $58.1 – $80.2 million, value add of between $25.4 - $35.1 million and Annual employment (FTE) of 203 – 280.

• The CBA analysis shows that all project options deliver BCRs greater than 1.0, meaning the benefit outweighs costs, and that Project Option 2 delivers a BCR of 2.5 and Project Option 1 a BCR of 2.49



• Delivers an economic return to the state for their investment. CORA have advised that under both Project Option 1 and Project Option 2 a request to government for $30 million investment in enabling infrastructure (upgrade to the road and utilities) would be required to provide essential services to the site.




• Project Option 1 includes a sports science hub and also education precinct which will be focused on sports, research and development and sports science. The prospect of having a local tertiary educational facility in the local region will be of great benefit to the employment prospects of the local community. Project Option 2 does not deliver this benefit.

• Project Option 1 will also provide significant opportunities for managerial and skilled positions within the elite sports facility and in the Region through operating a world-class hospitality, recreational, tourism and retail facility.

• Project Option 2 also delivers against this outcome, however to a lesser extent.

Addresses youth unemployment and underemployment

• Project Option 1 delivers the greatest employment opportunities with an estimated 203 - 280 jobs ongoing. Project Option 2 to a lesser extent delivers employment opportunities due to its smaller size and also more limited breadth of employment, total direct jobs are estimated at 244 for Option 2.

• Project Options 1 and 2 also deliver childcare facilities which enable those wanting to return to work in the Region the opportunity to do so.

Project Option 1 (high scenario) provides the largest economic return to the State

6.4.2 Social impacts

The options considered can deliver a range of direct and indirect social impacts which extend to health and wellbeing, community, and preservation of cultural heritage. These are discussed below.

Health and wellbeing

• Project Option 1 is focused on supporting elite fitness, health and wellbeing of the general public and the local community. Project Option 1 provides an over-arching health and wellness message, with additional sports facilities and a greater focus on sports science, training, performance and rehabilitation.

• Both Project Options 1 and 2 include a gymnasium, wave pool, family cycling trails and fitness paths around Lake Modewarre

Engages the community

• Project Option 1 is expected to provide a focal point for the local community and stimulate significant community pride through being home to an internationally recognised elite sports training facility.

• Project Options 1 and 2 will deliver significant opportunities for social participation and improved cohesion. The site will also provide local residents with a community outdoor space to spend recreational time with family and friends. It is expected that CORA will also play host to regular farmers markets as well as community events.

Preserving the surfing heritage of the surf-coast

• Both Project Options 1 and 2 include a wave pool and, with Surf Coast Shire approval, the possible relocation and enhancement of the Surf Museum which is currently in Torquay. Although these facilities are expected to attract a number of keen surfers, there is also significant opportunities for CORA to host surf events. In this way Project Options 1 and 2 provide an opportunity to highlight and cement the rich history that the Great Ocean Road Region has in surfing. Both Project Options are also investigating a partnership with Rip Curl and at least one other surfing organisation.



Project Option 1 provides the most significant social benefits to the community. With a strong focus on health and wellbeing. Project Option 1 will also deliver the greatest

community pride with an internationally recognised facility.

6.4.3 Environmental impacts

• Retaining and enhancing natural assets: Project Options 1 and 2 incorporate plans to restore the native bush and act as a catalyst to enhance the Lake Modewarre wetlands. Approximately 80 hectares (30% of the site) will be put into the Trust for Nature, resulting in it being protected into the future. In addition, the beauty of the area will be enhanced through the removal of the existing broiler farm and the bird-litter pile that currently discharges into the lake. This is expected to also deliver environmental benefits.

• Environmental sustainability of buildings: Project Options 1 and 2 will have a strong environmental focus. The CORA buildings are aiming to be 5-star Green Star rated and Leadership in Energy & Environmental Design (LEED) Platinum standard, the world’s highest environmental standard. The facility will become an exemplar for best-practice design and management in the sustainability space.

Project Options 1 and 2 will deliver strong environment and sustainability benefits to the

local area and provide exemplars for other facilities.

6.4.4 Summary of Socio-Economic and Environmental Impacts

Each option was scored against the economic, social and environmental criteria using a scale of 0 to 5, where 0 does not meet the criterion and a score of 5 fully meets the criterion. Table 52 summarises the weighted and unweighted results. Project Option 1 delivers the greatest economic, social and community and environmental benefits to the Great Ocean Road region as well as Victoria.

Table 52: Benefit assessment criteria

Criteria Supports Base Case

Project Option 1

(CORA)

Project Option 2

(Tourism

development

Only)

Economic criteria (50%)

Delivers an economic return for the State for their investment

30% 0 4 3


10% 0 3 1

Addresses youth unemployment and underemployment

10% 0 3 2

Social and Community (40%)

Health and wellbeing 20% 0 4 3

Engages the community 10% 0 4 3

Preserving the surfing cultural heritage of the surf-coast

10% 0 3 3

Environmental (10%)

Environmental 10% 0 4 4

Total unweighted score (max 35) 0 25 19

Total weighted score (max 5) 0 3.7 2.8



6.5 Risk comparison

A high level risk assessment of the options has been undertaken for the purpose of comparing the risks associated with each option (refer below). Only the risks that are unique to each option have been captured in Table 53 below. Section 7.3 provides a more comprehensive assessment of the risks associated with the preferred option.

Table 53 Risk exposures

Option Summary of option specific risks

Risk Rating (1 = very low to 4 =

very high)

Base Case - Do nothing

Outdated tourist attractions in the Great Ocean Road and increased congestion among key tourist spots may result in deterring visitors to the Region.

4

Lack of a world class back of house facilities may limit Victoria’s ability to host major sporting events impacting our reputation.

3

Increased social disadvantage and pockets of youth unemployment in the Region due to lack of employment opportunities.

3

Risk of poor health and well-being in the Region 3

Option 1: CORA

facility Risk that the elite sporting facility isn’t well received by the domestic and international sporting community

2

The local regional community perceives CORA as elitist and designed for wealthy tourists, and there is community backlash.

2

Risk that the unique technical requirements of building an elite sports facility results in a cost blowouts and delays impacting the ability to deliver the project.

2

Risk that CORA cannot attract the number and quality of staff needed to operate a world-class facility in a regional area.

3

Option 2: CORA Tourism

development only

Risk that CORA does not have a unique or differentiating factor needed to attract international tourists

3

Risk that the facility is not financially feasible due to lower visitation and the absence of a premium priced revenue stream

4

6.6 Interdependencies

This project has significant breadth and covers tourism and visitation, elite athletes training, research and development, education, medical, sports and recreation. As a result, there a number of independent projects and factors which may impact the success of the CORA project. Key interdependences are described below.

• Major Events Bid Fund – The success of the CORA Elite Sports Training facility is somewhat dependent on the Victorian Governments continued commitment to bid for major sporting teams and continuing the significant commitment associated with the $120 million bid fund. If the Government were to reduce the bid fund, or remove it entirely, this would have an impact on the CORA’s ability to attract elite athletes to the site, as they would not be travelling to Melbourne to host major events.

• Australian Sports Commission (ASC) Review – The ASC is currently undertaking a review of the delivery of High Performance programs at both the Commonwealth and State levels. Currently a number of high performance programs are delivered by state based sporting organisations within state based facilities. The ASC is looking to consolidate facilities and ensure that the best athletes have access to the best facilities in Australia, not only those in their own state. Depending on the outcomes of the review, this could provide significant upside potential for the CORA site if the ASC identified CORA as a top training location.

• Commonwealth Sports Investment Strategy. The strategy is currently being delivered and will determine what investments in sport will be made over the next 10 years. The strategy may result in a competitive offer being developed or could highlight the need to outsource and use the CORA and other existing facilities where possible.



6.7 Uncertainties

All projects have uncertainties. This section explores the uncertainties which exist for the CORA project, including:

• The primary source of the uncertainty that could impact the investment

• How the uncertainty would impact the investment (value for money, intended benefits, effectiveness)

• How to increase the flexibility of the investment to better deal with uncertainties

• Trigger points that would prompt a decision to take a different course of action

The key exogenous uncertainties which may impact the decision to invest or otherwise in the CORA project are described below.

The construction of a similar sized elite sports training, accommodation and tourism facility

in Australia or in the Southern Hemisphere

If a similar sized facility were to be constructed in Australia prior to CORA being commissioned, or shortly after CORA was commissioned, it could significantly impact visitation from both tourists and elite athletes.

Furthermore, it could damage the perceived uniqueness of CORA in Australia and the Southern Hemisphere and potentially divert government funding and investors funding. There is significant intellectual property included in this proposal and as such it is a highly time sensitive project.

It will be essential to quickly obtain planning approvals to allow the project to be delivered in order to capitalise on being the first to market with this unique concept and ensure that a trusted brand can be established before the emergence of competitors in Australia, South Africa or Asia-Pacific.

6.8 Integrated analysis and options ranking

Table 54 summarises the results from the financial analysis, socio-economic and environmental analysis, risk assessment and stakeholder considerations.

Table 54: Presenting the results of the options analysis

Base Case


Project Option 1-

CORA

Project option 2 -


Financial Analysis (incremental to the Base Case over 20 years) $ million nominal

Analysis period (years) 20 20 20

Capital Costs N/A $352.71 $222.79

Operating Position

Revenues

$1,204.43

$599.69

Less Expenses $311.58 $247.19

Operating Net Position ($m nominal) $892.85 $352.50

Operating Net Present Value (9.7% nominal discount rate $m)

$273.72 $107.13

Economic Impact Assessment (in full year of operation)

Direct and Indirect Economic Output $80.23 $69.80

Direct and Indirect Value Add $35.06 $30.50

Direct and Indirect Jobs 280 244



Base Case


Project Option 1-

CORA

Project option 2 -


Socio-Economic and Environmental Score (weighted score)

Economic Impact 0 10.00 6.00

Social Impact 0.00 11.00 9.00

Environmental Impact 0.00 4.00 4.00

Total Weighted Score 0.00 3.70 2.80

Average Risk Rating

Risk rating (1 is very low risk, 5 is very high risk)

3.25 2.25 3.50

Stakeholders

Stakeholder support Strong support from all contacted stakeholders

Ranking 3 1 2

As seen above, Option 1 produces a superior result compared to Option 2 from a financial analysis perspective (revenue, net position, net present value), generating greater economic impact (direct and indirect economic output, value add and jobs) and improved social impact with a lower risk rating. In addition, Option 1 has strong stakeholder support, noting that Option 2 has not been discussed with stakeholders. Therefore, Option 1 is the preferred option for delivery.



Section 7:

Deliverability of

recommended

solution



7. Deliverability of recommended solution

Summary

This section provides an overview of the details of the recommended solution, the commercial and financial perspectives, management and deliverability of the recommended solution.

The recommended solution is Option 1: CORA facility. As previously mentioned CORA is an elite sports training, accommodation and retail village in the Surf Coast. There are eight key components to CORA and all support the delivery of the identified benefit in the ILM (either directly or indirectly).

From a financial and commercial perspective a significant amount of work has been undertaken to assess the financial and commercial risks and feasibility. Including :

• A number of preferred suppliers have already provided significant input into the project and have been awarded preferred supplier status.

• A risk workshop was undertaken which assessed the range of risks associated with the project, a number of risks and mitigation measures were identified. There remains two project risks which have a risk rating of high following mitigation, these risks relate to financial projections and a risk to Government that land is rezoned but the CORA development does not go ahead and hence planned economic benefit does not result.

• A detailed sensitivity analysis of CORA financial projections has been undertaken by EY, in a number of instances the revenue projections were revised down, even with this sensitivity analysis applied, the protect remains cash positive over all years

• An description of the three key funding sources has been provided (private investors, State Government and Commonwealth Government)

Consideration has also been given to the management of the project

• Governance structures, roles and responsibilities have been developed and allocated for both the project development phase and the project operational phase.

• While the stakeholder strategy is yet to be finalised, CORA have outlined a number of key stakeholder and community groups which they intend to engage with and have provided some high level actions for each group

In terms of delivery of the project, the following has been outlined

• A clear plan for how change on the project will be managed between the Project Manager and the CORA Board, as well as when and how RDV would be informed of any changes on the project

• Timelines and milestones are outlined from now to the CORA facility being operational and includes item such as planning approvals, business cases and civil works

• CORA have also outlined the next steps and exit strategy for Government.

7.1 Details of recommended solution

7.1.5 Rationale

Option 1 (Cape Otway Road Australia Project) is the recommended option for implementation. As

described in detail (in Section 5.3) Project Option 1 involves the development of a new and much

needed built tourism infrastructure support the natural tourism assets. CORA will provide much

desired 4 and 5 star accommodation in the Region as well as a focal point for health, well-being

and active recreational activities in the Region. In addition, CORA will also enhance Victoria’s

brand positioning as the leading state for sport and will provide a significant drawcard when

attempting to win the rights to host major sporting events. Finally the CORA project will provide

much needed employment as well as a focal point for the community to gather, relax, play and

enjoy.

The scope of the project has been developed to deliver the following core elements:

• The best of Australia – bringing the best of Australia to the rest of the world including food and beverage, retailers, wellness

• Attracts visitors to the Region – The elite sports component will provide a halo effect and is expected to attract visitors to stay at the same facility where international sports stars have stayed and trained.

• World leading facilities to attract athletes both locally and internationally – CORA will have a strong focus on athlete performance, training and recovery facilities that meet elite teams’ requirements



• Upgrading of facilitating infrastructure – The project is likely to require an upgrade to local infrastructure (road network, sewerage, water, electricity)

• A strong CORA brand – There will be significant marketing spend to support the development of the CORA brand and grow the recognition of Cape Otway Road, Australia.

7.1.6 Key project elements and delivery of project benefits

The various items in the scope will deliver against each of the identified benefits in the ILM. The

contribution of each of the project elements to the project benefits is shown below in Table 55.

Table 55 Eight Key Project Elements and their Contribution to Benefits

No. Key element

Benefit 1 -Tourism yield and

experience

Benefit 2 – Improved

competitiveness to host events

Benefit 3 – improved wellbeing, health and

reduced social disadvantage

1 Accommodation � �

2 Retail and Commercial offering � �

3 Wellness Centre � �

4 Public Sport and Recreational facilities (incorporating the wave pool, gymnasium and open spaces for walking and cycling)

� �

5 Elite Sports Training facility �

6 Educational Precinct (including the Sports Science Hub):

� �

7 Organic Farm � �

8 Residential Development

While the residential benefit is not directly related to the project benefits, the residential

development will assist in making the project financially feasible, enabling private investment.

7.1.7 Performance measures

Table 56 summarises the Key Performance Indicators (KPIs) for the CORA project. Overall, there are five measures to be reported against. The full Benefits Measurement Plan (BMP) is provided in Appendix B.

Table 56 Key Performance Indicators (KPIs) and measures

KPI Measure Baseline Target Reporting

Benefit 1: Improved tourism experience and yield in the Great Ocean Road Region

KPI 1: Visitor numbers at CORA (per annum)

Number of day visitors and overnight stays at CORA

n/a 200,000 (consistent with EY estimated visitor numbers for 2024-25)

CORA

KPI 2: Greater spend per visitor by increased length of stay and spend per stay

Average length of stay in Great Ocean Road Region for visitors

Average stay of overnight visitors: International 4.7 nights and 3.4 days for interstate visitors

Five (5) nights CORA

Benefit 2: Improved competitiveness to win the rights to host major events in Victoria

KPI 1: Enhanced brand value and reputation of Victoria

Recognition in the Sports Business “Ultimate Sports City Awards”

Melbourne won the Ultimate Sports City awards in 2006, 2008, 2010 and was recognised in 2014

To be recognised or a winner in the Ultimate Spots City awards

CORA



KPI Measure Baseline Target Reporting

KPI 2: Maintain or increase major sporting events in Victoria

Number of major sporting events in Victoria

In 2010 there were 27 events, in 2014 there were 32 events in 2016 there were 36 events

40 events CORA

Benefit 3:Improved wellbeing within the Region including better health (mental & physical) and community pride and reduced social disadvantage

KPI 2: Reduced unemployment

CORA employment Zero 124 (low scenario in 2024-25)

CORA



Commercial and financial

7.2 Procurement

This section outlines the procurement required for the Project.

There are various levels of procurement required for the CORA, these can be categorised as follows:

• Major Delivery and Operational Partners: Will have an ongoing involvement in the project, may have input into design and scope the project

• Retail and Commercial Tenants: There are up to 15 separate lots which will be rented out to a mix of food and beverage, retail and other services (childcare and wellness facilities)

Further information on each of the procurement processes intended for each party are described below.

7.2.8 Major Delivery and Operational Partners

There are several categories of major partners these are:

• Construction Partner

• Elite Sports Operator and Project Manager

• Advertising and Sponsorship Partner

• Facility Operations Partners

These are discussed in more detail below.

Construction Partner

A project of this size and complexity requires significant construction involvement from the outset.

As a result, a decision was made to find an appropriate construction partner early on in the process

to help guide the project. A number of major construction firms were consulted early on in the piece

including Multiplex, Probuild and L.U. Simon. There were four key factors considered when

determining a preferred construction partner:

• A tier one builder with the capacity and breadth to deliver a facility of this size

• Previous experience delivering sporting infrastructure

• Experience and capacity to deliver large scale regional projects

• Similar environmental sustainability values and an ability to deliver in this space.

After significant consultation and assessment it was decided that Multiplex best met the needs of

this project due to its previous experience constructing major sporting facilities such as Perth

Stadium, Stadium Australia, VRC Grandstand and Suncorp Stadium. Multiplex has also recently

completed the construction of the Epworth Hospital (approximately 10 minutes form the CORA site),

demonstrating their capacity and ability to work in regional Victoria. They bring previous experience

of applying world leading environmentally sustainable design principles, to deliver long-term

efficiencies, high-performance environmental outcomes and minimal environmental impact on each

of their projects. As a result, Multiplex was been awarded preferred bidder status.

To ensure that commercial tension remains within the construction, Multiplex will be asked to meet

the developed costings (which will be peer reviewed by an independent Quantity Surveyor). If the

quoted value cannot be met then CORA will go out to market to obtain a secondary quote. If the

secondary quote comes in lower, Multiplex will be provided first right of refusal

Elite Sports Operator and Project Manager (Proleisure)

Given CORA’s ambition to attract some of the biggest teams and athletes in the world, it was important to understand the needs of these athletes on a number of levels including day visitors, longer stays for teams and individuals as well as superstars and journey athletes. In order to be as relevant to as many athletes as possible. An understanding of what “world class” looks like to these



athletes is essential. It is also essential to translate what this means to a consumer audience. In addition, understanding how these audiences can co-exist was also important to develop a successful business model. Key factors in choosing an Elite Sports Partner and Facility Operator were:

• Global reputation aligned to some of the best facilities in the world

• Experience of developing and operating facilities in Australia

• Experience across a number of sports

• Ability to design to the most aspirational environmentally sustainability standards

CORA has partnered with Proleisure, one of the global leaders in designing, building and operating

elite sports facilities. Proleisure has completed a number of globally recognised projects including the

world’s leading football academy for City Football Group in Manchester and a similar development

here in Victoria for sister club Melbourne City FC. Proleisure has also designed the world’s leading

Martial Arts gym for UFC at their global HQ in Vegas.

Proleisure have worked closely with CORA and its partners to develop a business model that will attract the world’s leading athletes and sports organisations, and also deliver sustainable appeal to ‘everyday athletes’. The project has been developed to ensure it can capitalise on the latent tourism demand from the Great Ocean Road and the wider region, whilst also creating a unique proposition for a growing, affluent demographic that will travel to use elite training and wellbeing facilities.

Advertising and Sponsorship Partner

Understanding the commercial and sponsorship potential of the elite training facility was considered

critical to its overall commercial success. Early on the development of the project MediaCom

Sports and Entertainment, provided input on the marketing communications requirements for

CORA.

Throughout the development of the project MediaCom Sport & Entertainment have consulted their

global MediaCom network, international elite sporting teams/organisations and existing facility

operators to understand the need for and likelihood of occupancy for the proposed CORA facility.

MediaCom will support CORA to obtain sponsorship funding in the following areas:

• Naming rights

• Corporate sponsorship in the following areas:

• Health and performance,

• Energy and sustainability,

• Electronics and entertainment,

• Technology, data and connectivity

To date, MediaCom have worked on a consulting basis, providing input into the project

development phase and business case. It is proposed that once the facility is operational

MediaCom will move to a commission basis for all sponsorship revenue obtained.

Facility Operations Partners

It is anticipated that CORA will have a number of Facility Operational Partners, these are expected

to include:

• Educational Precinct Partner

• Medical Partner

• Wave Pool Partner

• There is also the potential for a hotel operations partner (however at this stage it is assumed that CORA will operate the accommodation facilities on site)

These facility partners will be responsible to operating significant portions of the CORA site. To the

extent that the can be confirmed early enough in the development process they may also dictate

the design of the some elements of the project. For example CORA is likely to work with the

Education Precinct Partner and the Medical Partner to design the educational and sport science

hub buildings.



In terms of procuring these partners, CORA have identified the commercial rents sought for each of

these components, as well as minimum performance requirements for each tenant. CORA will

continue discussions with potential partners to ensure that both CORA’s and Project Partners

requirements are aligned and can be achieved.

Retail and Commercial Tenants

An expression of interest process has already been undertaken to identify a range of food &

beverage and retail operators who best represent the “Brand Australia”. Some if these include:

Food & Beverage

• Bakery – Zeally Bay Sourdough

• Gelateria – Gelato Messina

Lifestyle Retail

• Homewares – Mud Room

Art & Design Precinct

• Architecture – Daryl Pelchen Architects



7.3 Risk assessment and management

The risk management framework outlined in Figure 18 closely follows the Australian Standard

AS/NZS 4360:2004 which sets out general risk management and business continuity planning

process, management accountabilities and approach, to systematically manage risk. The project

risk management approach is to continuously identify risks, develop strategies to manage the risks,

monitor effectiveness of these strategies and update these strategies as required.

As outlined in Figure 18, the risk management process and key project risks identified in Section

7.3.1 relate to the risks in delivery of the scope of works for the preferred option (Option 1 CORA).

Key elements of the project risk management framework include:

• Establishment of risk assessment criteria for the project

• Risk identification involving relevant stakeholders

• Establishment of a risk register

• Development / identification and implementation of strategies to mitigate identified risks

• Regular monitoring and review processes

• Review contingency allowance to cater for known risks.

Figure 18 Risk methodology



7.3.1 Key project risks

A risk workshop was held on 23 November 2017 with representatives from the CORA, Proleisure,

MediaCom, Multiplex, Ernst and Young, Tract, Altus Group, StratHouse. The key project risks are

summarised in the following table along with the proposed mitigation measures. All risks that were

rated as high (either pre or post mitigation measure) have been included in the below table. A copy

of the full Risk Register can be found in Appendix I, along with the risk matrices used to assess and

assign likelihood and consequence ratings, and ultimately risk ratings.



Table 57: Summary of high and medium rated risks

Rating Pre-mitigation Rating Post-Mitigation Phase Category Risk Consequence L C Risk

Rating Mitigation L C Risk

Rating

Planning and Development

Legislative and Government Policy Risks

The risk that Government provides enabling funding, land is rezoned but the CORA development does not go ahead and there is no economic impact or job impact – only the residential development goes ahead.

Regional benefits are not actualised Negative political fallout

2 5 High

Significant engagement with potential partners, tenants and suppliers has taken place and will continue. Investor engagement plan is in place. Robust business case for the full CORA offer demonstrating beneficial returns for investors. Key milestone deliverables to be agreed with government and linked to funding being released.

1 5 High

All Phases Brand

Risk that competitors to CORA attempt to discredit or damage CORA's entrance to the market, eroding the ability to attract funding.

Brand damage, Financial

3 4 High

Development of a commercially sound business case with a robust revenue model and communications plan. Investment into the CORA brand ensuring that all communication is clear, consistent and compelling to create a buy-in from key parties.

2 3 Medium

All Phases Governance / Ownership

Risk of commercial disputes between CORA and investors, partners and other stakeholders because of a lack of well-defined contracts and agreements, inclusive of each parties' respective rights and obligations. For example, if a partner decides to exit the partnership, there is a risk that a commercial dispute may arise over use of intellectual property as a result of a poorly defined contractual agreement.

Financial, Delay

3 4 High

Engage credentialed legal advisers to develop well defined contracts and agreements to protect each partner's rights and intellectual property limiting the impact on any disputes in advance. Develop strong relationships to ensure the opportunity for disputes to arise is reduced. This will also reduce the potential impact of any disputes.

2 3 Medium



Rating Pre-mitigation Rating Post-Mitigation

All Phases Partnerships

Risk that CORA's reputation among the local community and public brand is damaged because of a stakeholder, partner, supplier or investor experiencing financial difficulty or receiving negative publicity.

Brand damage 3 4 High

Comprehensive due diligence on all partners, supplier and investors regarding solvency. Development of guidelines regarding behaviours and public statements for all partners, suppliers and investors. Including management of potential issues before they arise.

3 3 Medium


Risk that a partner is required to be removed from or unexpectedly exits the partnership and a suitable replacement is not found in a timely manner.

Cost, Disruption

3 4 High

Development of a partnership succession plan. Relationship management plan for CORA and partners to identify issues before they arise.

2 4 Medium

All Phases Community

Community protests strongly against CORA because of strong Not In My Backyard (NIMBY) culture in small town Modewarre. Also, broader community concern about development being purely for elite athletes. Community rallies against CORA to fight against perception of big business taking over their town.


Fulsome consultation management and community education to ensure greater understanding of CORA concept and recognition of the benefits that will flow to the community over the longer term. Also, fine-tune business model to ensure and highlight key benefits to the community, including education, family fitness, water safety, child care, employment, community prosperity. Ongoing discussions with the eight affected parties with direct amenity impacts to broaden understanding and identify potential solutions.

3 3 Medium


Community

Risk that community sentiment of CORA deteriorates resulting in planning approval not being granted by the Minister or the local council revokes their support in principle


Consultation management plan and business model that appeals to the local community and broad range of influential stakeholders

1 5 Medium



Rating Pre-mitigation Rating Post-Mitigation

Project Delivery, Construction

Supplier

Risk that the construction timeline of CORA is delayed as a result of a supplier or subcontractor experiencing financial difficulty or supply issues.

Cost, Delay 3 4 High

Comprehensive due diligence on all partners, supplier and investors regarding solvency. Prioritising reputable companies with history of strong delivery and finances

2 4 Medium

Planning and Design Phase

Planning and environmental approvals risk

The risk that the necessary planning, environmental and statutory approvals are not obtained in accordance with the timeframe or form agreed, do not meet project requirements, or are more onerous than anticipated. - The risk of obtaining an unfavourable environmental audit score for land remediation.

This may lead to increased costs and delays to project commencement

3 4 High

All community engagement will be completed so that the timeframe for requests from Government are fair. Working to establish relationships, open communication and a shared understanding of timing requirements with key decision makers in government.

2 3 Medium



7.4 Detailed Financial Information

EY has undertaken a sensitivity analysis of the financial model produced by CORA. The sensitivity analysis focused on varying those assumptions which EY believed may have been overstated or carry significant risk of achieving.

Sensitivity analysis

A sensitivity analysis has been undertaken by EY to more critically assess the financial model

proposed by CORA. The capital costs have been taken as given and this analysis focuses on

review of the operating cash flows (pre-finance) to determine, on an operating basis, if the annual

operating revenues are greater than the operating costs. Table 58 below outlines the specific

revenues and costs which have been varied in EY’s sensitivity analysis, the sensitivity applied and

also a description of the reason for the sensitivity. CORA have provided a list of mitigation

measures they intend to undertake to support the revenue proposed. These are included in the

following table over the page.



Table 58 Key assumptions which have been varied for the sensitivity analysis

Category Subcategory

EY applied Sensitivity Description Proposed CORA mitigation

Commercial Retail, Food & Beverage, Wellness Centre

75% of estimated CORA income and expenditure

Given the inherent potential for some delay or vacancy of tenancies in the retail and commercial spaces, EY have assumed that only 75% of total rental income will be achieved annually.

This sensitivity has also been applied to the Wellness Centre (part of the hotel) as decreased footfall resulting from lower retail occupancy may affect daily usage of the Wellness facility and ultimately potential rental revenue.

Interaction with key tenants has commenced and further market analysis will continue throughout the design period with the aim of reaching firm commitments from key tenants shortly.

Should the market analysis determine a reduced appetite for retail leases, the retail component may be staged or reduced and build costs associated with retail would be reduced.

It is expected that tertiary education facility would also feed footfall for this facility, particularly for the F&B.

Sports Performance

Australian sports usage – primary

25% of estimated CORA income

A number of elite Australian sporting clubs already have their own training facilities and there may be limited demand for additional facilities at the level of rental income assumed by CORA.

Although discussions have been held with Geelong Football Club (GFC), a relationship already exists between GFC and Deakin University to use their training facilities as an alternate venue.

It is recognized that GFC has additional requirements for training facilities with additional team requirements (AFLW, VFL and Geelong Falcons). Although additional demand will be tempered by the current financial performance of the club and debt related to their new facility.

EY note that talks will occur with other Victorian sports clubs to fill this tenancy if GFC isn’t appropriate.

The current CORA accommodation schedule includes large areas for club administration, coaching staff, change rooms etc. Should a firm partnership not eventuate with an AFL club or the AFL these buildings will be reduced in size or offered at a later stage once firm commitments are made.

Sports Performance

Australian sports usage - secondary


Consistent with sensitivity of Australian Sports Usage – Primary. There are additional Australian sports revenue items that have been considered (above and beyond those included in the revenue model). These would bolster the Australian Sports usage revenue. These include several elite private schools, Paralympic sports and tailored pre-season training camps.

Sports Performance

Athlete food and beverage


Athlete food and beverage will be impacted by a reduction in Australian sports usage and has been reduced by 25%

Consistent with retail mitigation strategy

University Tertiary rent 25% of estimated

income

There is inherent potential for a tertiary tenant to not be established with the same level of involvement and floor space occupancy as detailed in the financial model. As such, a sensitivity of 25% has been applied.

Should a tenant not be found the university precinct would not be built with the relevant costs to be removed.

Sports Recreation

Gym, studio and pool

50% of estimated income

Gym, studio and pool – Sensitivity of 50% applied to given the large floor space and facilities allocated to the lessee. The tenant would need to be a large gym operator and it may take time to find an appropriate and willing candidate - this may result in the need to reduce the rentable floor

Consistent with retail mitigation strategy





space/facilities. It is also noted that the rates per square meter seem high given the location of the facility based on benchmark data.

Sports Recreation

Wave pool 50% of estimated income

EY considers that overall annual visitation is at the high end. Current wave pool income is estimated on a monthly basis with annual visitation estimates provided. The large visitation profile is best highlighted by the revenue generated and ultimately visitation achieved during Summer months.

For example January of the first year of operation

• Wave pool generates 15% of wave pool surfing revenue and 13,950 surfers and 11,267 general admissions in January

• On a daily basis this comprises 450 surfers per day and an additional 363 general admission visitors per day, totally 813 visitors to the pool each day during January.

• Surfing visitation then continues to grow. By year 3 visitation is 26% higher than year one.

• This numbers considered to be too high with the facility ultimately processing more than one new visitor each minute for 12 hours per day during this peak period.

EY believes that although it may be possible for the facility to maintain high general admission visitation during the summer months, it would be difficult to maintain 450 surfers per day in addition to the 363 non-surfers. EY believes a more appropriate surfing visitation would be around 270 allowing for 30 surfers per hour over nine hours per day during peak period. This allows appropriate space for each surfer and the loss of surfers to the world class free offering that is down the road (Surf Coast). Applying and 50% reduction to wave pool revenue represents a reduction from 450 to 270 surfers due to the revenue associated with this group.

In 2014, 214,500 visited the Surf Coast for surfing. Assuming similar seasonality to the wave pool, this would result in approximately 1000 surfers per day during summer surfing in the Surf Coast. In order for CORA to attract 450 surfers, they would have to either

• transfer 45% of the existing visiting surfers to the wave pool,

• attract large number of new surfers from the non-surfing population or

• Significantly change the surfing habits of local surfers.

Should 50% of the estimated income be reduced then the following operating expenses will also reduce:

• Energy (reduced operating hours)

• Labour costs (reduced operating hours as well as fewer lessons, coaching etc.)

• Hire equipment costs (reduced usage) • Repairs and maintenance (reduced usage)

Sports performance

Naming rights 25% of estimated income

Naming rights revenue of $3.7m is considered be at the high end. A 25% sensitivity has been applied to capture potential of lower revenue for a naming rights deal.

Some example naming right revenues include:

• Perth Stadium naming rights sold for $50m for 10 years ($5m per year) for international and domestic exposure on radio, television and online





streaming services across 20+ AFL games, international and domestic cricket games as well as other major sporting events.

• Holden pay a reported $3m annually as a premium sponsor of Collingwood, of which, anecdotally, half relates to the naming of the training facility. This facility is centrally located and home to one of the highest profile sporting clubs in the country.

While we understand this is viewed as a global facility it is unlikely to provide worldwide exposure that would generate the level of naming rights suggested.

Sports performance

Sponsorships 50% of estimated income

Sponsorship agreement sensitivity is similar to that of naming rights. Sensitivity of 50% has been applied due to the lower baseline for the four proposed sponsorship deals.

All All (except accommodation)

Ramp up of revenues and expenses over 4 year period

It is unlikely that the project revenues will be in full operation in the first year. The following ramp-up has been applied to operations excluding the following items:

• Tertiary, • Sponsorships,

• Australian sports usage

The ramp up applied is : Year 1 – 50% (Only includes one quarter) Year 2 – 70% Year 3 – 85% Year 4 – 100%

Accommodation included a ramp-up within the occupation rates and has therefore been excluded from this analysis.

All All Delay start of operation by 1 year

A delay of 1 year’s start has been included in the sensitivity analysis. This would result in the project being operational in the final quarter of 2020-21, allowing further time for the construction of the project.

Management Facility operation – Land Tax

Addition of land tax (non-recoverable) payable by CORA at $300,000 p.a.

Item was not considered in financial model.

Management Facility operations – Council rate

Addition of council rates (non-recoverable) payable by CORA at $450,000 p.a.

Item was not considered in financial model.

Commercial Marketing costs Costs to market the facility at $500,000 p.a.

Marketing costs were only considered for year one of operations. Marketing has been applied at $500k per year for the duration of the 20 year operating





model (this amount has been sensitised in line with operational ramp-up of retail facilities).



Project Option 1 – Cash flow with sensitivity adjustment

The revised cash flow for Option 1, the preferred option is presented below. As can be seen the

expected revenues are lower, however the project is still cash positive over all.

Table 59 Revised Cash flows for CORA Project Option 1 with Sensitivity analysis

2019-20 2020-21 2021-22 2022-23 2023-24

Revenue

Accommodation

Hotel income (public) $0 $2,548,683 $6,295,274 $6,768,503 $7,564,400

Public lodges and homesteads income $0 $3,266,744 $8,247,171 $9,181,748 $9,997,134

Commercial

Food & beverage rental income $0 $27,313 $170,073 $493,442 $595,033

Retail rental income $0 $78,799 $300,766 $1,058,075 $1,275,914

Services infrastructure rental income $0 $0 $29,877 $146,022 $176,086

Media

Media Centre hire income $0 $26,592 $75,388 $93,831 $113,149

Sport recreation

Wave pool rental income $0 $459,210 $2,587,647 $3,220,697 $3,883,782

Gym, pool and studio rental income $0 $27,994 $157,747 $196,338 $236,761




sports club usage and athlete F&B)

$0 $607,983 $2,447,132 $2,508,310 $2,571,018

Sponsorships and naming rights income $0 $909,403 $3,660,346 $3,751,855 $3,845,651

Education

Tertiary facility rental income $0 $0 $710,679 $965,339 $989,473

Total revenue $0 $7,952,720 $24,682,101 $28,384,161 $31,248,401

Expenses

Accommodation

Hotel outgoings $0 -$1,156,968 -$2,860,521 -$3,083,641 -$3,461,541

Accommodation maintenance $0 -$121,743 -$208,141 -$259,062 -$312,398

Lodges and homestead outgoings $0 -$908,466 -$2,293,715 -$2,554,588 -$2,782,190

Commercial

Commercial maintenance (retail, F&B and services) $0 -$11,663 -$66,331 -$82,558 -$99,555

Commercial management - function heads $0 -$104,511 -$274,472 -$341,620 -$411,953

Rental outgoings (retail, F&B and services) $0 -$44,831 -$251,055 -$304,853 -$358,650

Management

Facility maintenance (landscaping and support assets) $0 -$48,130 -$396,460 -$493,451 -$595,044

Facility operations (management team and overheads) $0 -$598,461 -$2,173,603 -$2,766,118 -$3,343,971

Media

Media centre rental outgoings $0 -$4,750 -$13,300 -$16,150 -$19,000

Sport recreation

Wave pool outgoings $0 -$36,464 -$207,379 -$258,113 -$311,254


Elite training facility maintenance $0 -$72,928 -$296,256 -$303,662 -$932,616

Education

Education facility maintenance $0 $0 -$83,988 -$114,431 -$117,292

Total expenses $0 -$3,108,915 -$9,125,221 -$10,578,246 -$12,745,464

Net total $0 $4,843,805 $15,556,880 $17,805,915 $18,502,937



7.5 Funding sources

The total project cost is estimated at approximately $352.7 million. There are three potential sources of funding for the project:

• Investor Funding - $319.8 million

• State Government Funding - $29.6 million

• Commonwealth Funding - $3.29 million

7.5.1 Investor funding

CORA have defined a three stage funding process for the project as follows:

Stage 1: Initial investment required to develop a Business Case and Planning Request for

Government.

• $3.3 million was raised by seven investors to undertake the initial planning and development works required to develop the project to a stage where additional funding could be sought.

• Stage 1 runs until 1 March 2018 and all investors have decided to rollover their investment into Stage 2

Stage 2: Project Development including land acquisition to construction

• An additional $10 million is sought from investors to support the project through Stage 2 which is due to be completed on 1 October 2018.

• Stage 2 includes the settlement of a number of options on surrounding parcels of land, the completion of the planning approvals and funding announcements from Victorian government.

• Stage 2 also includes some early works such as tube stock planting and land preparation

• Stage 2 also required development of a prospectus and investors for Stage 3. Stage 3: Project Construction

• Stage 3 will require $309.8 million in funding for the construction of the CORA facility as described in the detailed cost plan. (Noting that $10 million of funds would have already been expended in Stage 2).

• Stage 3 is the construction of the CORA site. It is expected that funding will be located and secured by October 2018 and that soon after project management, construction and other associated procurement can be finalised.

• CORA have already begun to consider the opportunities for investor funding for the project. CORA are imminently about to appoint a broker to assist with obtaining funding. The preference is to identify local Australian investors for the project, however if this is not possible then CORA will seek investment from Asia and the Middle East.

7.5.2 State Government Funding

This business case requests $29.6 million from the Victorian State Government for facilitating infrastructure to support CORA which has a total project value of $352.7 million. The organisation seeking funding is COESR Pty. Ltd.

Victorian Government funding is required for the connection of the following infrastructure services to the site including telecommunications, sewer treatment plant upgrade and power, transport upgrades to the site (road and bike path) as well as planning and professional fees. Capital costs are prepared by Altus Group and are based on recently tendered regional accommodation projects of similar capacity to CORA. A breakdown of these is provided for in the table below.

Table 60 Breakdown of funding request to Victorian Government

2018-19 2019-20 Total

Planning Costs and Business Case Funding

1,480,352 379,648 1,860,000

Site Infrastructure Construction Costs 17,044,741 4,371,259 21,416,000

Sub-total net costs 18,525,093 4,750,907 23,276,000



Authorities Charges 0.50% 92,625 23,755 116,380

Escalation to tender 3.00% 555,753 142,527 698,280

Escalation during construction 2.25% 431,403 110,637 542,040

Design contingency 5.00% 980,244 251,391 1,231,635

Contract contingency 6.00% 1,235,107 316,753 1,551,860

Fees 8.00% 1,745,618 447,678 2,193,296

Total 23,569,258 6,044,525 29,613,783

In addition to the funding request to Victorian Government, the proposal also requires rezoning the proposed site from Rural Conservation & Farming Zone to a Special Use Zone. CORA’s proposed timelines for the planning approvals is:

• Lodgement of Planning Scheme Amendment (PSA) request with Surf Coast Shire – 31 January 2018.

• Approval of PSA request – Early indication anticipated on 1 July 2018. With final confirmation by 1 October 2018

CORA have advised that they believe there is a genuine risk that should this project not receive timely planning approval, that the intellectual property within the proposal (and now publically available) could be lost to other Australians states or countries within the Asia Pacific region. Beyond this, given the state and international significance of CORA. For this reason, the planning approval is proposed to be referred to the Minister for Planning.

7.5.3 Commonwealth Funding

A request for funding of approximately $3.2 million was sought from the Regional Jobs and Investment Package (RJIP) fund. As of January 2018 the commonwealth government have provided CORA with a grant of $3.29 million for the project. This grant supports the Australian Government's commitment to stimulate economic growth in Australian regions and demonstrates federal commitment to the project and its outcomes.

7.6 Staffing impacts

There will be no VPS staffing impact requiring additional ongoing funding. The project is expected to generate a significant amount of employment in the Region and this has been discussed in Section 6.3.4.



Management

7.7 Governance and project management strategy

Project governance and control is critical to a project’s ultimate success. A project governance framework has been established by CORA to guide and inform decision making during project development and into project operations. It also enables the efficient and effective management of project delivery and risk management.

The proposed governance arrangements are shown for the two key project states

• Project development (including project planning, design and contractor procurement; construction, commissioning) and

• Operations.

7.7.1 Project Development

The following diagram summarises the proposed governance structure, during Project Development. This governance structure will remain in place from now until the facility is operational. This governance structure may be slightly refined when investors are brought on. The governance structure comprises of COESR Board, project manager and leaders for each of the key areas (shown in grey) reporting to the project manager. The legal entity will be COESR Pty Ltd.

Figure 19: Proposed governance arrangements during project deliver



Table 61: Governance details

Party / group and members Responsibility

CORA Board CORA Board comprising representation from Owners, Sporting Administration, Financial, Legal, Education and Retail sectors

• Meet monthly and receive project status reports from Project Manager

• Ensure that the project meets its intended outcomes aligned in this business case

• Oversees risk management processes

• Approves commencement of each stage of works

• Assesses and maintains oversight of public interest matters and OH&S

• Endorses the project management plan and subsidiary documents

• Endorses procurement and project delivery strategies

• Managing whole of government issues associated with the project (if they arise)

Project Manager

Proleisure in an Owner

Representative role will be

CORA Project Managers.

Nick Garcia, Director of

Proleisure will be the Project

Director on behalf of CORA

• Day-to-day project management

• Negotiation and contract management

• Develops and updates project management plan and prepares monthly project status report for the CORA Board

• Manages delivery schedule and budget with authority to approve minor variations to budget, scope and tolerances

• Manages contractors and internal project resources

• Prepares communications plan main point of contact for Government

• Resolves planning and implementation issues

• Manages project sponsor and stakeholder issues

• Maintains the project risk register

Stakeholders Working

Group

Reports to the Project Manager and is responsible for developing and delivering a detailed stakeholder engagement plan involving three key stakeholder groups 1. Political and key influencers, 2. Tenants (sports & retail) and 3. Visiting teams. The group will be responsible for identifying all potential tenants and visiting teams, securing contracts and negotiating and agreeing the terms of their use of the facility. They will also engage with political and key influencers to keep them informed on progress and support for CORA as a national asset.

• Political Stakeholder Management: StratHouse + TBC

• Tenant Negotiations: Proleisure

• International Sport Usage: MediaCom

Commercial Working

Group

Reports to the Project Manager and is responsible for delivering and executing strategic plans to gain private investment and sponsorship income for CORA.

• Managing Sponsorship: MediaCom

• Overseeing Private Investment: TBC

Legal & Finance Working

Group

Reports to the Project Manager. Responsibilities include ensuring that all contracts and financial processes are adhered to at the highest international standards throughout the process of planning and development.

• Lawyers: Piper Alderman Norton Gledhill

• Accountants: LZR & EY

• IP & Trademarking: Watermark

MARCOMMS Working

Group

Reports to the Project Manager. The working group will have responsibility for communications strategy for CORA with the following objectives: stakeholder and community engagement, building a strong brand, building awareness and ultimately saleability for CORA.

• Manages Brand: Canyon Brand

• Manages Marketing: TBC

• Manages Communications: TBC



7.7.2 Project Operation

The following diagram summarises the proposed governance structure, during Project Development. This governance structure will remain in place from now until the facility is operational. This governance structure may be slightly refined when investors are brought on.

Figure 20: Proposed governance arrangements during operation

Table 62: Governance details

Party / group and

members Responsibility

CORA Board • To maintain the integrity of the CORA offer and brand ensuring that it does not deviate

from its original intent.

• To work with the CORA leadership team to set the high level vision, strategy and objectives for CORA over the medium and long term.

• To ensure financial sustainability, global connectivity and innovation to guarantee CORA remains at the forefront of global sports and wellbeing facilities.

Chief Executive

Officer CORA • Reporting progress to the CORA Board and acting as the main point of communication

between the board and the rest of the business

• Liaising with and updating RDV.

• Working with the board on the development and execution of CORA’s long and short term strategy

• Responsible for day to day management plans

• Responsible for setting and managing the annual budget

Human Resources

Director • To put in place a resource strategy and work with the leadership team to ensure it is

implemented to the highest international standards

• To work with the leadership team and board to define the organisations culture and instil it to all employees as well as building it into the resource strategy

• To create a development strategy for all employees of the business and to work with the heads and leadership team to ensure its implementation and evolution

Chief Financial

Officer • To work with the CEO and leadership team to define and manage the annual budget

taking into account 3rd party stakeholders

• To uphold the highest levels of financial control

• To set the highest standards of procurement and ensure they are observed across the business



Party / group and

members Responsibility

Chief Commercial

Officer • To work with the board and leadership team to create a commercial strategy that as a

minimum delivers the revenue required for the business plan

• To work with the organisations commercial partners to develop and implement innovative commercial tactics to further enhance CORA’s commercial viability

• To oversee all sales and marketing functions to drive year round usage

• To work with the marketing director to ensure the brand of CORA is built to ensure consistency, clarity of message and value add across all commercial and marketing channels

Chief Operations

Officer • Work with the CEO and leadership team to ensure all CORA departments interact as

one cohesive unit to deliver the overall vision and strategic plan outlined by the CEO

• To maintain strong working relationships with all tenants to ensure long term tenancy and identify and work through any issues before they become problems.

• To be the glue between all tenants and key members of staff to facilitate collaboration for mutual gain.

7.8 Stakeholder engagement and communications plan

The project will require an engagement and communications plan to manage the communications

across the broad range of stakeholders and the community who will be impacted or have interest in

the project.

A detailed analysis of key stakeholders and their interest in this project have been identified in

Section 6.1. Significant stakeholder consultation has already been undertaken, and further

consultation and communication will be undertaken throughout project delivery. A stakeholder and

community engagement plan will be developed in the next stage of planning (once land has been

rezoned), however some of the key actions for each of the stakeholder and community groups have

been identified below.

7.8.1 State Government

• Nick Garcia (Project Director) will be the main point of contact for the CORA project for RDV.

• Monthly progress updates to RDV via phone

• Formal monthly updates to G21

7.8.2 Local Government and Agencies

• Both Surf Coast Shire and their executive will be engaged on a weekly basis with formal briefings and presentations monthly.

• It is intended that the CORA will provide full transparency except for commercially or strategically sensitive information.

7.8.3 Community, Public and Adjoining Land Owners

• CORA will manage stakeholder and community expectations for project by communicating progress and providing updates throughout project delivery

• Monitor local and wider press coverage regarding the development

• Identify specific actions to proactively manage stakeholder concerns and expectations. This is particularly important through the construction stage where there will be some disruption to the local area

• Provide a web-presence and provide a resource to respond to queries on the project including individual meetings as needed

Modelled from first principles, CORA has the potential to be truly socially inclusive, helping all sectors of the region, particularly the disadvantaged

Bill Mithen CEO, Give Where You Live Foundation



• CORA will engage with the selected local charity organisation, ‘GIVE WHERE YOU LIVE’ and to fully integrate the project’s procurement and operation with their significant stakeholder program ‘GROW’ as a matter of priority to ensure the project realises an intrinsic intent to represent community interests and needs and the socially disadvantaged

7.8.4 Major Project Partners

Once the team is in place, we will hold regular briefing and status meetings as follows:

• Initial briefing session for all parties, in one room

• Weekly meetings where all functions come together to report on key developments within their area

• More regular, less formal inter functional meetings dictated by key working groups

• Prospective Retail and Commercial Tenants

• Establish and implement a marketing plan to attract new tenants to sign onto the retail village

• Provide regular updates on construction process and tenancy arrangements.



Delivery

7.9 Change management

Changes to the endorsed project scope, budget or programme will be presented to the CORA

Board for endorsement. All significant changes to the project, will be tabled in a recommendation

report by the Project Director to the CORA Board. Change requests presented to the CORA Board

should be in a format of a separate paper outlining the time, cost and quality implications to the

project. The background, issues and final recommendation relating to the scope change shall be

covered in the paper. Endorsement of any changes including consideration of their impacts will be

record in the monthly Project Management Report.

Any substantive changes to the project that meet the below criteria will be discussed with RDV in

advance.

• Have an impact larger than $5 million

• Will impact the reported KPIs to RDV

7.10 Timelines and milestones

The proposed investment has been developed and costed based on a programme by Altus

(quantity surveyors).

The delivery schedule outlined in Figure 21 reflects the identified procurement strategy. It is indicative only, with a more detailed programme to be developed as part of the detailed design, and then finalised with input from the construction contractor. In addition the timelines are highly dependent on obtaining planning approval as identified below.



Figure 21 Milestones for implementation



7.11 Readiness and next steps

This project is ready for Government funding and planning approval so that further detailed design and planning can be undertaken. Key actions to be undertaken in preparation for funding approval and project commencement include:

• Continue implementing communications and stakeholder engagement with key parties and the community

• Continue negotiating and establishing key partnerships, especially confirming the educational, medical and elites sports partnerships as far as can be agreed in the absence of planning approval

• Seek expressions of interest for new tenancy agreements in the retail and commercial spaces

• Programming strategy to inform detailed design

• Prepare investment memorandum.

7.12 Exit strategy

The proposed arrangement with State Government for funding will include many gateways and

approvals before funding is released to CORA. If these gateways or timelines are not met

Government will have the opportunity to exit the proposed funding arrangement (pursuant to the

terms of the signed funding agreement).

If State Government funding is approved for the project, RDV will work with CORA to develop a

funding agreement which appropriately protects Government’s position.



Appendices



Appendix A – Investment Management Standard

Outputs

Cape Otway Road Australia (CORA) Page 4 Page 4


1

BENEFIT MANAGEMENT PLAN Part 2: Reporting and responsibilities

Benefit 1: Improved tourism experience and yield in the Great Ocean Road region

KPI: 1 Visitor numbers to CORA Measure Number of unique day and overnight visitors to CORA Baseline Currently zero Target 200,000 (Low scenario visitor estimates) based on 2024-25 Interim target N/A Source CORA records Reporting Forum CORA report to RDV as part of project progress reporting Start date 1 year after opening Frequency Annually End date 10 years after opening Responsibility for reporting

Name Daryl Pelchen Position Director Organisation CORA

KPI: 2 Increase the length of stay in the Great Ocean Road Measure Average length of stay for domestic and international tourists in GORR Baseline 4.7 days international and 3.4 interstate visitors Target 5 days Interim target No Source Visit Victoria Statistics Reporting Forum CORA report to RDV as part of project progress reporting

Start date 1 year after opening Frequency Annually End date 5 years after opening Responsibility for reporting

Name Daryl Pelchen Position Director Organisation CORA

Investor: Facilitator:

Accredited Facilitator:

Daryl Pelchen n/a Yes

0.1 n/a Katie McNamara 6/12/2017 5.0

Version no: Initial Workshop: Last modified by:

Template version:


Elite Sports Training facility, Accommodation and Retail Village in the Surf Coast, Victoria


Benefit 2: Improved competitiveness to win the rights to host major events in Victoria

KPI: 1 Enhanced brand value and reputation of Victoria

Measure Recognition in the Sports Business “Ultimate Sports City Awards”

Baseline

Melbourne won the Ultimate Sports City awards in 2006, 2008, 2010 and was recognised in 2014

Target To be recognised or a winner in the Ultimate Spots City awards

Interim target No

Source Annual brand survey

Reporting Forum CORA report to RDV as part of project progress reporting

Start date 1 year after opening

Frequency Annually

End date 5 years after opening

Responsibility for reporting

Name Daryl Pelchen

Position Director

Organisation CORA

KPI: 2 Maintain or increase major sporting events in Victoria

Measure Number of major sporting events in Victoria

Baseline

In 2010 there were 27 events, in 2014 there were 32 events in 2016 there were 36 events

Target 40 events

Interim target No

Source

Victorian Major Events Company – Economic Impact of the Victorian Major Events Calendar


Start date 1 year after opening

Frequency Annually



Name Daryl Pelchen

Position Director

Organisation CORA

Benefit 3: Improved wellbeing within the region including better health (mental & physical) and community pride and reduced social disadvantage

KPI: 1 Reduce unemployment

Measure Number of FTE employed at CORA

Baseline Currently zero employed at CORA

Target 171 FTE staff employed at CORA

Interim target n/a

Source CORA employee records


Start date 5 year after opening (2023-24)

Frequency Annually



Name Daryl Pelchen

Position Director

Organisation CORA

Responsibility for delivering the benefits Daryl Pelchen Director 6/12/2017



Appendix B – Stakeholders and Partners

COMPANY NAME EMAIL

Geelong Advertiser Wayne Buttner [email protected],

Surf Coast Times Warick Brown [email protected],

Geelong Business News Davina Montgomery [email protected],

Barwon Water Kate Sullivan [email protected],

City of Greater Geelong Brett Luxford [email protected],

Tourism Greater Geelong & The Bellarine Roger Grant [email protected],

Tourism Greater Geelong & The Bellarine Brett Ince [email protected],

Enterprise Geelong Terry Hickey [email protected],

Cotton On Peter Johnson [email protected],

Deakin Jane Den Hollander [email protected],

UDIA Geelong Tom Roe [email protected],

Committee for Geelong Rebecca Casson [email protected],

Committee for Geelong Rosemary White [email protected],

Committee for Geelong Dan Simmonds [email protected],

Novo Planning Kirsten Kilpatrick [email protected],

GMHBA Mimi Skoko [email protected]

GMHBA Amy Gillet [email protected]

Avalon Airport Justin Giddings [email protected],

Epworth Damian Armour [email protected],

Bendigo Bank Mel Pearce [email protected],

Geelong Chamber of Commerce Bernadette Uzelac [email protected],

Geelong Chamber of Commerce Mark Edmonds [email protected],

Faggs Mitre10 Keith Fagg [email protected],

Geelong Football Club Brian Cook [email protected],

Rip Curl Brian Singer [email protected]

Geelong Football Club Simon Lloyd [email protected]

Ray Frost Investments Ray Frost [email protected]

Cotton On Nigel Austin [email protected]

The Sands Torquay Paddy Hannebury Invite was via Brian Cook

Geelong Football Club Bob Gartland [email protected],

G21 Regional Alliance Elaine Carbines [email protected]

G21 Regional Alliance David Finlayson [email protected],

Golden Plains Shire Cr Des Phelan [email protected],

Colac Otway Shire Cr Chris Potter [email protected],

Surf Coast Shire Cr Brian McKiterick [email protected],

Golden Plains Shire Rod Nicholls [email protected],

Borough of Queenscliffe Lenny Jenner [email protected],

Give Where You Live Foundation Bill Mithen [email protected],

Corangamite CMA Graham Phelps [email protected],

Great Ocean Road Chocolaterie Leanne Neeland [email protected],

Surf Coast Shire Keith Baille [email protected],

Surf Coast Shire Cr Rose Hodge [email protected],

Surf Coast Shire Cr David Bell (Mayor) [email protected],

Surf Coast Shire Cr Margot Smith [email protected],

Surf Coast Shire Cr Libby Coker [email protected],

Surf Coast Shire Cr Clive Goldsworthy (Deputy Mayor) [email protected],

Surf Coast Shire Cr Carol McGregor [email protected],

Surf Coast Shire Chris Pike [email protected],

Surf Coast Shire Ransce Sala [email protected],

Surf Coast Shire Bill Cathcart [email protected],

Surf Coast Shire Matt Taylor [email protected],

Surf Coast Shire Cr Martin Duke [email protected]

Federal Member for Corio Hon Richard Marles MP [email protected],

Federal Member for Corangamite Sarah Henderson MP [email protected],

Member for South Barwon Andrew Katos MP [email protected],

Member for Polwarth Richard Riordan [email protected],

Member for Lara John Eren MP [email protected],

Member for Bellarine Lisa Neville MP [email protected],

Member for Geelong Christine Couzens [email protected],

Office of Hon Lisa Neville MP Kim Walker [email protected],

Member for Western Victoria Simon Ramsey [email protected],

The Office of the Member for Bellarine Ian Trezise [email protected],

G21 Nada Malinac [email protected]

Deakin Prof David Shilbury [email protected],

Deakin Kean Selway [email protected],

Costa Group Frank Costa [email protected]

Kardinia Trust Michael Brown [email protected],

Kardinia Park Stadium Trust Michael Malouf [email protected],

Riordan Grains Jim Riordan [email protected],

Colac Otway Shire Gary Warrener [email protected]

Office of Hon John Eren MP Kelly Toyne [email protected]

City of Greater Geelong Cr Anthony Aitken [email protected]

Geelong Gallery Jason Smith [email protected]

Geelong Gallery Penny Whitehead [email protected]

Bendigo Bank Mike Hirst [email protected]

Bendigo Bank Robert Musgrove [email protected]

Bendigo Bank Mike Fleming [email protected]

RDV Hadden Finger [email protected]

RDV Kathy Timmins [email protected]

Victrack - CEO Campbell Rose [email protected]

Fagg's Mitre 10 Barry Fagg [email protected]

Charles Stewart Real Estate Andrew Rice [email protected]

Whitford Real Estate Dale Whitford [email protected]

Whitford Real Estate Andre Veronie [email protected]

Spence Construction Matt Gibson [email protected]

Spence Construction Glenn McVilly [email protected]

Australia China Business Council Barry White [email protected]

Oakfield Chase - Developers Glen Dyke [email protected]

Grills and Co Conveyancing Murray Grills [email protected]

Ark Resources Jan Talacko [email protected]

Lancemore Group Julian Clark [email protected]

Moss Green Paul Sumner [email protected]

Melbourne City Football Club - CEO Scott Munn [email protected]

Basketball Australia - CEO Anthony Moore [email protected]

Gerard Murphy Constulting Gerard Murphy [email protected]

Australian Automotive Research Centre - GM Ari Suss [email protected]

ASTN (Aust Sports Technologies Networks) Craig Hill [email protected]

Ex GFC Doctor & Aust Open Doctor Hugh Seward [email protected]

Zeally Bay Joel Farnan [email protected]

Zeally Bay Michelle Findlay as above

Gelato Messina Stephen Arnold [email protected]

The School of Life Hannah Gee [email protected]

Tic Group David Harris [email protected]

Marcus Oldham College Bruce Wilson - Chairman [email protected]

Marcus Oldham College Michael Dowling - Board Member [email protected]

McGains Nursery Peter McGain [email protected]

Geelong Osteopath Clinic Dave Birley [email protected]

Geelong Pilates Studio Lu Albrecht [email protected]

Kingfisher Capital Partners Ross Illingworth [email protected]

Whitehead Advisory Stuart Whitehead [email protected]

Mt Moriac Beef Jim McKenna [email protected]

Mt Moriac Beef Eliza Holt [email protected]

Delmore Gallery Don Holt [email protected]

Norton Gledhill David Burridge [email protected]

Catnook Cattery Anita & Graham Kenafacke [email protected]

Moriac Maternal and Childcare Centre Kaye Batson [email protected]

Moriac Kindergarten Reps Alison Marchant [email protected]

Geelong College Mark Cheatley [email protected]

Birregurra Recreation Reserve Paul O Brien [email protected]

Christian College Geelong Daryl Riddle [email protected]

Birregurra CWA Belinda sent via Olivia Tipler

Birregurra CWA Prue sent via Olivia Tipler

Otway Fields Ami Hillege [email protected]

City of Greater Geelong - Arts and Culture Kaz Paton [email protected]

Moriac Primary School Suzanne Prendergast - Principal [email protected]

Moriac Primary School Ben Raidme sent via Suzanne Prendergast

Moriac Primary School - Council President Stuart Christie [email protected]

Great Ocean Road Coastal Committee Richard Davies [email protected]

Surfing Victoria Adam Robertson [email protected]

Barwon Health Foundation Helene Bender OAM [email protected]

Lyons Construction Gary Iacono (Managing Director) [email protected]

Bob Dunnet [email protected]

Colliers John Marasco [email protected]

Colliers Mike Crittenden [email protected]

Pitcher Partners Michael Langhammer [email protected]

Green Building Council of Australia Jamie Wallis [email protected]

Dingle Partners Malcolm Dingle [email protected]

Headland Property Greg Taylor [email protected]

PanUrban Morry Schwartz [email protected]

Gauge Property David Hodgson [email protected]

Fridcorp Paul Fridman [email protected]

Luminosity Australia Mary Delahunty [email protected]

Pitcher Partners Stuart Dall [email protected]

Bourne and Weir John Bourne & Allan Mikola-Dori [email protected]

ReThink Sustainability Justin McFarlane - Executive Director [email protected]

ReThink Sustainability Rob Gell - Executive Director [email protected]

ReThink Sustainability Tobias Hornlein [email protected]



Appendix C – Letters of Intent



Appendix D – Government Funding Details

Breakdown of request to Government for funding of enabling

infrastructure

New Utilities Plant

CORA will aim to demonstrate the highest environmental standards including a stand-alone sewer

plant and solar plant located to the east, on an additional 100 acre site at 1030 Cape Otway Road.

Subject to responsible authority approval, this plant would provide both power and sewer for the

subject site including potentially a capacity to serve the Moriac township. The sewer plant will provide

suitably treated water to the subject site with the solar plant assisting the desired LEED Platinum

accreditation. This is considered enabling infrastructure for the environmental settings required for the project.

Project cost:

Sewer Treatment Plant: $11,433,000

Solar Power Generation: $9,147,000

Funding requested from Government: $20,580,000

Utilities Upgrades

It is necessary to upgrade the existing power and water infrastructure to meet the requirements of the

site and ideally the wider community, as well as ensure the highest levels of sustainability and CORA’s ambition to achieve LEED Platinum status.

Project cost:

Power Upgrade: $1,600,000

Town Water Supply Upgrade: $1,753,000


Bike Path to Moriac

It is intended that a public bike path link the subject site with the Moriac township approximately 6km

with no land acquisition required. (Please refer to drawings attached). This path would provide

improved linkages for the community between the project and the primary resident population in Moriac.

Project cost: $2,734,000






Upgrade to Main Cape Otway Road

In order to support the anticipated traffic to the facility and fulfil the project ambition of relieving

congestion on the Great Ocean Road by creating a ‘loop’, some upgrades will be necessary to the Main Cape Otway Road, including site access slip lanes.

Project cost: $646,000 Funding requested from Government: $646,000

Batsons Road ‘Causeway’ Culvert size increase and unsealed road lifted by approximately 100mm. The location of the road is shown below.

Project cost: Est. $127,000 Funding requested from Government: $127,000



Process Facilitation

Ongoing facilitation The CORA team are also seeking attendance, advocacy and project representation from the Victorian Government to varying state, national and international stakeholders.

Project cost: Time Funding requested from Government: Time

Cultural Assessment CORA has started working with the RAP (Wadawarrung Aboriginal Community) to complete a site

assessment for artefacts of Aboriginal significance within the CORA site. Whist initial findings have

been inconclusive and limited, there is more work to do in both identifying and addressing any

findings. CORA seeks RDV funding and supporting in meeting a mutually beneficial outcome for both the RAP and CORA

Project cost: Est. $443,000 Funding requested from Government: full sum with direct management

Planning Panel In order to elevate and expedite the planning process via Richard Wynne, the Planning Minister as a

result of CORA’s proposed state and international significance, it will be necessary for CORA to fund a planning panel. CORA requests funding from State Government for this panel.

Project cost: up to $380k Funding requested from Government: $380k

Planning Costs CORA has engaged leading local, national and global consultants across the project to ensure it is

delivered with local consideration and tone, but to the highest global standards. This is essential to

ensure CORA is strategically aligned for the global audience it targets as well as meeting and exceeding the industry benchmarks across sports and wellbeing.

Project cost: up to $1,342,000 Funding requested from Government: $1,342,000

## Street Name Suite ###, City, Prov | XXX XXX

T: XXX.XXX.XXXX | E: [email protected] | altusgroup.com

COST PLAN

Cape Otway Road Australia – Business Case Funding Cost Plan for Ernst & Young

January 31, 2018

PROJECT NO: 1319 – Cape Otway Road Australia

REVIEWED BY: Murray Baker

DOCUMENT TITLE: Business Case Funding Cost Plan

ISSUE DATE: January 31, 2018

ALTUS GROUP trading as ALTUS GROUP CONSULTING PTY LTD in Australia ABN 34 091 512 471

Suite 107, 134 Cambridge Street, Collingwood VIC 3066 AUSTRALIA T: +61 3 9642 0299 | E: [email protected] | altusgroup.com

1319 – Cape Otway Road Australia

Business Case Funding Cost Plan January 31, 2018 1 of 9

CONTENTS

1. Executive Summary ......................................................................................................................... 2

Project Parties ......................................................................................................................... 2

2. Cost Summary ................................................................................................................................. 3

3. Project Scope Statement ................................................................................................................. 4

Allowances .............................................................................................................................. 4

General Assumptions .............................................................................................................. 4

Exclusions ............................................................................................................................... 5

4. Basis of Cost Plan ............................................................................................................................ 6

5. Definitions ........................................................................................................................................ 7

Appendix A – Cost Plan Summary and Detail ........................................................................................ 8

DOCUMENT CONTROL:

Signature: Date: January 31, 2018

Reviewed by: Murray Baker

Prepared by: Siyang Chen



1. Executive Summary

Altus Group Consulting (AGC) have prepared a Business Funding Cost Plan for the Cape Otway Road

Australia Facility at Cape Otway Road, Connies Lane, Modewarre VIC 3240.

We emphasis the cost plan is based on preliminary information only. All components of this cost plan

are based on assumptions that require confirmation once further information is available. Please refer

to section 2 for the key assumptions.

Project Parties

Key project stakeholders are:

Principal Consultant: Daryl Pelchen Architects

Project Manager: Proleisure

Architect: Williams Boag Architects

Hospitality Consultant: Maurph

Business Case: Ernst & Young

Sponsorship / Media: Mediacom

Engineering: Macleod Consulting

Landscape: Tract



2. Cost Summary

Our estimate for the construction works is as follows:

Description Construction Cost Total Project Cost

1.01 Infrastructure upgrades $18,905,000 $23,933,000

1.02 Bike path 3.0 wide to Moriac $2,160,000 $2,734,000

1.03 Upgrade Main Cape Otway Road including site access slip lanes $510,000 $646,000

1.04 Connies Lane establishment and road surface upgrade - -

1.05 Batsons Road Causeway modification $100,000 $127,000

1.06 Telecommunications Upgrade Excluded Excluded

1.07 Moriac CFA upgrade Excluded Excluded

1.08 Ongoing Facilitation Excluded Excluded

1.09 Cultural Assessment $350,000 $443,000

1.10 Planning panel fees $300,000 $380,000

1.11 CORA headquarter establishment Excluded Excluded

1.12 Planning Costs $1,060,000 $1,342,000

Total Construction Cost (Excl. GST) $23,385,000 $29,605,000

Sundry Authorities Charges (Provisional Allowance) Included Included

Escalation to Tender - 12 months $702,000 Included

Escalation During Construction - 18 months (discounted at 60%) $542,000 Included

Design Contingency $1,231,000 Included

Contract Contingency $1,552,000 Included

Consultant fees $2,193,000 Included

Total Project Cost (Excl. GST) $29,605,000 $29,605,000



3. Project Scope Statement

Allowances

The following items and corresponding allowances have been included in the cost plan:

Item Project Specific Allowance

Sundry Authorities Charges (Provisional Allowance) Included

Escalation to Tender - 12 months $702,000

Escalation During Construction - 18 months (discounted at 60%) $542,000

Design Contingency $1,232,000

Contract Contingency $1,552,000

Consultant fees $2,193,000

Project Management TBC $400,000.00

Architect $300,000.00

Quantity Surveyor $110,000.00

Land Surveyor TBC $50,000.00

Civil Engineer TBC $50,000.00

Services Engineer TBC $50,000.00

Landscape Architect TBC $50,000.00

Traffic Engineer TBC $50,000.00

General Assumptions

The following general assumptions have been made when preparing the cost plan:

Escalation to tender - 3%, based on 12 months (November 2017 Tender)

Escalation During Construction - 2.25% (based on 18 months construction discounted by 60%)

Design Contingency - 5%

Contract Contingency - 6%

Consultant fees - 8%

Increase the bike lane to 3m wide to meet the best practise



Exclusions

The following are excluded from the cost plan:

Cost of telecommunications Upgrade

Cost of Moriac CFA upgrade

Cost of ongoing facilitation

Cost of CORA headquarter establishment

Cost to upgrade Cape Otway Road (slip lane included)

Finance costs

Legal costs

Investor refund

GST

Items noted as excluded in the cost plan



4. Basis of Cost Plan

The Estimate reflects our opinion of a competitive tendered lump sum contract and is based on the

following documents:

Architectural Concept Masterplan Document ‘CAPE OTWAY ELITE SPORT RETREAT - MASTER PLAN’ prepared by Daryl Pelchen Architects, received on 8 November 2017.

Area Schedule ‘REV 04_20171110’ prepared by Williams Boag Architects, received on 10 November 2017.

CORA Draft Final Business Case CORA updated v3 prepared by Proleisure, received on 29th Jan 2018.

This Cost Plan was prepared using preliminary information. Some allowances and assumptions have been made which will require review and confirmation once the design progresses.



5. Definitions

Included in AGC cost plans, the following terms and corresponding definitions have been used:

Authorities Charges is the allowance included to cover statutory fees typically associated with local

authorities. These include infrastructure charges for connection to sewer, water and electrical services.

Contract Contingency is the contingency provision for variations that arise during the construction phase

of the project. The allowance is intended for documentation discrepancies, latent conditions and minor

necessary design amendments during construction. The contingency is not intended for scope or design

changes.

Cost escalation to tender is a cost management provision to factor in escalation costs during the

design period. As the procurement is a fixed lump sum contract the tenderers will include their own

assessment for escalation which will be “rolled up” within their lump sum price. AGC have based the

calculation on 3% per annum.

Cost escalation to completion is a cost management provision to factor in escalation costs during the

construction period. As the procurement is a fixed lump sum contract the tenderers will include their

own assessment for escalation which will be “rolled up” within their lump sum price. AGC have based

the calculation on 3% per annum however we have discounted this allowance by 60% to reflect monthly

cash flow expenditure.

Design Contingency is a cost management provision to reflect that the documents that the cost plans

are being prepared from are preliminary and we anticipate that additional costs will arise during the

design process. The allowance is not intended for scope or design increases. This allowance will taper

to zero as the documentation is finalised.

Energy Efficiency Allowance / ESD Initiatives are the allowance “extra over” allowance for Energy

Efficiency initiatives.

Professional Fees are the cost for payment of all design and documentation consulting services

required to deliver the building.

Provisional Sums is an allowance that is inserted into tender documents for a specific element of the

works that is not yet defined in enough detail for tenderers to price.



Appendix A – Cost Plan Summary and Detail

Project Summary

Project: 1319 - Cape Otway Elite Sports FacilityBusiness Case FundingBui lding:1319 - Cape Otway Elite Sports FacilityBusiness Case Funding

Detai ls:

Code Description Quantity Unit Rate Total

Business Case Funding Request 23,385,000

SUBTOTAL BUILDING COST 130,366 m2 179 23,385,000

Sundry Authorities Charges (Provisional Allowance) included

Escalation to Tender - 12 months 3.00 % 701,550

Escalation During Construction - 18 months (discounted at 60%) 2.25 % 541,947

SUBTOTAL CONSTRUCTION COST 130,366 m2 189 24,628,497

Design Contingency 5.00 % 1,231,425

Contract Contingency 6.00 % 1,551,595

TOTAL CONSTRUCTION COST 130,366 m2 210 27,411,518

Consultant fees 8.00 % 2,192,921

TOTAL PROJECT COST (TPC) 130,366 m2 227 29,604,439

31/01/2018 Altusgroup Cost Consulting Pty Ltd Page 1 of 1

Cost Plan Summary

Project: 1319 - Cape Otway Elite Sports FacilityBusiness Case FundingBui lding:1319 - Cape Otway Elite Sports FacilityBusiness Case Funding

Detai ls:


Business Case Funding Request

1.01 Infrastructure upgrade

Off site Sewer Treatment Plant located in Moriac 1 Item 7,500,000.00 7,500,000

Power Upgrade 1 Item 1,050,000.00 1,050,000

Town Water Supply Upgrade 1 Item 1,150,000.00 1,150,000

Solar power generation 1 Item 6,000,000.00 6,000,000

Utility Contribution Charges (Advised by Ken Macleod) 1 Item 1,258,000.00 1,258,000

Infrastructure design fees 1 Item 1,947,000.00 1,947,000

1.02 Bike path 3.0m wide to Moriac 18,000 m2 120.00 2,160,000

1.03 Upgrade Main Cape Otway Road including site access slip lanes 1 Item 510,000.00 510,000

1.04 Connies Lane establishment and road surface upgrade 1 Item 0.00 0

1.05 Batsons Road Causeway modification 1 Item 100,000.00 100,000

1.06 Telecommunications Upgrade 1 Item excl. excluded

1.07 Moriac CFA upgrade 1 Item excl. excluded

1.08 Ongoing facilitation 1 Item excl. excluded

1.09 Cultural Assessment 1 Item 350,000.00 350,000

1.10 Planning panel fees 1 Item 300,000.00 300,000

1.11 CORA headquarter establishment 1 Item excl. excluded

1.12 Planning Costs

Project Management TBC 1 Item 400,000.00 400,000

Architect 1 Item 300,000.00 300,000

Quantity Surveyor 1 Item 110,000.00 110,000

Land Surveyor TBC 1 Item 50,000.00 50,000

Civil Engineer TBC 1 Item 50,000.00 50,000

Services Engineer TBC 1 Item 50,000.00 50,000

Landscape Architect TBC 1 Item 50,000.00 50,000

Traffic Engineer TBC 1 Item 50,000.00 50,000

Cultural Heritage Study CHMP - Estimate 1 Item incl. included

Community Engagement 1 Item incl. included




B.1 Funding history

Some initial funding was provided for the development of a business Case

($ million)

Capital Funding 2017-18 2018-19 2019-20 2020-21 2021-22

Grant to support development of a Business Case for CORA

0.100 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000

Total 0.100 0.000 0.000 0.000 0.000

B.2 Existing funding base

Not applicable this is not a prior funded project

($ million)

Description of funding provided 2017-18 2018-19 2019-20 2020-21 2021-22

0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000

B.3 Budget impact – capital

The request for State Government funding is provided below.

Capital funding ($ million)

Estimated asset investment cash flow 2018-19 2019-20 2020-21 2022-23 2024-25 TEI

Government funded component of CORA 23.558 6.044 0.000 0.000 0.000 29.613

Subtotal (gross asset price increase) 23.558 6.044 0.000 0.000 0.000 29.613

Funds from other sources (e.g. asset sale proceeds, Commonwealth funding, GAIC, trust accounts) – specify

(0.000) (0.000) (0.000) (0.000) (0.000) (0.000)

Net impact on capital appropriation 23.558 6.044 0.000 0.000 0.000 29.613

B.4 Budget impact – operational

Not applicable for this project.

Output funding ($ million)

Price change requested for provision of output 20xx-yy 20xx-yy 20xx-yy 20xx-yy 20xx-yy Ongoing

(Component x) gross output price 0.000 0.000 0.000 0.000 0.000 0.000

(Component y) gross output price 0.000 0.000 0.000 0.000 0.000 0.000

Consultants 0.000 0.000 0.000 0.000 0.000 0.000

Maintenance costs 0.000 0.000 0.000 0.000 0.000 0.000

Subtotal (gross asset price increase) 0.000 0.000 0.000 0.000 0.000 0.000

Offset from internal reprioritisation (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)

Offset from revenue (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)



B.5 Budget impact – CAC and depreciation

Not applicable for this project. No impact for Government

($ million)

2017-18 2018-19 2019-20 2020-21 2021-22 Ongoing

Capital asset charge 0.000 0.000 0.000 0.000 0.000 0.000

Depreciation expense 0.000 0.000 0.000 0.000 0.000 0.000

B.6 Existing funding base over forward estimates

Existing revenue estimates for this initiative is not applicable for this project.

($ million)

Existing revenue financial impact 2017-18 2018-19 2019-20 2020-21 2021-22 Total Ongoing

Existing revenue in the forward estimate

0.000 0.000 0.000 0.000 0.000 0.000 0.000

New revenue estimates are not applicable for this project.

($ million)

New revenue financial impact 2017-18 2018-19 2019-20 2020-21 2021-22 Total Ongoing

New revenue initiative 1 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Impact on existing revenue increase/(decrease)

0.000 0.000 0.000 0.000 0.000 0.000 0.000

Net revenue impact 0.000 0.000 0.000 0.000 0.000 0.000 0.000



Appendix E – Capital Cost Plans

The capital cost plans for Options 1 and 2 are provided.

COST PLAN

Cape Otway Road Australia - Business Case Cost Plan

- Option 1 Rev.1

January 31, 2018



DOCUMENT TITLE: Business Case Cost Plan – Option 1 Rev.1





Business Case Cost Plan – Option 1 Rev.1 January 31, 2018 1 of 9

CONTENTS

1. Executive Summary.................................................................................................................................... 2

1.1 Project Parties ................................................................................................................................... 2

2. Cost Summary ............................................................................................................................................ 3

3. Project Scope Statement ............................................................................................................................ 4

3.1 Allowances ......................................................................................................................................... 4

3.2 General Assumptions ........................................................................................................................ 4

3.3 Exclusions .......................................................................................................................................... 5

4. Basis of Cost Plan ...................................................................................................................................... 6

5. Definitions ................................................................................................................................................... 7

Appendix A ........................................................................................................................................................ A

DOCUMENT CONTROL:

Signature: Date: 31 January 2018


Prepare by: Siyang Chen




Altus Group have prepared a Business Case Cost Plan for the proposed Cape Otway Road Australia Facility at Cape Otway Road, Connies Lane, Modewarre VIC 3240. We emphasis the cost plan is based on preliminary information only. All components of this cost plan are based on assumptions that require confirmation once design documentation is available. Please refer to section 3 for assumptions and exclusions. The projects consists of Cotco buildings, Hotels, Wellness Centre, Media / Function Centre, Sport Facilities, Sport Science / Medicine Hub, Support Facilities, Sport Manager Residence (Farm) and infrastructure works.

1.1 Project Parties









Landscape: Tract



2. Cost Summary


DESCRIPTION AMOUNT

1.00 Accommodation $54,632,000

2.00 Sports Recreation $27,168,000

3.00 Sports Performance $54,833,000

4.00 Media $3,811,000

5.00 Commercial - 50% Accommodation Schedule $11,881,000

6.00 Support facilities $13,978,000

7.00 Tertiary Education $40,946,000

8.00 Other $800,000

9.00 Site works and services $8,397,000

10.00 Landscaping $30,000,000

11.00 Site infrastructure (Other than Business Case Funding Request) $7,500,000

12.00 Business Case Funding Request $23,385,000

TOTAL BUILDING COST (EXCL GST) $277,331,000

Authorities Charges (Provisional Allowance - note: excluding business case funding request)

$1,270,000

Escalation to Tender - 12 months, 3% $8,358,000

Escalation During Construction - 18 months (discounted at 60%), 2.25% $6,457,000

Design Contingency - 5% $14,671,000

Contract Contingency - 6% $18,485,000

Consultant fees – 8% $26,126,000

TOTAL PROJECT COST (EXCL GST) $352,698,000




3.1 Allowances



Authorities Charges (Provisional Allowance - note: excluding business case

funding request) $1,270,000

Escalation to Tender - 12 months $8,358,000

Escalation During Construction - 18 months (discounted at 60%) $6,457,000












3.2 General Assumptions


- Authorities Charges - 0.5%

- Escalation to tender - 3%, based on 12 months (November 2017 Tender)

- Escalation During Construction - 2.25% (based on 18 months construction discounted by 60%)

- Design Contingency - 5%

- Contract Contingency - 6%

- Consultant fees - 8%

- Increase the bike lane to 3m wide to meet the best practise



3.3 Exclusions

The following items are excluded from this cost report:

- Asbestos Removal

- Removal of contaminated material

- Loose Furniture and Equipment

- Sporting Equipment including scoreboard elite sports management, GPS tracking etc.

- Sports / Science equipment

- Communications equipment, IT, servers, printers etc.

- ESD sustainable principals (to be determined) beyond sewerage treatment plant ($7,500,000) and

solar power generation ($6,000,000)

- Infrastructure upgrades outside the site boundary beyond specific provisional sums

- Cost of telecommunications Upgrade

- Cost of Moriac CFA upgrade

- Cost of ongoing facilitation

- Cost of CORA headquarter establishment

- Cost to upgrade Cape Otway Road (slip lane included)

- Road closure costs

- Prolongation costs

- Items noted as excluded in Budget Cost Plan

- Land Costs

- Finance costs

- Legal cost

- GST




The Cost Plan reflects our opinion of a competitive tendered lump sum contract and is based on the following

documents:







5. Definitions

Included in APK cost plans, the following terms and corresponding definitions have been used:



Contract Contingency is the contingency provision for variations that arise during the construction phase of

the project. The allowance is intended for documentation discrepancies, latent conditions and minor necessary

design amendments during construction. The contingency is not intended for scope or design changes.

Cost escalation to tender is a cost management provision to factor in escalation costs during the design

period. As the procurement is a fixed lump sum contract the tenderers will include their own assessment for

escalation which will be “rolled up” within their lump sum price. APK have based the calculation on 3% per

annum.


construction period. As the procurement is a fixed lump sum contract the tenderers will include their own

assessment for escalation which will be “rolled up” within their lump sum price. APK have based the calculation

on 3% per annum however we have discounted this allowance by 60% to reflect monthly cash flow expenditure.

Design Contingency is a cost management provision to reflect that the documents that the cost plans are

being prepared from are preliminary and we anticipate that additional costs will arise during the design process.

The allowance is not intended for scope or design increases. This allowance will taper to zero as the

documentation is finalised.

Energy Efficiency Allowance / ESD Initiatives are the allowance “extra over” allowance for Energy Efficiency

initiatives.

Professional Fees are the cost for payment of all design and documentation consulting services required to

deliver the building.

Provisional Sums is an allowance that is inserted into tender documents for a specific element of the works

that is not yet defined in enough detail for tenderers to price.

ALTUS GROUP | CONFIDENTIAL 1319– Cape Otway Elite Sports Facility A

Appendix A

Cost Plan Summary and Details

Project Summary

Project: 1319 - Cape Otway Elite SportsFacility-Option 1Bui lding:1319 - Cape Otway Elite Sports Facility -Option 1

Detai ls:


1.00 Accommodation 18,327 m2 2,981.00 54,632,120

2.00 Sports Recreation 69,473 m2 391.00 27,168,455

3.00 Sports Performance 11,168 m2 4,910.00 54,832,511

4.00 Media 1,031 m2 3,697.00 3,811,185

5.00 Commercial - 50% Accommodation Schedule 12,885 m2 922.00 11,881,007

6.00 Support facilities 5,676 m2 2,463.00 13,977,806

7.00 Tertiary Education 11,806 m2 3,468.00 40,946,310

8.00 Other 800,000

9.00 Site works and services 8,397,056

10.00 Landscaping 30,000,000

11.00 Site infrastructure (Other than Business Case Funding Request) 7,500,000

12.00 Business Case Funding Request 23,385,000

SUBTOTAL BUILDING COST 130,366 m2 2,127 277,331,449

Authorities Charges (Provisional Allowance-note:excluding business case fundingrequest)

0.50 % 1,269,732

Escalation to Tender - 12 months 3.00 % 8,358,035

Escalation During Construction - 18 months (discounted at 60%) 2.25 % 6,456,582

SUBTOTAL CONSTRUCTION COST 130,366 m2 2,251 293,415,799



TOTAL CONSTRUCTION COST 130,366 m2 2,505 326,571,785


TOTAL PROJECT COST (TPC) 130,366 m2 2,705 352,697,527


Cost Plan Summary


Detai ls:


1 .00 Accommodat ion

1.01 Eco lodges 1,782 m2 2,731.00 4,866,642

1.02 Lakeside Surf Eco Lodges 1,215 m2 2,789.00 3,388,635

1.03 Retreat Homestead 11,664 m2 2,400.00 27,993,600

1.03 Homestead land subdivision (excluding landscaping) 48 No 30,000.00 1,440,000

1.04 Athlete Hotel 5,441 m2 2,789.00 15,173,555

1.05 Family Food Restaurant 378 m2 2,731.00 1,032,318

1.06 Fine Dining Restaurant 270 m2 2,731.00 737,370

2.00 Sports Recreat ion

2.01 Main lake watersports centre (Excluded) 0 m2 2,640.00 0

2.02 Public/Membership training and fitness gym 1,492 m2 2,393.00 3,569,758

2.03 Change rooms 486 m2 2,872.00 1,395,792

2.04 Bird watching platform 41 m2 450.00 18,225

2.05 Bike house 135 m2 1,368.00 184,680

2.06 Surfing wave lake 1 item 22,000,000.00

22,000,000

3.00 Spor ts Per formance

3.01 Performance gym 810.00 m2 3,964.00 3,210,840

3.02 Lab-hypoxic and environmental 67.50 m2 3,964.00 267,570

3.03 Lab 2 33.75 m2 3,964.00 133,785

3.04 Nutrition consultation 33.75 m2 3,964.00 133,785

3.05 Nutrition kitchen/shake bar 33.75 m2 3,964.00 133,785

3.06 Physiotherapy 162.00 m2 3,964.00 642,168

3.07 Consultation 1/ Private treatment 24.30 m2 3,964.00 96,325

3.08 Consultation 2/ Private treatment 24.30 m2 3,964.00 96,325

3.09 Anti doping 37.80 m2 3,964.00 149,839

3.10 Medical consultation (Doc suite) 33.75 m2 3,964.00 133,785

3.11 Emergency medical/first aid 37.80 m2 3,964.00 149,839

3.12 Hydrotherapy suite 708.75 m2 3,964.00 2,809,485

3.13 Recovery suite 189.00 m2 3,964.00 749,196

3.14 Performance analysis suite 40.50 m2 3,964.00 160,542

3.15 Auditorium 108.00 m2 2,964.00 320,112

3.16 Indoor sports hall 2,380.05 m2 1,374.00 3,270,189


Cost Plan Summary


Detai ls:


3 .00 Spor ts Per formance (Cont inued)

3.17 Change rooms 1,620.00 m2 3,000.00 4,860,000

3.18 Administration 891.00 m2 3,566.00 3,177,306

3.19 Coaches and support staff 270.00 m2 3,566.00 962,820

3.20 Reception/coffee shope/lounge/nutrition bar 203 m2 2,731.00 553,028

3.21 Sports hub lounge/bar/rest 675 m2 2,731.00 1,843,425

3.22 Athlete dining 439 m2 2,731.00 1,198,226

3.24 MCG oval (AFL) 18,950 m2 235.00 4,453,250

3.25 Soccer 15,336 m2 235.00 3,603,960

3.26 Atheletics track/Sprint track 14,635 m2 350.00 5,122,250

3.27 Rugby league/Union pitch 12,000 m2 235.00 2,820,000

3.28 Synthetic turf pitch 9,600 m2 350.00 3,360,000

3.29 Sand pit/Beach volleyball 336 m2 200.00 67,200

3.31 Tennis courts 4,904 m2 350.00 1,716,400

3.32 Enclosed lap pool 50 meters long x 21 meters wide 2,160 m2 3,650.00 7,883,996

3.33 Boot clean 25 m2 1,368.00 34,200

3.34 Equipment store 80 m2 1,368.00 109,440

3.35 Kit store 80 m2 1,368.00 109,440

Allow for digital signage 1 Item 500,000.00 500,000

4.00 Media

4.01 Media reception 68 m2 3,700.00 249,750

4.02 Media lounge 203 m2 3,700.00 749,250

4.03 Briefing-1 27 m2 3,700.00 99,900

4.04 Briefing-2 27 m2 3,700.00 99,900

4.05 Meeting-1 41 m2 3,700.00 149,850

4.06 Meeting-2 41 m2 3,700.00 149,850

4.07 Board room 61 m2 3,700.00 224,775

4.08 Media press conference 177 m2 3,700.00 654,345

4.09 Multi function conference 270 m2 3,700.00 999,000

4.10 Green room 34 m2 3,700.00 124,875

4.11 Pre-function room 43 m2 3,700.00 159,840

4.12 Studio 1 20 m2 3,700.00 74,925

4.13 Studio 2 20 m2 3,700.00 74,925


Cost Plan Summary


Detai ls:


5 .00 Commerc ia l - 50% Accommodat ion Schedule

5.01 Arts retail 1,215 m2 2,700.00 3,280,500

5.02 F & B retail 3,308 m2 2,700.00 8,930,250

5.03 Sports merchandise retail 1,148 m2 2,700.00 3,098,250

5.04 Lifestyle retail 668 m2 2,700.00 1,804,275

5.06 Support services 2,025 m2 2,700.00 5,467,500

5.07 Treatment and spa 2,253 m2 3,125.00 7,041,094

5.07b Provision for Treatment pools and wet areas 1 Item 500,000.00 500,000

Credit to provide shell space to net areas only 7,864 m2 -1,004.00 -7,895,456

5.01 Reduce Arts retail x 50% -608 m2 2,700.00 -1,640,250

5.02 Reduce F & B retail x 50% -1,654 m2 2,700.00 -4,465,125

5.03 Reduce Sports merchandise retail x 50% -574 m2 2,700.00 -1,549,125

5.04 Reduce Lifestyle retail x 50% -334 m2 2,700.00 -902,138

5.07 Reduce Treatment and spa x 50% -1,836 m2 3,125.00 -5,737,500

Reduce Credit to provide shell space to net areas only x 50% -3,933 m2 -1,004.00 3,948,732

6.00 Support fac i l i t ies

6.03 FM Services Building 338 m2 3,125.00 1,054,688

6.04 Staff Accommodation Block 373 m2 2,800.00 1,043,280

6.05 Management Dwellings 1,458 m2 2,800.00 4,082,400

6.06 Sports Managers Residence 605 m2 2,800.00 1,693,440

6.07 Energy Centre (Building Only - Refer $6M infrastructure allowance for SolarEnergy)

1,350 m2 2,700.00 3,645,000

6.09 Grounds Maintenance / Storage 810 m2 2,700.00 2,187,000

6.10 Security 54 m2 2,700.00 145,800

6.11 Laundry 81 m2 2,700.00 218,700

6.12 Distribution Centre 608 m2 2,700.00 1,640,250

6.04 Reduce Staff Accommodation Block x 30% -112 m2 2,800.00 -0

6.05 Reduce Management Dwellings x 30% -437 m2 2,800.00 -1,224,720

6.06 Reduce Sports Managers Residence x 30% -181 m2 2,800.00 -508,032

7.00 Ter t iary Educat ion

7.02 Teaching rooms / lecture halls 4,050 m2 3,600.00 14,580,000

7.03 Exercise Sports Science Area 2,464 m2 3,600.00 8,869,500

7.04 Academic Administration offices 1,782 m2 3,370.00 6,005,340

7.05 Business and Innovation Suite includes meeting rooms / post grad prog 1,350 m2 3,370.00 4,549,500


Cost Plan Summary


Detai ls:


7 .00 Ter t iary Educat ion (Cont inued)

7.06 Academic Changing Facilities 378 m2 3,000.00 1,134,000

7.07 Archive Centre 54 m2 3,530.00 190,620

7.12 Performance and Participation Administration Offices 230 m2 3,370.00 773,415

7.13 Sports Performance and Participation Reception 68 m2 3,370.00 227,475

7.14 Clinical Space – physio/ physical therapy / rehab 108 m2 3,370.00 363,960

7.15 Indoor Changing Facilities 378 m2 3,000.00 1,134,000

7.16 Catering/dinning 945 m2 3,300.00 3,118,500

8.00 Other

8.03 Farmhouse (Sport Manager Residence) 448 m2

8.04 Farm Depot 800,000

9.00 Si te works and serv ices

9.01 Demolition 1 Item 220,000.00 220,000

9.02 Civil Works including stormwater 1 Item 2,200,000.00 2,200,000

9.03 Road paving 41,473 m2 84.00 3,483,732

9.04 Helipad 1 Item 150,000.00 150,000

9.05 On site water reticulation 1 Item 150,000.00 150,000

9.06 Connie's Lane and new residential developement road works 10,900 m2 84.00 915,600

9.07 Open car parking 15,211 m2 84.00 1,277,724

10.00 Landscaping

10.01 Landscaping and improvements 1 Item 13,000,000.00

13,000,000

10.02 Pier/Boardwalk 9,103 m2 450.00 4,096,350

10.03 Boardwalk 3,850 m2 450.00 0

10.04 Distribution center paving 2,066 m2 120.00 247,920

10.05 Market square paving 6,046 m2 120.00 725,520

10.06 Wharf/Boardwalk 10,299 m2 450.00 0

10.07 Pedestrain path 4,909 m2 120.00 589,080

10.08 Fences 1,497 m 400.00 598,800

10.09 Contribution to public realm landscape works 1 Item 5,000,000.00 5,000,000

10.10 Fragrance garden and 1,050 m2 300.00 315,000

10.11 Granitic Sand Family cycle path 19,308 m2 120.00 2,316,960

10.12 Site wide running path and fitness trail 1,609 m2 250.00 402,250


Cost Plan Summary


Detai ls:


10.00 Landscaping (Cont inued)

10.13 Walk and bike lane 7,592 m2 58.00 440,336

10.14 Homestead land subdivision \ landscaping 48 No 5,000.00 240,000

10.15 Childcare outside space 630 m2 200.00 126,000

10.16 Upgrade, fencing (Conservation Land) 300,000

10.17 Sundry landscaping / rounding 1 Item 130,689.00 130,689

10.02 Reduce Pier/Boardwalk x 30% -2,731 m2 450.00 -1,228,905

10.03 Reduce Boardwalk x 30% -1,155 m2 450.00 -0

10.06 Reduce Wharf/Boardwalk x 30% -3,090 m2 450.00 -0

Cap total site boardwalk area to be 6,000m2 6,000 m2 450.00 2,700,000

11.00 Si te in f rast ruc ture (Other than Business Case Funding Request)

11.01 Moriac Train single platform station including road and parking (excludesland, rail tracks and signal upgrades)

1 Item 7,500,000.00 7,500,000

12.00 Bus iness Case Funding Request









12.03 Upgrade Main Cape Otway Road including site access slip lanes2 1 Item 510,000.00 510,000









12.12 Planning Costs


Architect 1 Item 300,000.00 300,000


Cost Plan Summary


Detai ls:


12.00 Bus iness Case Funding Request (Cont inued)










COST PLAN

Cape Otway Road Australia - Business Case Cost Plan

- Option 2 Rev.1

January 31, 2018



DOCUMENT TITLE: Business Case Cost Plan – Option 2 Rev.1






CONTENTS

1. Executive Summary.................................................................................................................................... 2

1.1 Project Parties ................................................................................................................................... 2

2. Cost Summary ............................................................................................................................................ 3

3. Project Scope Statement ............................................................................................................................ 4

3.1 Allowances ......................................................................................................................................... 4

3.2 General Assumptions ........................................................................................................................ 4

3.3 Exclusions .......................................................................................................................................... 5

4. Basis of Cost Plan ...................................................................................................................................... 6

5. Definitions ................................................................................................................................................... 7

Appendix A ........................................................................................................................................................ A

DOCUMENT CONTROL:

Signature: Date: 31 January 2018


Prepare by: Siyang Chen




Altus Group have prepared a Business Case Cost Plan for the proposed Cape Otway Road Australia Facility at Cape Otway Road, Connies Lane, Modewarre VIC 3240. We emphasis the cost plan is based on preliminary information only. All components of this cost plan are based on assumptions that require confirmation once design documentation is available. Please refer to section 3 for assumptions and exclusions. Option 2 comprises similar scope to option 1, however has deleted the elites sporting components of the building. The projects consists of Cotco buildings, Hotels, Wellness Centre, Sport Science / Medicine Hub, Support Facilities, (Farm) and infrastructure works.

1.1 Project Parties









Landscape: Tract



2. Cost Summary


DESCRIPTION AMOUNT

1.00 Accommodation $54,632,000

2.00 Sports Recreation $27,168,000

3.00 Sports Performance -

4.00 Media -

5.00 Commercial - 50% Accommodation Schedule $11,881,000

6.00 Support facilities $11,454,000

7.00 Tertiary Education -

8.00 Other $800,000

9.00 Site works and services $8,397,000

10.00 Landscaping $30,000,000

11.00 Site infrastructure (Other than Business Case Funding Request) $7,500,000

12.00 Business Case Funding Request $23,385,000

TOTAL BUILDING COST (EXCL GST) $175,218,000

Authorities Charges (Provisional Allowance - note: excluding business case funding request)

$759,000

Escalation to Tender - 12 months, 3% $5,279,000

Escalation During Construction - 18 months (discounted at 60%), 2.25% $4,078,000

Design Contingency - 5% $9,267,000

Contract Contingency - 6% $11,676,000

Consultant fees – 8% $16,502,000

TOTAL PROJECT COST (EXCL GST) $222,780,000




3.1 Allowances



Authorities Charges (Provisional Allowance - note: excluding business case

funding request) $759,000

Escalation to Tender - 12 months $5,279,000

Escalation During Construction - 18 months (discounted at 60%) $4,078,000












3.2 General Assumptions


- Authorities Charges - 0.5%

- Escalation to tender - 3%, based on 12 months (November 2017 Tender)

- Escalation During Construction - 2.25% (based on 18 months construction discounted by 60%)

- Design Contingency - 5%

- Contract Contingency - 6%

- Consultant fees - 8%

- Increase the bike lane to 3m wide to meet the best practise



3.3 Exclusions

The following items are excluded from this cost report:

- Sports performance

- Media

- Tertiary Education

- Reduction in building areas for staff accommodation and management dwellings

- Sports manager’s residence

- Asbestos Removal

- Removal of contaminated material

- Loose Furniture and Equipment

- Sporting Equipment including scoreboard elite sports management, GPS tracking etc.

- Sports / Science equipment

- Communications equipment, IT, servers, printers etc.

- ESD sustainable principals (to be determined) beyond sewerage treatment plant ($7,500,000) and

solar power generation ($6,000,000)

- Infrastructure upgrades outside the site boundary beyond specific provisional sums

- Cost of telecommunications Upgrade

- Cost of Moriac CFA upgrade

- Cost of ongoing facilitation

- Cost of CORA headquarter establishment

- Cost to upgrade Cape Otway Road (slip lane included)

- Road closure costs

- Prolongation costs

- Items noted as excluded in Budget Cost Plan

- Land Costs

- Investor refund

- Finance costs

- Legal cost

- GST




The Cost Plan reflects our opinion of a competitive tendered lump sum contract and is based on the following

documents:







5. Definitions

Included in APK cost plans, the following terms and corresponding definitions have been used:



Contract Contingency is the contingency provision for variations that arise during the construction phase of

the project. The allowance is intended for documentation discrepancies, latent conditions and minor necessary

design amendments during construction. The contingency is not intended for scope or design changes.

Cost escalation to tender is a cost management provision to factor in escalation costs during the design

period. As the procurement is a fixed lump sum contract the tenderers will include their own assessment for

escalation which will be “rolled up” within their lump sum price. APK have based the calculation on 3% per

annum.


construction period. As the procurement is a fixed lump sum contract the tenderers will include their own

assessment for escalation which will be “rolled up” within their lump sum price. APK have based the calculation

on 3% per annum however we have discounted this allowance by 60% to reflect monthly cash flow expenditure.

Design Contingency is a cost management provision to reflect that the documents that the cost plans are

being prepared from are preliminary and we anticipate that additional costs will arise during the design process.

The allowance is not intended for scope or design increases. This allowance will taper to zero as the

documentation is finalised.

Energy Efficiency Allowance / ESD Initiatives are the allowance “extra over” allowance for Energy Efficiency

initiatives.

Professional Fees are the cost for payment of all design and documentation consulting services required to

deliver the building.

Provisional Sums is an allowance that is inserted into tender documents for a specific element of the works

that is not yet defined in enough detail for tenderers to price.

ALTUS GROUP | CONFIDENTIAL 1319– Cape Otway Elite Sports Facility A

Appendix A

Cost Plan Summary and Details

Project Summary


Detai ls:


1.00 Accommodation 18,327 m2 2,981.00 54,632,120

2.00 Sports Recreation 69,473 m2 391.00 27,168,455

3.00 Sports Performance - - -

4.00 Media - - -

5.00 Commercial - 50% Accommodation Schedule 7,880 m2 1,508.00 11,881,007

6.00 Support facilities 4,156 m2 2,756.00 11,454,278

7.00 Tertiary Education - - -

8.00 Other 800,000

9.00 Site works and services 8,397,056

10.00 Landscaping 30,000,000

11.00 Site infrastructure (Other than Business Case Funding Request) 7,500,000

12.00 Business Case Funding Request 23,385,000

SUBTOTAL BUILDING COST 99,836 m2 1,755 175,217,915

Authorities Charges (Provisional Allowance-note:excluding business case fundingrequest)

0.50 % 759,165

Escalation to Tender - 12 months 3.00 % 5,279,312

Escalation During Construction - 18 months (discounted at 60%) 2.25 % 4,078,269

SUBTOTAL CONSTRUCTION COST 99,836 m2 1,856 185,334,661



TOTAL CONSTRUCTION COST 99,836 m2 2,066 206,277,477


TOTAL PROJECT COST (TPC) 99,836 m2 2,231 222,779,676


Cost Plan Summary


Detai ls:


1 .00 Accommodat ion

1.01 Eco lodges 1,782 m2 2,731.00 4,866,642

1.02 Lakeside Surf Eco Lodges 1,215 m2 2,789.00 3,388,635

1.03 Retreat Homestead 11,664 m2 2,400.00 27,993,600

1.03 Homestead land subdivision (excluding landscaping) 48 No 30,000.00 1,440,000

1.04 Athlete Hotel 5,441 m2 2,789.00 15,173,555

1.05 Family Food Restaurant 378 m2 2,731.00 1,032,318

1.06 Fine Dining Restaurant 270 m2 2,731.00 737,370

2.00 Sports Recreat ion

2.01 Main lake watersports centre (Excluded) 0 m2 2,640.00 0

2.02 Public/Membership training and fitness gym 1,492 m2 2,393.00 3,569,758

2.03 Change rooms 486 m2 2,872.00 1,395,792

2.04 Bird watching platform 41 m2 450.00 18,225

2.05 Bike house 135 m2 1,368.00 184,680

2.06 Surfing wave lake 1 item 22,000,000.00

22,000,000

5.00 Commerc ia l - 50% Accommodat ion Schedule

5.01 Arts retail 1,215 m2 2,700.00 3,280,500

5.02 F & B retail 3,308 m2 2,700.00 8,930,250

5.03 Sports merchandise retail 1,148 m2 2,700.00 3,098,250

5.04 Lifestyle retail 668 m2 2,700.00 1,804,275

5.06 Support services 2,025 m2 2,700.00 5,467,500

5.07 Treatment and spa 2,253 m2 3,125.00 7,041,094

5.07b Provision for Treatment pools and wet areas 1 Item 500,000.00 500,000

Credit to provide shell space to net areas only 7,864 m2 -1,004.00 -7,895,456

5.01 Reduce Arts retail x 50% -608 m2 2,700.00 -1,640,250

5.02 Reduce F & B retail x 50% -1,654 m2 2,700.00 -4,465,125

5.03 Reduce Sports merchandise retail x 50% -574 m2 2,700.00 -1,549,125

5.04 Reduce Lifestyle retail x 50% -334 m2 2,700.00 -902,138

5.07 Reduce Treatment and spa x 50% -1,836 m2 3,125.00 -5,737,500

Reduce Credit to provide shell space to net areas only x 50% -3,933 m2 -1,004.00 3,948,732

6.00 Support fac i l i t ies

6.03 FM Services Building 338 m2 3,125.00 1,054,688


Cost Plan Summary


Detai ls:


6 .00 Support fac i l i t ies (Cont inued)

6.04 Staff Accommodation Block 373 m2 2,800.00 1,043,280

6.05 Management Dwellings 1,458 m2 2,800.00 4,082,400

6.06 Sports Managers Residence 605 m2 2,800.00 1,693,440

6.07 Energy Centre (Building Only - Refer $6M infrastructure allowance for SolarEnergy)

1,350 m2 2,700.00 3,645,000

6.09 Grounds Maintenance / Storage 810 m2 2,700.00 2,187,000

6.10 Security 54 m2 2,700.00 145,800

6.11 Laundry 81 m2 2,700.00 218,700

6.12 Distribution Centre 608 m2 2,700.00 1,640,250

6.04 Reduce Staff Accommodation Block x 50% -186 m2 2,800.00 -521,640

6.05 Reduce Management Dwellings x 50% -729 m2 2,800.00 -2,041,200

6.06 Reduce Sports Managers Residence x 100% -605 m2 2,800.00 -1,693,440

8.00 Other

8.03 Farmhouse (Sport Manager Residence) 448 m2

8.04 Farm Depot 800,000

9.00 Si te works and serv ices

9.01 Demolition 1 Item 220,000.00 220,000

9.02 Civil Works including stormwater 1 Item 2,200,000.00 2,200,000

9.03 Road paving 41,473 m2 84.00 3,483,732

9.04 Helipad 1 Item 150,000.00 150,000

9.05 On site water reticulation 1 Item 150,000.00 150,000

9.06 Connie's Lane and new residential developement road works 10,900 m2 84.00 915,600

9.07 Open car parking 15,211 m2 84.00 1,277,724

10.00 Landscaping

10.01 Landscaping and improvements 1 Item 13,000,000.00

13,000,000

10.02 Pier/Boardwalk 9,103 m2 450.00 4,096,350

10.03 Boardwalk 3,850 m2 450.00 0

10.04 Distribution center paving 2,066 m2 120.00 247,920

10.05 Market square paving 6,046 m2 120.00 725,520

10.06 Wharf/Boardwalk 10,299 m2 450.00 0

10.07 Pedestrain path 4,909 m2 120.00 589,080

10.08 Fences 1,497 m 400.00 598,800


Cost Plan Summary


Detai ls:


10.00 Landscaping (Cont inued)

10.09 Contribution to public realm landscape works 1 Item 5,000,000.00 5,000,000

10.10 Fragrance garden and 1,050 m2 300.00 315,000

10.11 Granitic Sand Family cycle path 19,308 m2 120.00 2,316,960

10.12 Site wide running path and fitness trail 1,609 m2 250.00 402,250

10.13 Walk and bike lane 7,592 m2 58.00 440,336

10.14 Homestead land subdivision \ landscaping 48 No 5,000.00 240,000

10.15 Childcare outside space 630 m2 200.00 126,000

10.16 Upgrade, fencing (Conservation Land) 300,000

10.17 Sundry landscaping / rounding 1 Item 130,689.00 130,689

10.02 Reduce Pier/Boardwalk x 30% -2,731 m2 450.00 -1,228,905

10.03 Reduce Boardwalk x 30% -1,155 m2 450.00 -0

10.06 Reduce Wharf/Boardwalk x 30% -3,090 m2 450.00 -0

Cap total site boardwalk area to be 6,000m2 6,000 m2 450.00 2,700,000

11.00 Si te in f rast ruc ture (Other than Business Case Funding Request)

11.01 Moriac Train single platform station including road and parking (excludesland, rail tracks and signal upgrades)

1 Item 7,500,000.00 7,500,000

12.00 Bus iness Case Funding Request









12.03 Upgrade Main Cape Otway Road including site access slip lanes2 1 Item 510,000.00 510,000









Cost Plan Summary


Detai ls:


12.00 Bus iness Case Funding Request (Cont inued)


12.12 Planning Costs


Architect 1 Item 300,000.00 300,000












Appendix F – Operating Costs and Revenues

The estimated operating costs and revenues over a 20 year period are provided for the following:

• Project Option 1 – CORA financial estimates

• Project Option 1 – CORA financials with EY sensitivities applied

• Project Option 2 - CORA financial estimates



Project Option 1 – CORA financial estimates

Table 1 Project Option 1 – CORA financial estimate

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 3032-33 2033-34 2034-35 2035-36 2036-27 2037-38 2038-39 2039-40

Revenue

Accommodation

Hotel income (public and visiting teams) $2,548,683 $6,295,274 $6,768,503 $7,564,400 $8,445,909 $8,914,744 $9,303,949 $9,536,547 $9,801,548 $10,019,335 $10,269,818 $10,526,564 $10,819,076 $11,059,471 $11,335,958 $11,619,357 $11,942,235 $12,207,587 $12,512,776 $12,825,596 $13,100,620

Public lodges and homesteads income $3,266,744 $8,247,171 $9,181,748 $9,997,134 $10,767,445 $11,568,485 $12,190,045 $12,494,796 $12,842,001 $13,127,345 $13,455,528 $13,791,917 $14,175,166 $14,490,132 $14,852,386 $15,223,695 $15,646,731 $15,994,395 $16,394,255 $16,804,111 $17,164,449

Commercial

Food & beverage rental income $72,834 $323,950 $774,027 $793,378 $813,212 $833,543 $854,381 $875,741 $897,634 $920,075 $943,077 $966,654 $990,820 $1,015,591 $1,040,981 $1,067,005 $1,093,680 $1,121,022 $1,149,048 $1,177,774 $1,198,563

Retail rental income $210,130 $572,888 $1,659,726 $1,701,219 $1,743,749 $1,787,343 $1,832,027 $1,877,827 $1,924,773 $1,972,892 $2,022,215 $2,072,770 $2,124,589 $2,177,704 $2,232,146 $2,287,950 $2,345,149 $2,403,778 $2,463,872 $2,525,469 $2,573,950

Services infrastructure rental income $0 $56,908 $229,054 $234,781 $240,650 $246,666 $252,833 $259,154 $265,633 $272,274 $279,080 $286,057 $293,209 $300,539 $308,053 $315,754 $323,648 $331,739 $340,032 $348,533 $355,028

Media

Media Centre hire income $53,184 $107,697 $110,390 $113,149 $115,978 $118,878 $121,850 $124,896 $128,018 $131,219 $134,499 $137,862 $141,308 $144,841 $148,462 $152,173 $155,978 $159,877 $163,874 $167,971 $170,045

Sport recreation

Wave pool rental income $1,836,839 $7,393,278 $7,578,110 $7,767,563 $7,961,752 $8,160,796 $8,364,816 $8,573,936 $8,788,285 $9,007,992 $9,233,192 $9,464,022 $9,700,622 $9,943,138 $10,191,716 $10,446,509 $10,707,672 $10,975,363 $11,249,748 $11,530,991 $11,745,854

Gym, pool and studio rental income $111,976 $450,705 $461,972 $473,522 $485,360 $497,494 $509,931 $522,679 $535,746 $549,140 $562,868 $576,940 $591,363 $606,148 $621,301 $636,834 $652,755 $669,074 $685,800 $702,945 $716,044




sports club usage and athlete F&B)$1,187,190 $4,778,438 $4,897,899 $5,020,346 $5,145,855 $5,274,501 $5,406,364 $5,541,523 $5,680,061 $5,822,063 $5,967,614 $6,116,805 $6,269,725 $6,426,468 $6,587,130 $6,751,808 $6,920,603 $7,093,618 $7,270,958 $7,452,732 $7,591,603

Sponsorships and naming rights income $2,282,229 $9,185,974 $9,415,623 $9,651,013 $9,892,289 $10,139,596 $10,393,086 $10,652,913 $10,919,236 $11,192,217 $11,472,022 $11,758,823 $12,052,793 $12,354,113 $12,662,966 $12,979,540 $13,304,029 $13,636,629 $13,977,545 $14,326,984 $14,593,946

Education

Tertiary facility rental income $0 $2,842,717 $3,861,357 $3,957,891 $4,056,839 $4,158,259 $4,262,216 $4,368,771 $4,477,991 $4,589,940 $4,704,689 $4,822,306 $4,942,864 $5,066,435 $5,193,096 $5,322,924 $5,455,997 $5,592,397 $5,732,207 $5,875,512 $5,985,452

Total revenue $11,569,809 $40,254,999 $44,938,410 $47,274,397 $49,669,038 $51,700,305 $53,491,496 $54,828,784 $56,260,926 $57,604,491 $59,044,603 $60,520,718 $62,101,535 $63,584,580 $65,174,194 $66,803,549 $68,548,475 $70,185,479 $71,940,116 $73,738,619 $75,195,554

Expenses

Accommodation

Hotel outgoings -$1,156,968 -$2,860,521 -$3,083,641 -$3,461,541 -$3,879,959 -$4,101,131 -$4,283,501 -$4,390,589 -$4,512,594 -$4,612,862 -$4,728,184 -$4,846,388 -$4,981,060 -$5,091,737 -$5,219,030 -$5,349,506 -$5,498,158 -$5,620,325 -$5,760,833 -$5,904,854 -$6,031,474

Accommodation maintenance -$121,743 -$297,345 -$304,778 -$312,398 -$320,208 -$328,213 -$336,418 -$344,829 -$353,449 -$362,286 -$371,343 -$380,626 -$390,142 -$399,896 -$409,893 -$420,140 -$430,644 -$441,410 -$452,445 -$463,756 -$472,416

Lodges and homestead outgoings -$908,466 -$2,293,715 -$2,554,588 -$2,782,190 -$2,995,726 -$3,217,109 -$3,389,126 -$3,473,854 -$3,570,385 -$3,649,718 -$3,740,961 -$3,834,485 -$3,941,037 -$4,028,606 -$4,129,321 -$4,232,554 -$4,350,168 -$4,446,827 -$4,557,998 -$4,671,947 -$4,772,130

Commercial

Commercial maintenance (retail, F&B and services) -$23,326 -$94,758 -$97,127 -$99,555 -$102,044 -$104,595 -$107,210 -$109,890 -$112,638 -$115,454 -$118,340 -$121,299 -$124,331 -$127,439 -$130,625 -$133,891 -$137,238 -$140,669 -$144,186 -$147,790 -$150,550

Commercial management - function heads -$171,522 -$392,103 -$401,906 -$411,953 -$422,252 -$432,808 -$443,629 -$454,719 -$466,087 -$477,739 -$489,683 -$501,925 -$514,473 -$527,335 -$540,518 -$554,031 -$567,882 -$582,079 -$596,631 -$611,547 -$622,966

Rental outgoings (retail, F&B and services) -$119,550 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200

Management

Facility maintenance (landscaping and support assets) -$96,259 -$566,371 -$580,530 -$595,044 -$609,920 -$625,168 -$640,797 -$656,817 -$673,237 -$690,068 -$707,320 -$725,003 -$743,128 -$761,706 -$780,749 -$800,267 -$820,274 -$840,781 -$861,800 -$883,345 -$899,840

Facility operations (management team and overheads)-$1,035,423 -$2,069,432 -$2,121,168 -$2,174,197 -$2,228,552 -$2,284,266 -$2,341,373 -$2,399,907 -$2,459,905 -$2,521,403 -$2,584,438 -$2,649,049 -$2,715,275 -$2,783,157 -$2,852,736 -$2,924,054 -$2,997,155 -$3,072,084 -$3,148,886 -$3,227,608 -$3,287,876

Media

Media centre rental outgoings -$9,500 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000

Sport recreation

Wave pool outgoings -$72,928 -$296,256 -$303,662 -$311,254 -$319,035 -$327,011 -$335,186 -$343,566 -$352,155 -$360,959 -$369,983 -$379,232 -$388,713 -$398,431 -$408,392 -$418,601 -$429,066 -$439,793 -$450,788 -$462,058 -$470,685


Elite training facility maintenance -$218,516 -$887,678 -$909,870 -$932,616 -$955,932 -$979,830 -$1,004,326 -$1,029,434 -$1,055,170 -$1,081,549 -$1,108,588 -$1,136,302 -$1,164,710 -$1,193,828 -$1,223,673 -$1,254,265 -$1,285,622 -$1,317,762 -$1,350,706 -$1,384,474 -$1,410,326

Education

Tertiary facility maintenance $0 -$335,953 -$457,726 -$469,169 -$480,898 -$492,921 -$505,244 -$517,875 -$530,822 -$544,092 -$557,694 -$571,637 -$585,928 -$600,576 -$615,590 -$630,980 -$646,755 -$662,923 -$679,497 -$696,484 -$709,489

Expenses -$3,934,201 -$10,591,332 -$11,312,196 -$12,047,117 -$12,811,725 -$13,390,252 -$13,884,009 -$14,218,679 -$14,583,642 -$14,913,329 -$15,273,732 -$15,643,146 -$16,045,996 -$16,409,909 -$16,807,727 -$17,215,490 -$17,660,162 -$18,061,854 -$18,500,970 -$18,951,064 -$19,324,952

Net total $7,635,609 $29,663,667 $33,626,214 $35,227,280 $36,857,313 $38,310,052 $39,607,487 $40,610,104 $41,677,284 $42,691,162 $43,770,871 $44,877,573 $46,055,539 $47,174,670 $48,366,467 $49,588,059 $50,888,313 $52,123,625 $53,439,146 $54,787,554 $55,870,602




Table 2 Project Option 1 – CORA financial estimate with EY sensitivities applied

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 3032-33 2033-34 2034-35 2035-36 2036-27 2037-38 2038-39 2039-40

Revenue

Accommodation

Hotel income (public) $0 $2,548,683 $6,295,274 $6,768,503 $7,564,400 $8,445,909 $8,914,744 $9,303,949 $9,536,547 $9,801,548 $10,019,335 $10,269,818 $10,526,564 $10,819,076 $11,059,471 $11,335,958 $11,619,357 $11,942,235 $12,207,587 $12,512,776 $12,825,596

Public lodges and homesteads income $0 $3,266,744 $8,247,171 $9,181,748 $9,997,134 $10,767,445 $11,568,485 $12,190,045 $12,494,796 $12,842,001 $13,127,345 $13,455,528 $13,791,917 $14,175,166 $14,490,132 $14,852,386 $15,223,695 $15,646,731 $15,994,395 $16,394,255 $16,804,111

Commercial

Food & beverage rental income $0 $27,313 $170,073 $493,442 $595,033 $609,909 $625,157 $640,786 $656,806 $673,226 $690,056 $707,308 $724,990 $743,115 $761,693 $780,735 $800,254 $820,260 $840,767 $861,786 $883,331

Retail rental income $0 $78,799 $300,766 $1,058,075 $1,275,914 $1,307,812 $1,340,507 $1,374,020 $1,408,370 $1,443,580 $1,479,669 $1,516,661 $1,554,577 $1,593,442 $1,633,278 $1,674,110 $1,715,963 $1,758,862 $1,802,833 $1,847,904 $1,894,102

Services infrastructure rental income $0 $0 $29,877 $146,022 $176,086 $180,488 $185,000 $189,625 $194,365 $199,225 $204,205 $209,310 $214,543 $219,907 $225,404 $231,039 $236,815 $242,736 $248,804 $255,024 $261,400

Media

Media Centre hire income $0 $26,592 $75,388 $93,831 $113,149 $115,978 $118,878 $121,850 $124,896 $128,018 $131,219 $134,499 $137,862 $141,308 $144,841 $148,462 $152,173 $155,978 $159,877 $163,874 $167,971

Sport recreation

Wave pool rental income $0 $459,210 $2,587,647 $3,220,697 $3,883,782 $3,980,876 $4,080,398 $4,182,408 $4,286,968 $4,394,142 $4,503,996 $4,616,596 $4,732,011 $4,850,311 $4,971,569 $5,095,858 $5,223,254 $5,353,836 $5,487,682 $5,624,874 $5,765,496

Gym, pool and studio rental income $0 $27,994 $157,747 $196,338 $236,761 $242,680 $248,747 $254,965 $261,340 $267,873 $274,570 $281,434 $288,470 $295,682 $303,074 $310,651 $318,417 $326,377 $334,537 $342,900 $351,473




sports club usage and athlete F&B)

$0 $607,983 $2,447,132 $2,508,310 $2,571,018 $2,635,294 $2,701,176 $2,768,705 $2,837,923 $2,908,871 $2,981,593 $3,056,133 $3,132,536 $3,210,849 $3,291,121 $3,373,399 $3,457,734 $3,544,177 $3,632,781 $3,723,601 $3,816,691

Sponsorships and naming rights income $0 $909,403 $3,660,346 $3,751,855 $3,845,651 $3,941,792 $4,040,337 $4,141,345 $4,244,879 $4,351,001 $4,459,776 $4,571,271 $4,685,552 $4,802,691 $4,922,758 $5,045,827 $5,171,973 $5,301,272 $5,433,804 $5,569,649 $5,708,890

Education

Tertiary facility rental income $0 $0 $710,679 $965,339 $989,473 $1,014,210 $1,039,565 $1,065,554 $1,092,193 $1,119,498 $1,147,485 $1,176,172 $1,205,577 $1,235,716 $1,266,609 $1,298,274 $1,330,731 $1,363,999 $1,398,099 $1,433,052 $1,468,878

Total revenue $0 $7,952,720 $24,682,101 $28,384,161 $31,248,401 $33,242,392 $34,862,993 $36,233,252 $37,139,083 $38,128,983 $39,019,249 $39,994,730 $40,994,599 $42,087,262 $43,069,950 $44,146,699 $45,250,366 $46,456,463 $47,541,166 $48,729,695 $49,947,938

Expenses

Accommodation

Hotel outgoings $0 -$1,156,968 -$2,860,521 -$3,083,641 -$3,461,541 -$3,879,959 -$4,101,131 -$4,283,501 -$4,390,589 -$4,512,594 -$4,612,862 -$4,728,184 -$4,846,388 -$4,981,060 -$5,091,737 -$5,219,030 -$5,349,506 -$5,498,158 -$5,620,325 -$5,760,833 -$5,904,854

Accommodation maintenance $0 -$121,743 -$208,141 -$259,062 -$312,398 -$320,208 -$328,213 -$336,418 -$344,829 -$353,449 -$362,286 -$371,343 -$380,626 -$390,142 -$399,896 -$409,893 -$420,140 -$430,644 -$441,410 -$452,445 -$463,756

Lodges and homestead outgoings $0 -$908,466 -$2,293,715 -$2,554,588 -$2,782,190 -$2,995,726 -$3,217,109 -$3,389,126 -$3,473,854 -$3,570,385 -$3,649,718 -$3,740,961 -$3,834,485 -$3,941,037 -$4,028,606 -$4,129,321 -$4,232,554 -$4,350,168 -$4,446,827 -$4,557,998 -$4,671,947

Commercial

Commercial maintenance (retail, F&B and services) $0 -$11,663 -$66,331 -$82,558 -$99,555 -$102,044 -$104,595 -$107,210 -$109,890 -$112,638 -$115,454 -$118,340 -$121,299 -$124,331 -$127,439 -$130,625 -$133,891 -$137,238 -$140,669 -$144,186 -$147,790

Commercial management - function heads $0 -$104,511 -$274,472 -$341,620 -$411,953 -$422,252 -$432,808 -$443,629 -$454,719 -$466,087 -$477,739 -$489,683 -$501,925 -$514,473 -$527,335 -$540,518 -$554,031 -$567,882 -$582,079 -$596,631 -$611,547

Rental outgoings (retail, F&B and services) $0 -$44,831 -$251,055 -$304,853 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650 -$358,650

Management

Facility maintenance (landscaping and support assets) $0 -$48,130 -$396,460 -$493,451 -$595,044 -$609,920 -$625,168 -$640,797 -$656,817 -$673,237 -$690,068 -$707,320 -$725,003 -$743,128 -$761,706 -$780,749 -$800,267 -$820,274 -$840,781 -$861,800 -$883,345

Facility operations (management team and overheads) $0 -$598,461 -$2,173,603 -$2,766,118 -$3,343,971 -$3,536,220 -$3,624,626 -$3,715,242 -$3,808,123 -$3,903,326 -$4,000,909 -$4,100,932 -$4,203,455 -$4,308,541 -$4,416,255 -$4,526,661 -$4,639,828 -$4,755,823 -$4,874,719 -$4,996,587 -$5,121,502

Media

Media centre rental outgoings $0 -$4,750 -$13,300 -$16,150 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000 -$19,000

Sport recreation

Wave pool outgoings $0 -$36,464 -$207,379 -$258,113 -$311,254 -$319,035 -$327,011 -$335,186 -$343,566 -$352,155 -$360,959 -$369,983 -$379,232 -$388,713 -$398,431 -$408,392 -$418,601 -$429,066 -$439,793 -$450,788 -$462,058


Elite training facility maintenance $0 -$72,928 -$296,256 -$303,662 -$932,616 -$955,932 -$979,830 -$1,004,326 -$1,029,434 -$1,055,170 -$1,081,549 -$1,108,588 -$1,136,302 -$1,164,710 -$1,193,828 -$1,223,673 -$1,254,265 -$1,285,622 -$1,317,762 -$1,350,706 -$1,384,474

Education

Education facility maintenance $0 $0 -$83,988 -$114,431 -$117,292 -$120,225 -$123,230 -$126,311 -$129,469 -$132,705 -$136,023 -$139,424 -$142,909 -$146,482 -$150,144 -$153,898 -$157,745 -$161,689 -$165,731 -$169,874 -$174,121

Total expenses $0 -$3,108,915 -$9,125,221 -$10,578,246 -$12,745,464 -$13,639,170 -$14,241,372 -$14,759,395 -$15,118,939 -$15,509,397 -$15,865,216 -$16,252,406 -$16,649,274 -$17,080,267 -$17,473,025 -$17,900,410 -$18,338,479 -$18,814,214 -$19,247,746 -$19,719,498 -$20,203,044

Net total $0 $4,843,805 $15,556,880 $17,805,915 $18,502,937 $19,603,223 $20,621,621 $21,473,857 $22,020,144 $22,619,586 $23,154,033 $23,742,325 $24,345,324 $25,006,995 $25,596,925 $26,246,289 $26,911,887 $27,642,249 $28,293,420 $29,010,197 $29,744,893




Table 3 Project Option 2 – CORA financial estimate

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 3032-33 2033-34 2034-35 2035-36 2036-27 2037-38 2038-39 2039-40

Revenue

Accommodation

Athlete hotel income (public and visiting teams) $1,509,088 $3,749,796 $4,096,219 $4,699,972 $5,367,622 $5,711,825 $5,987,690 $6,137,382 $6,307,927 $6,448,087 $6,609,289 $6,774,521 $6,962,771 $7,117,481 $7,295,418 $7,477,804 $7,685,597 $7,856,368 $8,052,777 $8,254,096 $8,431,092

Public lodges and homesteads income $2,337,319 $5,927,460 $6,658,365 $7,293,498 $7,890,178 $8,514,928 $8,993,679 $9,218,521 $9,474,685 $9,685,209 $9,927,339 $10,175,522 $10,458,279 $10,690,658 $10,957,925 $11,231,873 $11,543,983 $11,800,486 $12,095,498 $12,397,886 $12,663,739

Commercial

Food & beverage rental income $72,834 $323,950 $774,027 $793,378 $813,212 $833,543 $854,381 $875,741 $897,634 $920,075 $943,077 $966,654 $990,820 $1,015,591 $1,040,981 $1,067,005 $1,093,680 $1,121,022 $1,149,048 $1,177,774 $1,198,563

Retail rental income $210,130 $572,888 $1,659,726 $1,701,219 $1,743,749 $1,787,343 $1,832,027 $1,877,827 $1,924,773 $1,972,892 $2,022,215 $2,072,770 $2,124,589 $2,177,704 $2,232,146 $2,287,950 $2,345,149 $2,403,778 $2,463,872 $2,525,469 $2,573,950

Services infrastructure rental income $0 $56,908 $229,054 $234,781 $240,650 $246,666 $252,833 $259,154 $265,633 $272,274 $279,080 $286,057 $293,209 $300,539 $308,053 $315,754 $323,648 $331,739 $340,032 $348,533 $355,028

Sport recreation

Wave pool rental income $1,836,839 $7,393,278 $7,578,110 $7,767,563 $7,961,752 $8,160,796 $8,364,816 $8,573,936 $8,788,285 $9,007,992 $9,233,192 $9,464,022 $9,700,622 $9,943,138 $10,191,716 $10,446,509 $10,707,672 $10,975,363 $11,249,748 $11,530,991 $11,745,854

Gym, pool and studio rental income $111,976 $450,705 $461,972 $473,522 $485,360 $497,494 $509,931 $522,679 $535,746 $549,140 $562,868 $576,940 $591,363 $606,148 $621,301 $636,834 $652,755 $669,074 $685,800 $702,945 $716,044

Total Revenue 6,078,187$ 18,474,985$ 21,457,474$ 22,963,932$ 24,502,524$ 25,752,594$ 26,795,356$ 27,465,240$ 28,194,683$ 28,855,668$ 29,577,060$ 30,316,486$ 31,121,655$ 31,851,258$ 32,647,540$ 33,463,728$ 34,352,483$ 35,157,830$ 36,036,775$ 36,937,695$ 37,684,270$

Expenses

Accommodation

Athlete hotel outgoings -$905,453 -$2,249,878 -$2,457,731 -$2,819,983 -$3,220,573 -$3,427,095 -$3,592,614 -$3,682,429 -$3,784,756 -$3,868,852 -$3,965,573 -$4,064,713 -$4,177,663 -$4,270,489 -$4,377,251 -$4,486,682 -$4,611,358 -$4,713,821 -$4,831,666 -$4,952,458 -$5,058,655

Accommodation maintenance -$121,743 -$297,345 -$304,778 -$312,398 -$320,208 -$328,213 -$336,418 -$344,829 -$353,449 -$362,286 -$371,343 -$380,626 -$390,142 -$399,896 -$409,893 -$420,140 -$430,644 -$441,410 -$452,445 -$463,756 -$472,416

Lodges and homestead outgoings -$812,707 -$2,061,225 -$2,316,286 -$2,537,930 -$2,744,679 -$2,960,484 -$3,126,085 -$3,204,237 -$3,293,276 -$3,366,452 -$3,450,613 -$3,536,878 -$3,635,161 -$3,715,933 -$3,808,831 -$3,904,052 -$4,012,537 -$4,101,694 -$4,204,237 -$4,309,343 -$4,401,750

Commercial

Commercial maintenance (retail, F&B and services) -$23,326 -$94,758 -$97,127 -$99,555 -$102,044 -$104,595 -$107,210 -$109,890 -$112,638 -$115,454 -$118,340 -$121,299 -$124,331 -$127,439 -$130,625 -$133,891 -$137,238 -$140,669 -$144,186 -$147,790 -$150,550

Commercial management - function heads -$96,522 -$392,103 -$401,906 -$411,953 -$422,252 -$432,808 -$443,629 -$454,719 -$466,087 -$477,739 -$489,683 -$501,925 -$514,473 -$527,335 -$540,518 -$554,031 -$567,882 -$582,079 -$596,631 -$611,547 -$622,966

Rental outgoings (retail, F&B and services) -$119,550 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200 -$478,200

Management

Facility maintenance (landscaping and support assets)-$96,259 -$566,371 -$580,530 -$595,044 -$609,920 -$625,168 -$640,797 -$656,817 -$673,237 -$690,068 -$707,320 -$725,003 -$743,128 -$761,706 -$780,749 -$800,267 -$820,274 -$840,781 -$861,800 -$883,345 -$899,840

Facility operations (management team and overheads)-$442,211 -$1,784,716 -$1,829,334 -$1,875,067 -$1,921,944 -$1,969,993 -$2,019,243 -$2,069,724 -$2,121,467 -$2,174,503 -$2,228,866 -$2,284,588 -$2,341,702 -$2,400,245 -$2,460,251 -$2,521,757 -$2,584,801 -$2,649,421 -$2,715,657 -$2,783,548 -$2,842,926

Sport recreation

Wave pool outgoings -$72,928 -$296,256 -$303,662 -$311,254 -$319,035 -$327,011 -$335,186 -$343,566 -$352,155 -$360,959 -$369,983 -$379,232 -$388,713 -$398,431 -$408,392 -$418,601 -$429,066 -$439,793 -$450,788 -$462,058 -$470,685

Total expenses 2,690,700-$ 8,220,851-$ 8,769,555-$ 9,441,385-$ 10,138,855-$ 10,653,567-$ 11,079,381-$ 11,344,411-$ 11,635,266-$ 11,894,513-$ 12,179,921-$ 12,472,464-$ 12,793,513-$ 13,079,673-$ 13,394,710-$ 13,717,623-$ 14,072,001-$ 14,387,869-$ 14,735,610-$ 15,092,045-$ 15,397,988-$

Net total 3,387,487$ 10,254,133$ 12,687,919$ 13,522,547$ 14,363,669$ 15,099,028$ 15,715,975$ 16,120,830$ 16,559,417$ 16,961,155$ 17,397,139$ 17,844,023$ 18,328,141$ 18,771,585$ 19,252,830$ 19,746,106$ 20,280,482$ 20,769,961$ 21,301,165$ 21,845,649$ 22,286,282$



Appendix G – Economic impact assumptions

Table 4 Project Option 1 – Occupancy1, room rate, length of stay and guest density assumptions

1 All room rates grow at 2.5% per annum for the operating period while occupancy remain at constant after the operational ramp up periods.

Rooms Type Name Star rating Room area (m2)Guest density

(persons)

Avg. Stay

(days)2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Room rate 250$ 256$ 263$ 269$ 276$ 283$

Occupancy 40% 42% 45% 52% 54% 56%

Room rate 563$ 577$ 591$ 606$ 621$ 636$

Occupancy 40% 44% 48% 50% 52% 54%

Room rate 625$ 641$ 657$ 673$ 690$ 707$

Occupancy 40% 44% 48% 50% 52% 54%

Room rate 938$ 961$ 985$ 1,010$ 1,035$ 1,061$

Occupancy 35% 38% 40% 42% 45% 48%

Room rate 360$ 369$ 378$ 388$ 397$ 407$

Occupancy 6% 6% 6% 6% 6% 6%4.95

70

180

28-45

2.3

5.5

1.0

22

24

128

Lodge

Villa

Hotel

Eco Lodges

Retreat Homestead

Visiting Teams

5

2.5

2.5

15 Lodge Lakeside Surf Eco Lodge 5 70 2.3

5 2.5

128 Hotel Hotel: Public 4.5 28-45 1.7 2.5



Table 5 Project Option 1 (sensitised) – Occupancy, room rate, length of stay and guest density assumptions

Table 6 Project Option 2 – Occupancy, room rate, length of stay and guest density assumptions

Rooms Type Name Star ratingRoom area

(m2)

Guest density

(persons)

Avg. Stay

(days)2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26

Room rate 250$ 256$ 263$ 269$ 276$ 283$

Occupancy 0% 40% 42% 45% 52% 54% 56%

Room rate 563$ 577$ 591$ 606$ 621$ 636$

Occupancy 0% 40% 44% 48% 50% 52% 54%

Room rate 625$ 641$ 657$ 673$ 690$ 707$

Occupancy 0% 40% 44% 48% 50% 52% 54%

Room rate 938$ 961$ 985$ 1,010$ 1,035$ 1,061$

Occupancy 0% 35% 38% 40% 42% 45% 48%

Room rate 360$ 369$ 378$ 388$ 397$ 407$

Occupancy 0% 6% 6% 6% 6% 6% 6%4.9128 Hotel Visiting Teams 5 28-45 1.0

2.5

24 Villa Retreat Homestead 5 180 5.5 2.5


2.5

22 Lodge Eco Lodges 5 70 2.3 2.5

128 Hotel Hotel: Public 4.5 28-45 1.7

Rooms Type Name Star rating Room area (m2)Guest density

(persons)

Avg. Stay

(days)2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

Room rate 200$ 205$ 210$ 215$ 221$ 226$

Occupancy 36% 38% 41% 48% 50% 52%

Room rate 450$ 461$ 473$ 485$ 497$ 509$

Occupancy 36% 40% 44% 46% 48% 50%

Room rate 500$ 513$ 525$ 538$ 552$ 566$

Occupancy 36% 40% 44% 46% 48% 50%

Room rate 750$ 769$ 788$ 808$ 828$ 849$

Occupancy 31% 34% 36% 38% 41% 44%

Room rate 360$ 369$ 378$ 388$ 397$ 407$

Occupancy 0% 0% 0% 0% 0% 0%4.9128 Hotel Visiting Teams 5 28-45 1.0

2.5

24 Villa Retreat Homestead 5 180 5.5 2.5


2.5

22 Lodge Eco Lodges 5 70 2.3 2.5

128 Hotel Hotel: Public 4.5 28-45 1.7



Appendix H – Checklist and sign-off

Initiative title: Cape Otway Road Australia (CORA)

Yes Department: [Company]

1. Has a Business case cover sheet been completed to accompany this business case? �

2. Have costings been agreed with DTF/DPC? �

3. Was DTF/DPC consulted during the preparation of the business case? �

4. Is the need clearly established (e.g. investment concept brief)? �

5. Are the links to Government policy(ies) and contributions explicit? �

6. Is there a clear statement of the service benefits and project scope, and are future implications noted? �

7. Are cost estimates provided for capital and operational phases? �

8. Have cost and risk estimators signed off on the adequacy of their work? �

9. Is the project budget including the base cost estimate, risk assessment, base risk allocation and contingency adequate? �

10. Do cost and benefit estimates and analyses demonstrate value for money? �

11. Are the project deliverables clearly stated? �

12. Is a benefit management or evaluation plan included? �

13. Are risk management processes in place and assumptions stated? �

14. Does the proposal assess the project schedule and readiness (including market appetite)? �

15. Are governance structures identified? �

16. Are stakeholder interfaces detailed? �

17. Are regulatory requirements identified? �

18. Has a Project Profile Model (PPM) been completed and sent to DTF? �

19. Is the project high-value high-risk? �



Initiative title: Cape Otway Road Australia (CORA)

Yes Department: [Company]

20. Have Gateway reviews been undertaken? �

21. If applicable, have the relevant VCC documents been completed and included? A high level assessment has been undertaken with in the business case. �

This model checklist is designed for the project proponent’s endorsement.

Prepared by: Date:

Approved by: Date:

Approving officer/

delegate name: Date:

Secretary: Date:



Appendix I – Detailed Risk Register

The following tables provide the risk matrices used in the analysis.

Table 7 Risk Assessment tables

The complete risk register is provided in the following table.



Table 8 Full Risk Register for CORA Project Option 1 (Preferred Option)

Rating Pre-mitigation

Rating Post-Mitigation

Phase Category Risk Consequence L C

Risk Rating

Mitigation L C Risk

Rating



The risk that Government provides enabling funding, land is rezoned but the CORA development does not go ahead and there is no economic impact or job impact.

Regional benefits are not actualised Negative political fallout

2 5 High

Significant engagement with potential partners, tenants and suppliers has taken place and will continue. Investor engagement plan in place. Robust business case for the full CORA offer demonstrating beneficial returns for investors. Plan to build equity and awareness into the full CORA offer. Key milestone deliverables to be agreed with government against funding being released.

1 5 High

Planning and Development, Project Delivery

Commercial

The commercial viability and sustainability of the business model is not realised and the project does not go ahead, so there is no economic impact or job impact

Regional benefits are not actualised 2 5 High

Development of a commercially sound business case with a robust revenue model 1 5 High

All Phases Brand

Risk that competitors to CORA attempt to discredit or damage CORA's entrance to the market, eroding the ability to attract funding.

Brand damage, Financial

3 4 High

Development of a commercially sound business case with a robust revenue model and communications plan. Investment into the CORA brand ensuring that all communication is clear, consistent and compelling to create a barrier for this happening.

2 3 Medium






Risk Rating

Mitigation L C Risk

Rating

All Phases Governance / Ownership

Risk of commercial disputes between CORA and investors, partners and other stakeholders because of a lack of well-defined contracts and agreements, inclusive of each parties' respective rights and obligations. For example, if a partner decides to exit the partnership, there is a risk that a commercial dispute may arise over use of intellectual property as a result of a poorly defined contractual agreement.

Financial, Delay 3 4 High

Engage credentialed legal advisers to develop well defined contracts and agreements to protect each partner's rights and intellectual property limiting the impact of any disputes in advance. Develop strong relationships to ensure the opportunity for disputes to arise is reduced. This will also reduce the potential for any disputes.

2 3 Medium


Risk that CORA's reputation among the local community and public brand is damaged because of a stakeholder, partner, supplier or investor experiencing financial difficulty or receiving negative publicity.


Comprehensive due diligence on all partners, supplier and investors regarding solvency Development of guidelines regarding behaviours and public statements for all partners, suppliers and investors. Including management of potential issues before they arise.

3 3 Medium


Risk that a partner is required to be removed from or unexpectedly exits the partnership and a suitable replacement is not found in a timely manner due to no partnership successor plan being in place.

Cost, Disruption 3 4 High

Development of a partnership succession plan. Relationship management plan for CORA and partners to identify issues before they arise.

2 4 Medium






Risk Rating

Mitigation L C Risk

Rating

All Phases Community

Community protests strongly against CORA because of strong Not In My Backyard (NIMBY) culture in small town Modewarre. Also, broader community concern about development being purely for elite athletes. Community rallies against CORA to fight against perception of big business taking over their town. Community concern driven by poor understanding about reality of CORA, stemming from lack of consultation and education about the concept.


Fulsome consultation management and community education to ensure greater understanding of CORA concept and recognition of the benefits that will flow to the community over the longer term. Also, fine-tune business model to ensure and highlight key benefits to the community, including education, family fitness, water safety, child care, employment, community prosperity. Ongoing discussions with the 8 affected parties with direct amenity impacts to broaden understanding and identify potential solutions.

3 3 Medium

All Phases Force Majeure Risks

Risk that CORA is beaten to market by a similar sized/themed development in Australia or the Asia Pacific region due to delays in planning, approval or delivery.

Cost, Delay 2 4 Medium

Invest in the best project management planning to ensure timelines are managed effectively and planning is received on time and without issue. Build a unique and compelling brand to protect against other entrants to the market.

2 3 Medium


Site Risk

Risk that the construction of key supporting infrastructure (power, water, telecommunications) is delayed and lags behind the construction of the CORA site itself.

Delay 2 3 Medium

Services already exist, so the upgrade will happen incrementally over a 4 year period. Invest in the best project management planning to ensure timelines are managed effectively.

1 3 Low


Planning Risks

Risk of certain stakeholders having a disproportionate influence on the design and construction of the facility resulting in a negative impact to the offering of the development.

Planning disruption

2 2 Low

Contingency planning. Set clear agreements as to what stakeholders can influence and agree timescales for input

1 2 Low






Risk Rating

Mitigation L C Risk

Rating

All Phases Sponsorship risks

Risk that Deakin and other key partners will cease its involvement with CORA resulting in brand and reputational damage.

Brand damage 2 4 Medium

Individual consultation to shape the offer to suit their requirements, to enable a strong long lasting partnership in a purpose built facility. Development of sound business case Development of relationship management plan

2 3 Medium

Operations Operating Risks

Risk that CORA will be unable to attract and retain the necessary highly skilled employees (highly skilled and otherwise) to work at CORA, including chefs, scientists and hospitality staff, due to location and transport limitations.

Operational disruption

2 4 Medium

Human resources strategy for recruitment, development and retention of key staff. Accommodation on site for key staff members. Childcare facility to help enable parents to get back to work. Aspire to develop the local train station to improve commute options or run a shuttle bus from Geelong.

2 3 Medium


Site Risk

Risk of additional site testing uncovering significant cultural artefacts resulting in changes to facility design, as well as time delays and additional costs.


Capital cost estimates include 11% contingency provisions which anticipate covering latent site conditions including repositioning buildings, should sensitive artefacts be encountered. Excavation is minimised due to the design of the buildings being built above ground rather than in it.

2 3 Medium


Environment

Risk that an Environment Effects Statement and referral is required to be completed, resulting in time delays and additional costs.


Contingency planning

2 2 Low






Risk Rating

Mitigation L C Risk

Rating


Community

Risk of damaging important relationships with the local Indigenous community as a result of poor communication and consultation with representatives throughout the site testing process.


Consultation/engagement management plan in place to share relevant information. Culturally acknowledge and embrace the heritage as part of the final CORA offer. Ensure business model appeals to the local community and broad range of influential stakeholders

1 4 Medium


Community

Being requested to evaluate wider areas that are not included in the actual site that will be impacted. With potential for significant increased costs.

Cost, delay 2 4 Medium

Consultation/engagement management plan. Work with Government stakeholders requesting their assistance to be part of the negation to ensure only relevant areas are requested to be addressed.

1 4 Medium


Political Risk

Risk that the project may become politicised and face unjustified criticism and scrutiny if the governing party supports the project while the opposition does not - the effect of which may result in damage for CORA brand.


Contingency planning Remain politically neutral engaging with government and opposition to ensure that both parties see the benefits of CORA

1 3 Low


Financial Risks

Risk that CORA engages in transactions and locks in contracts with suppliers/investors based on the value of the CORA brand name currently, as opposed to where it will be in the medium to long term.


Development of a commercially sound business case with a robust revenue model Negotiate commercial deal terms based on performance measure incentives

2 2 Low






Risk Rating

Mitigation L C Risk

Rating


Community

Risk that community sentiment of CORA deteriorates resulting in planning approval not being granted by the Minister or the local council revokes their support in principle


Consultation management plan and business model that appeals to the local community and broad range of influential stakeholders

1 5 Medium



Risk that government approval will not be provided for the sale/zoning of the proposed residential land, resulting in CORA not being able to rely on selling the houses as an early cash injection, requiring additional revenue streams to provide risk mitigation.

Financial 3 4 High

Consultation management plan and business model that appeals to the local community and broad range of influential stakeholders Contingency planning

2 4 Medium



Option 2 specific: Risk that similar upcoming developments (Hot Springs / Port Campbell) may receive government funding instead of CORA resulting in CORA requiring more funding from investors.

Financial 3 4 High

Development of a commercially sound business case with a robust revenue model to solve key community problems in the region Government stakeholder engagement and lobbying plan

3 3 Medium

Project Delivery

Investors

Risk that CORA moves away from its core plan, strategy and offering as a result of the demands of key high-value investors regarding the features of the CORA development.


Engage credentialed legal advisers to develop well defined contracts and agreements to protects each partner's rights and intellectual property

1 3 Low

Project Delivery

Technical Risks

Risk that the construction timeframe and technical requirements of CORA development assets are not well-defined for subcontractors to effectively build to, or are not adhered to by subcontractors - resulting in costly delays and re-work to meet technical requirements.


Procurement strategy Project management plan including clear time allocated to further develop the design and clearly define the assets prior to work commencing

1 3 Low






Risk Rating

Mitigation L C Risk

Rating

Project Delivery

Design, Construction and Commissioning

Risk that civil works is not completed at an appropriate time of the year (i.e. during months with heavy rainfall) resulting in time delays and additional costs.


Project management plan that includes the ability to sequence the civil works according to critical building activities during periods of inclement weather. Non critical areas can wait for favourable weather conditions.

1 3 Low

Operations FM - Asset The risk that maintenance costs and wear and tear are higher than anticipated levels due to operational circumstances e.g. - Over use - Environmental factors - users causing greater than anticipated damage to facilities

Replacement cost Procurement cost Higher utility costs

3 3 Medium

Each building has been given a separate asset maintenance allowance appropriate for its type. It is considered unlikely that all building types will run over and some may come in under estimations. Increased use would also indicate increased revenue.

1 3 Low

Operations FM - Asset The risk of fixtures and fittings being insufficient and not fit for purpose leading to replacement costs.

Replacement cost 2 3 Medium

Building fit out only to be specified by companies with specific and relevant design experience

1 3 Low

Operations FM - Services The risk that costs estimated to deliver the expected FM service levels are under-estimated. This includes insufficient resource allowances being made to achieve the desired level of service

Additional staff costs required to deliver the services Non-staff costs associated with service delivery

2 3 Medium

Based on our knowledge of similar facilities appropriate, resources have been considered. Benchmarked on similar operating facilities with salaries based on the Australian market. Inbuilt contingency includes a dedicated function head for the retail facility which has now been halved in size.

1 3 Low

Project Delivery, Construction

Supplier

Risk that the construction timeline of CORA is delayed as a result of a supplier or subcontractor experiencing financial difficulty or supply issues.

Cost, Delay 3 4 High

Comprehensive due diligence on all partners, supplier and investors regarding solvency. Prioritising reputable companies with history of strong delivery and finances

2 4 Medium






Risk Rating

Mitigation L C Risk

Rating

Project Delivery

Local Procurement

Risk that local procurement partners take advantage of a unique development and charge CORA unfair, uncompetitive, above-market rates due to a lack of well-defined and clearly agreed terms established at the start of the partnership.

Financial 3 3 Medium

Clear procurement strategy

2 3 Medium

Planning and Design Phase

Planning and environmental approvals risk

The risk that the necessary planning, environmental and statutory approvals are not obtained in accordance with the timeframe or form agreed, do not meet project requirements, or are more onerous than anticipated. - The risk of obtaining an unfavourable environmental audit score for land remediation.

This may lead to increased costs and delays to project commencement

3 4 High

All community engagement will be completed so that the timeframe for requests from Government are fair. Working to establish relationships, open communication and a shared understanding of timing requirements with key decision makers in government.

2 3 Medium

Environmental risk

• The risk that unknown environmentally protected species are present on site, during construction which were not originally identified. • The risk that environmental performance requirements are exceedingly difficult to comply with without incurring significant cost

• This may cause delays to the project and increased costs to implement protection measures and gain environmental approvals. • Non adherence with environmental requirements may result in fines and associated costs.

3 3 Medium

Flora and fauna assessment has been undertaken. Nothing found onsite. Capital cost estimates include 11% contingency provision which anticipate covering latent site conditions including repositioning buildings, should sensitive artefacts be encountered.

2 2 Low






Risk Rating

Mitigation L C Risk

Rating

Design Scope Creep The risk that the design process is more extensive than expected due to meeting a diverse range of departmental, provider and community stakeholders requirements or due to omissions in the specification. -The risk that the project's scope changes during the design phase due to additional stakeholder requirements -The risk that additional scope is added during the Construction phase without proper authorisation through the Governance framework

Higher than expected costs compared to budget - Project delays

3 3 Medium

Contingency planning. Clear project management strategy, outlining design parameters and ensuring all parties are working together with shared goals. Ensuring all parties clearly understand the expectations and limitations of the project prior to design. Governance framework to be put in place to ensure correct checks and balances are applied to all requests for additional scope

3 3 Medium

Construction Ground Condition

The risk of unanticipated ground conditions delaying and/or increasing costs. - Conditions may include contamination on site, unexploded ordnances, utilities infrastructure, geo-tech conditions

Additional costs and project delays -Potential changes to site selection

3 2 Medium

Full geotechnical assessment undertaken to understand ground conditions in advance of build. To be factored into planning and build. Land was originally farming land, so risk of contamination is low. Contingency plan.

2 2 Low

Throughout Construction

Existing utilities and connections

The risk that existing assets and utilities are of insufficient capacity to the site, assets fail due to increase load of new facilities The risk that the sites need further upgrades to connections more substantial than what had been allowed for

Delay to construction completion Additional cost of accelerating the project to meet completion

2 2 Low

Consulted with the utilities at a CEO level. All are supportive of the project and discussions undertaken to identify potential issues. No current settings that we are aware of that will lead to genuine risk. This will be a support supply as opposed to a primary supply.

1 2 Low






Risk Rating

Mitigation L C Risk

Rating

Commissioning Commissioning of facilities

The risk that re-testing is required during the commissioning period, extending the commissioning period, The risk that the works don’t meet project scope requirements in relation to functionality, during the commissioning period.

This may result in additional cost and delays to meet asset owner handback standards.

2 3 Medium

The commissioning will be staged, so problems can be addressed in smaller sections over the course of the project. The chosen design group are basing their designs on existing experience to ensure the buildings function for their intended requirements. Their experience includes providing equivalent facilities elsewhere.

1 3 Low

Construction Flooding The risk that site flooding leads to construction complications (excluding insured events and beyond normal weather variation incorporated into base programme and by separate risk below)

Delay - Additional costs for damage repair

3 3 Medium

Hydrology flood report has been undertaken to understand the extent and depth of floods that may occur and when the flood event may occur - this will all be fully considered in the build plan.

2 3 Medium



Appendix J – References

Budget Secures Victoria as Major Events Capital. https://www.premier.vic.gov.au/budget-secures-

victoria-as-major-events-capital/

2016 Census, Australian Bureau of Statistics.

http://www.abs.gov.au/websitedbs/censushome.nsf/home/2016

National Visitor Survey, Regional Expenditure Model (REX), Tourism Research Australia, June

2017. https://www.tra.gov.au/research/view-all-publications/all-publications/national-visitor-survey-

results/nvs-june-2017

Strategic Master Plan for the Great Ocean Road visitor economy 2015-2025 (2015).

http://greatoceanroadtourism.org.au/wp-content/uploads/2015/01/Masterplan-151022-ONLINE-

version.pdf

DEDJRT, Economic Contribution of Tourism to the Great Ocean Road (2015-16).

http://www.business.vic.gov.au/__data/assets/pdf_file/0007/1563280/Great-Ocean-Road-RTSA-

2015-16-FINAL.PDF

Victorian State Government, Victorian Visitor Economy Strategy (2016).

https://www.vic.gov.au/news/victorian-visitor-economy-strategy.html?

The Age, Great Ocean Road: $3 million plan to ease congestion at Anglesea (26 February 2016).

http://www.theage.com.au/victoria/great-ocean-road-3-million-plan-to-ease-congestion-at-anglesea-

20160225-gn3n5t.html

Great Ocean Road Tourism, Great Ocean Road update (August 2015).

http://greatoceanroadtourism.org.au/wp-content/uploads/2015/08/Vicroads-Great-Ocean-Road-

August-update.pdf

Victorian State Government, Media Release, Budget Secures Victoria as Major Events Capital (3

May 2015). https://www.premier.vic.gov.au/budget-secures-victoria-as-major-events-capital/

Destination NSW, Annual Report (2015-2016). https://www.destinationnsw.com.au/wp-

content/uploads/2011/10/Destination-NSW-Annual-Report-2015-2016.pdf

Profile ID, SEIFA disadvantage by LGA, http://profile.id.com.au/surf-coast/seifa-disadvantage-

small-area?SeifaKey=40004

Profile ID, Surf Coast Shire (2011). http://profile.id.com.au/surf-coast/

Profile ID, Surf Coast Shire (2016). http://profile.id.com.au/surf-coast/

Department of Treasury and Finance, Economic Evaluation Guidelines.

http://www.dtf.vic.gov.au/Investment-Planning-and-Evaluation/Investment-professionals-

toolkit/Economic-evaluation-guidelines

Surf Coast Shire, Surf Coast Youth Survey (2016).

https://www.surfcoast.vic.gov.au/My_Community/Youth_Development/The_Surf_Coast_Shire_Yout

h_Survey

Surf Coast Shire, Health and Wellbeing Plan (2013-2017).

https://www.surfcoast.vic.gov.au/My_Community/Public_Health/Health_amp_Wellbeing_Plan

EY, (2016) Victorian Major Events Company, Economic impact of the Victorian Major Events

Calendar

Surf Coast Shire, Visitor Insights (2016). https://www.surfcoast.vic.gov.au/files/assets/public/.../scs_visitor_insights_2016.pdf



Global Wellness Economy Monitor, (2017). https://www.globalwellnessinstitute.org/global-wellness-institute-releases-global-wellness-economy-monitor-packed-with-regional-national-data-on-wellness-markets/

Productivity Commission Research Report, Relative Costs of Doing Business in Australia: Retail Trade, (September 2014). https://www.pc.gov.au/inquiries/completed/retail-trade/report/retail-trade.pdf

Tourism Victoria, Great Ocean Road – Market Profile: Year Ending (December 2014). https://www.business.vic.gov.au/__data/assets/pdf_file/0007/1551823/Great_Ocean_Road_Profile_2014.PDF

Documents

Cape Otway Road Australia (CORA) - Planning · Cape Otway Road Australia (CORA) represents a major investment in the Great Ocean Road Region (“GORR” or the “Region”). It is