MINUTES OF THE COUNCIL MEETING OF THE CITY OF TEA TREE ... · Ms A Dinevski Continuous Improvement Coordinator ... That the meeting be adjourned for a 3 minute break. Carried Unanimously

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Council Meeting Minutes - 24 September 2019

MINUTES OF THE COUNCIL MEETING OF THE CITY OF TEA TREE GULLY

HELD ON TUESDAY 24 SEPTEMBER 2019 AT 7.00PM IN THE COUNCIL CHAMBERS, 571 MONTAGUE ROAD, MODBURY

1. Opening Prayer and Welcome

The Mayor read the Opening Prayer and Acknowledgement of Country Statement. 2. Attendance Record:

2.1 Present

His Worship Mayor K Knight, Crs B Rankine, B Keane, J Lintvelt, L Jones, O Savvas, R Unger, D Wyld, L Petrie, R Coleman, P Field, S Keane and A Schlueter.

2.2 Apologies Nil 2.3 Leave of Absence Nil 2.4 Record of Officers in Attendance

Mr J Moyle Chief Executive Officer Mrs C Neil Director Community & Cultural Development Mr T Harfield Director Assets & Environment Mr R McMahon Director Organisational Services & Excellence Ms D Taglierini Governance Advisor Miss M Lay Governance & Risk Administration Officer Ms A Dinevski Continuous Improvement Coordinator Mrs E Graves Manager Customer and Communications Ms I Wilkshire Manager City Strategy Mr C Hickman Manager Community Safety Mr J Robbins Manager Finance & Rating Operations Ms R Baines Team Leader Financial Accounting Ms F Birch Manager Recreation & Leisure Services Ms C Oborn Recreation Planning & Facility Coordinator Mr M Konecny Manager Civil & Water Operations Mr J Foong Water Resources Specialist

2.5 Record of Number of Persons in the Public Gallery

52 Attendees

2.6 Record of Media in Attendance

Messenger

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3. Confirmation of Minutes to the Previous Meeting Moved Cr Wyld, Seconded Cr Field That the Minutes of the Council Meeting held on 10 September 2019 be confirmed as a true and accurate record of proceedings.

Carried Unanimously (237) 4. Mayor’s Report - Nil 5. Public Forum – Nil 6. Deputations - Nil 7. Presentations

7.1 Modbury Hospital Re-Development (D19/53755)

Ms Mandy Ross, Director of Project Management Office Unit and Commissioning Lead provided an update of the $96 million redevelopment of Modbury Hospital.

8. Petitions - Nil 9. Declaration of Conflicts of Interests Cr Lintvelt and Cr Jones declared a conflict of interest on the Notice of Motion entitled

“Letter to Minister and Local Member about Community Wastewater Management System (CWMS)”.

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10. Management Report Community & Cultural Development

10.1 Tea Tree Gully Motocross Club Incorporated - Request to enter into a five year lease (D19/50759)

Moved Cr B Keane, Seconded Cr Rankine

1. That Council grants a lease to the Tea Tree Gully Motocross Club Incorporated for the portion of land described as Little Para Reserve, Para Valley Road, Greenwith (Certificate of Title – Volume 5830/Folio 262) and as outlined in the report entitled “Tea Tree Gully Motocross Club Incorporated – Request to enter into a five year lease” and dated 24 September 2019, with the following terms and conditions: The term of the lease shall be for a period of five (5) years The lease fee shall be initially $1 per annum with annual CPI increases

on the yearly anniversary date which is consistent with the criteria in Council’s “Leases and Licences to Sporting and Community Organisations Policy”

Other terms and conditions as set out in accordance with Council’s “Leases and Licences to Sporting and Community Organisations Policy”

Any other terms and conditions as deemed necessary by Council’s Chief Executive Officer that are required for this specific lease and site, including the permitted times of use for the site.

Carried Unanimously (238)

10.2 Ladywood Reserve, Modbury North - Installation of Sports Field Floodlighting and back netting - Outcome of Community Engagement (D19/53068)

Moved Cr Petrie, Seconded Cr Wyld

1. That Council, having considered the report entitled “Ladywood Reserve, Modbury North – Installation of Sports Field Floodlighting and Back Netting – Outcome of Community Engagement” and dated 24 September 2019 notes the Community Engagement Outcomes report contained in Attachment 2 and approves the amendment to the relevant Community Land Management Plan to include permanent sports field floodlighting and back netting at Ladywood Reserve, Modbury North.

2. That the Chief Executive Officer be authorised to request the payment of

$50,000 from the Modbury Jets Amateur Soccer Club as a financial contribution towards the project.

3. That the Chief Executive Officer be authorised to provide a letter of support

to Modbury Jets Amateur Soccer Club confirming that Council is prepared to be guarantor for a loan to the club up to the sum of $40,000.


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Adjournment of Meeting at 7.44pm

Moved Cr Wyld, Seconded Cr Petrie That the meeting be adjourned for a 3 minute break.


The meeting resumed at 7.48pm 11. Questions on Notice

11.1 Questions on Notice - Clarification of Information for Community Wastewater Management System (CWMS) (Cr Lintvelt) (D19/61705)

The responses for the Question on Notice were summarised by the Mayor and are provided as Attachment 1 to these Minutes.

11.2 Questions on Notice - Community Wastewater Management System (CWMS)

Upgrades and Financial Statements (Cr Lintvelt) (D19/61706)

The responses for the Question on Notice were summarised by the Mayor and are provided as Attachment 2 to these Minutes.

12. Notice(s) of Motions

12.1 Notice of Motion - Letter to Minister and Local Member about Community Wastewater Management System (CWMS) (Cr Petrie) (D19/61359)

Pursuant to sections 75 & 75A of the Local Government Act 1999 Cr Lintvelt declared an actual conflict of interest in relation to this matter on the basis that she has a Community Wastewater Management System (CWMS) connection on her property. Cr Lintvelt remained in the meeting and indicated she would deal with this conflict of interest in a transparent and accountable way by remaining impartial and considering the item on its merits and making a decision in the public interest and not move or second the motion or enter into the debate relating to this matter. Pursuant to sections 75 & 75A of the Local Government Act 1999 Cr Jones declared an actual conflict of interest in relation to this matter on the basis that he has a Community Wastewater Management System (CWMS) connection on his property. Cr Jones left the meeting and its close vicinity at 7.59pm while the matter was being discussed and voted on.

Moved Cr Petrie, Seconded Cr Wyld

1. That Council’s Chief Executive Officer and Mayor jointly write to the State

Minister for Environment and Water to:

a) Inform him of the City of Tea Tree Gully Community Wastewater Systems (CWMS) network including: Relevant history of the network and previous Council requests

including but not limited to those that date back to 1970’s and 1980’s for the State Government to provide an effective sewerage system commensurate with metropolitan standards to all of our City’s metropolitan areas

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Details of all capital works completed to date on the network in the last 10 years

Details of Council’s Asset Management Plan including proposed upgrades, current costings and condition assessments

Details of the recent independent Internal Audit completed by BRM Holdich

Advise him of Council’s engagement/meetings with SA Water staff to date

Advise him that Council is prepared to partner with the State Government to remove the CWMS system and replace it with an appropriate sewerage system to SA Water standards

b) Request the State Government to provide full funding support over the

next 5-7 years for the removal of the CWMS network in the City of Tea Tree Gully including decommissioning of superseded infrastructure and reconnection costs and replacement with a sewerage system that is commensurate with metropolitan standards in the majority of South Australia.

c) That during this time the State Government be requested to reduce the

impost on those transferred at a later period in the removal and replacement program by providing a subsidy to City of Tree Gully Council CWMS customers, no different to how the State Government provides to SA Water, to ensure that Council can achieve full cost recovery with only CPI increases during this time.

2. That the Council writes to the local Member for Newland to thank him for

assisting to date with the Council/SA Water negotiations and to advise him that Council will continue to complete its ongoing active dialogue with SA Water representatives noting that this will assist with implementation of a project to convert the network to sewerage when appropriate funding is provided by the State Government, noting that that SA Water is not permitted to take on loss generating assets without funding support of State Treasury.


Cr Jones was not present for the vote.

Cr Jones re-entered the meeting at 8.26pm

12.2 Notice of Motion - Letter to State Treasurer regarding Community Wastewater System (CWMS) (Cr Jones) (D19/61597)

Cr Jones requested that his Notice of Motion be withdrawn which was supported. 13. Adjourned Business - Nil 14. Motions Lying on the Table - Nil

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15. Committee Reports Audit Committee - Nil

Policy and Strategic Development Committee 15.1 Recommendations from Policy and Strategic Development Committee on 21

August 2019

Road Alteration or Encroachment Policy (D19/47836)

During the discussion, Cr Jones left the meeting at 8.42pm and re-entered the meeting at 8.45pm Cr Rankine left the meeting at 8.43pm and re-entered the meeting at 8.45pm.

Moved Cr Wyld, Seconded Cr Lintvelt That the “Road Alteration or Encroachment Policy” as reviewed by the Policy and Strategic Development Committee on 21 August 2019 be adopted.

Carried (242)

CEO Performance and Remuneration Review Committee - Nil

Traffic Management Safety Committee - Nil 16. Management Reports

Office of the Chief Executive Officer 16.1 Draft Strategic Plan 2025 - Incorporating feedback from stakeholder

engagement (D19/52276)

Moved Cr Savvas, Seconded Cr Field

1. That Council endorses the draft Strategic Plan 2025 as presented in Attachment 1 of the report entitled “Draft Strategic Plan 2025 – Incorporating feedback from stakeholder engagement” and dated 24 September 2019 and including the changes proposed in this report as a result of community engagement.

2. That Council adopts the following documents as its strategic management

plans: a) Strategic Plan b) Long-Term Financial Plan c) Annual Business Plan d) Asset Management Plans e) Tea Tree Gully Council Development Plan (to be replaced by the

Planning and Design Code from 1 July 2020)

Carried Unanimously (243) Cr Wyld left the meeting at 9.17pm

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Assets & Environment - Nil

Organisational Services & Excellence 16.2 Financial Statements for the Financial Year Ending 30 June 2018-2019

(D19/59922)

Mrs Rebecca Baines, Team Leader Financial Accounting provided a summary of Council’s Financial Statements for the year ending 30 June 2019. During the presentation, Cr Unger left the meeting at 9.19pm and re-entered the meeting at

9.20pm. Cr Wyld re-entered at 9.20pm. Moved Cr Field, Seconded Cr Unger That Council receives the financial statements for financial year ending 30 June 2019 as detailed in Attachment 1 to the report entitled “Financial Statements for the Financial Year Ending 30 June 2019” and dated 24 September 2019.


Community & Cultural Development 16.5 Smoke Free Areas for Carparks at Kindergartens, Childcare Centres, Primary

and Secondary Schools on Council Land or Land under the care and control of Council (D19/57776)

Moved Cr S Keane, Seconded Cr Schlueter 1. That in accordance with section 246(3)(e) of the Local Government Act 1999

and paragraph 9 of Council’s Local Government Land By-law 2015, Council hereby resolves that paragraph 5.6.2 of Council’s Local Government Land By-law 2015 (prohibition on smoking tobacco or any other substance) shall apply to the following parcels of the local government land or land under the care and control of Council as detailed in the following attachments to the report entitled “Smoke Free Areas Carparks at Kindergartens, Childcare Centres, Primary and Secondary Schools on Council Land or Land under the care and control of Council” and dated 24 September 2019:

a. Greenwith Community Centre Carpark That part of the local government land comprised in Certificate of Title

Register Book Volume 6018 Folio 720 as outlined in red on the plan included as Attachment 1.

b. Wynn Vale House Kindergarten That part of the local government land comprised in Certificate of Title


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c. Modbury North Kindergarten That part of the local government land comprised in Certificate of Title


d. Modbury Community Learning Centre – U3A Adjacent Modbury

Primary School That part of the local government land comprised in Certificate of Title


e. Spring Crescent Banksia Park Primary School That part of the local government land comprised in Certificate of Title

Register Book Volume 3040 Folio 26 as outlined in red on the plan and attached to the Minutes.

f. Vine St Surrey Downs, Surrey Downs Primary School That part of the local government land comprised in Certificate of Title


g. Payne St Highbury Primary School That part of the local government land comprised in Certificate of Title

Register Book Volume 5577 Folio 70 and Volume 5574 Folio 779 as outlined in red on the plan and attached to the Minutes.

h. Wynn Vale Oval That part of the local government land comprised in Certificate of Title


2. That the Chief Executive Officer be authorised to:

a. Publish notice of the making of this determination in the South

Australian Government Gazette and the Adelaide Advertiser Newspaper; and

b. Authorise the erection of such notices as the Chief Executive Officer

deems necessary setting out the effect of this resolution in a prominent position on the land to which paragraph 5.6.2 of Council’s Local Government Land By-law 2015 applies by virtue of this resolution.


17. Motions without Notice – Nil 18. Questions without Notice – Nil

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19. Council Delegates and Activities Report Cr Wyld, on behalf of the Mayor attended the Modbury Soccer Club - State League 1

Grand Final on 14 September 2019. 20. Information Reports

The following Information reports were received at the meeting:

20.1 Service Centre Project - Benefits Realisation Assessment - First Report (D19/57763)

20.2 Revaluation Initiative Project - Office of the Valuer-General (D19/59869)

21. Status Report on Resolutions - Nil 22. Other Business – Nil 23. Section 90(2) Local Government Act 1999 – Confidential Items - Nil

24. Date of Next Ordinary Meeting 8 October 2019

The Mayor declared the meeting closed at 9.45 pm.

Confirmed……………………………….. Mayor 8 October 2019

City of Tea Tree Gully

COUNCIL MEETING

24 SEPTEMBER 2019

QUESTION ON NOTICE

Questions on Notice - Clarification of Information for Community Wastewater Management System (CWMS) (Cr Lintvelt) D19/61705 Cr Lintvelt asked the following question on notice: 1. That the Council noting that on 30 July 2019 the Minister for Environment

and Water responded to questions in State Government parliamentary estimates from the Member of Florey, refer Attachment 1, asks Council’s Chief Executive Officer to provide a response to the speech and in particular draw to the Council’s attention to any anomalies?

2. In relation to the Member for Newlands speech made in State Government

parliament, refer Attachment 2 of this Question on Notice, relating to the Community Wastewater Management System (CWMS), can Council’s Chief Executive Officer respond to the speech and any in particular draw Council’s attention to any anomalies?

Cr Jessica Lintvelt 18 September 2019

Attachment 1 - Question on Notice Clarification of Information for CWMS Page 344



COUNCIL MEETING

24 SEPTEMBER 2019

QUESTION ON NOTICE - RESPONSE

Questions on Notice - Clarification of Information for Community Wastewater Management System (CWMS) (Cr Lintvelt) D19/61705 1. That the Council noting that on (Tuesday, 20 July 2019) the Minister for

Environment and Water responded to questions in State Government parliamentary estimates from the Member of Florey, refer Attachment 1, asks Council’s Chief Executive Officer to provide a response to the speech and in particular draw Council’s attention to any anomalies?

Response

The Minister for Environment and Water, the Hon DJ Speirs responded to questions in State Government parliamentary estimates from the Member of Florey Ms Frances Bedford MP don Tuesday, 20 July 2019 during the Estimates Committee B. The following table shows some of the anomalies observed in the response from the Minister for Environment and Water. Response from Hon DJ Speirs Council’s Comments Paragraph 4: Line 2 to Line 7 “It has become very apparent in recent times that the asset maintenance regime around that community wastewater system leaves a lot to be desired and has not had the investment in the asset maintenance that it should have had.”

Council takes a proactive approach to managing its assets that is consistent with best practice asset management. Council actively undertakes asset inspections to rehabilitate, renew and upgrade assets in accordance to the CWMS Asset Management Plan. A total of 10km of CWMS infrastructure was condition assessed in the last two years, which is approximately 9% of the CWMS network. In addition, Council has undertaken approximately 16.7km (approximately 14.4% of all CWMS infrastructure) of asset renewals since the early 1990s which includes 2.5km of CWMS mains the last 10 years. The total capital expenditure to renew CWMS mains over the last 10 years was approximately $2.1m.



Response from Hon DJ Speirs Council’s Comments There were a total of 74 effluent overflows per 100 km recorded in 2018-2019 for the CTTG CWMS system. This result is comparable with SA Water which recorded 7,500 sewer overflows ( SA Water regulatory Performance report 2017-18) across its 8,868km which equates to 86 sewer overflows per 100km. It is noted overflows can often be caused by local properties clearing their blockages and then pushing the debris into the CWMS network which is not designed to handle solids.

Paragraph 4: Line 12 to Line 15 “In fact, it also appears to be reducing the value of residential properties in that area, or at least the potential value, in that people are put off purchasing houses that are on one of these systems.”

The City of Tea Tree Gully is experiencing a period of growth across the City, which includes suburbs serviced by CWMS. The growth in 2018-2019 was approximately 0.96% in CWMS suburbs compared with the long-term projected growth of 0.30% for the City of Tea Tree Gully. Therefore, it is quite possible that the Minister for Environment and Water may be misinformed regarding the value and demand or residential properties in CWMS serviced areas.

Paragraph 5: Line 1 to Line 6 “The government is concerned about this. SA Water has attempted to have conversations with the City of Tea Tree Gully council. I understand that those conversations have been challenging in terms of what information the council will put on the table.” Paragraph 5: Line 10 to Line 17 “……and we are very keen for the City of Tea Tree Gully to outline the costs associated with the project and the costs that residents or homeowners are being charged to access the wastewater system. That sort of information will help SA Water derive an understanding as to how it can assist with this problem.”

Council met with SA Water in June 2018 to discuss the possibility of conversion of CWMS catchments in Modbury, Ridgehaven, St Agnes and other small catchment areas. Information of the catchment areas were provided to SA Water for consideration. The proposal was rejected by SA Water on commercial grounds. A subsequent meeting was recently held with senior staff members from Council and SA Water. SA Water informed Council that SA Water would not participate in any commercial undertaking that would result in financial losses for the organisation. SA Water had estimated based on figures in Council’s CWMS Asset management Plan that Council would have to contribute approximately $20m to SA Water to divest its CWMS assets to SA Water. The cost estimates for the conversion from CWMS to sewer



Response from Hon DJ Speirs Council’s Comments identified in Council’s CWMS Asset Management Plan. A subsequent meeting on 13 September 2019, which included Council’s CEO, Director of Assets & Environment and Director of Organisational Services & Excellence with senior staff members of SA Water. SA Water reiterated that it would not participate in any commercial undertaking that will lead to financial loss for the organisation.

Paragraph 9: Line 1 to Line 3 “I understand that the council has not provided the level of information required to SA Water.”

Sufficient information has been provided to SA Water to provide Council with a cost estimate for divesting Council’s CWMS assets.

Paragraph 10 to Paragraph 15 Discussion between the Minister for Environment and Water and Member for Florey if Council’s CWMS system is the last in the metropolitan Adelaide area.

Yes, the City of Tea Tree Gully is the only Council which has CWMS in metropolitan Adelaide.

2. In relation to the Member for Newlands speech made in State Government

parliament, refer Attachment 2 of this Question on Notice, relating to the Community Wastewater Management System (CWMS), can Council’s Chief Executive Officer respond to the speech and any in particular draw to the Council’s attention to any anomalies?

Response

The Member of Newland, Dr Richard Harvey addressed the South Australian Parliament on Thursday, 12 September 2019 regarding the City of Tea Tree Gully’s Community Wastewater Management System. The following table shows some of the anomalies observed in the speech from the Member of Newland.

Speech by Member of Newland Council’s Comments Paragraph 3 “Shortly after being elected, it became clear to me that a number of residents within my community have been concerned about this system. There is the inconvenience of having septic tanks emptied every four years, which is a service provided by the Council, but in some cases it requires additional expense by the home owner to reach the tank. I have also heard stories of people not realizing they even had a tank, not knowing where the tanks is and even some cases of structures being unknowingly built over the top of tanks, all the while the

The CWMS “system” does not include the septic tanks, which are owned by the property owners and are therefore their responsibility to manage. Council undertakes a 4 yearly clean of the septic tanks to remove solids, which is consistent with SA Department of Health guidelines. Council provides Septic Tank Information Brochures to our customers with the quarterly rates notice and through our website advising them to raise their septic tank lids to ensure that there is ease of access. Some customers choose not to do



Speech by Member of Newland Council’s Comments number of blockages in the system has increased by 138 percent in just 5 years.”

this. Council cannot force customers to comply with our advice. The task of locating septic tanks become simpler with raised septic tank lids. Council will assist our customers that requiring assistance to locate their septic tanks. A contact number is provided for customers with the Cleaning Notice Letter to contact Council if assistance is required to locate their septic tanks. No additional fees are charged for this service. Customers should exercise due diligence when erecting structures on their property to ensure they will have continued access to stormwater and sanitary drains They should prevent damage to stormwater and sanitary drains and other underground infrastructure, such as electrical and communication conduits. Erection of certain structures will also trigger a development approval process that will prevent certain structures from being constructed over a septic tank. The suburbs serviced by CWMS typically have homes that have been constructed in the 1960s and 1970s. The sanitary drains of a significant number of these properties are relatively shallow and more susceptible to root intrusion. The material of construction is typically vitreous clay and in highly reactive soils, resulting in poor joints between pipe segments. Council assesses each blockage to determine the cause. The assessments show that a significant percentage of the blockages in CWMS mains can be contributed to damaged private infrastructure. There were a total of 74 sewer overflows per 100 km recorded in 2018-2019. This result is comparable with SA Water which recorded 7,500 sewer overflows across its 8,868km (7,252km in Adelaide metropolitan area and 1,434km in country areas), which equates to 86 sewer overflows per 100km.

Paragraph 4 “In fact, I recently visited a property in Banksia Park where I was shown an overflowing inspection point by the home owner in their backyard. The CWMS line runs along the back of their property and is, in fact, adjacent to one of the local creeks. I understand that the Council did promptly attend the residence to repair and disinfect the area, but obviously this is less than ideal

As the Member of Newland did not identify the property affected in question, we are not able to provide a response to this particular case. However, in a similar case, Council staff attended a property along Coulls Road, Banksia Park in August 2019, which had a suspected blockage. The property had a creek running pass the back of the property.



Speech by Member of Newland Council’s Comments situation and one that is of increasing concern, given the steady increase in the number of blockages.”

The Council staff responded within 40 minutes of the report. The blockage was cleared using high pressure water and the affected area was disinfected. The matter was reported to SA Environmental Protection Authority (EPA) and SA Department of Health who have provided Council with written responses that the action Council undertook was appropriate. As the sewer overflow was localised to the property, the total volume of the sewer overflow would be proportional to the number of users in the home at the time which would have been very low. Therefore, the potential risk of environmental harm and public health risk downstream of the creek was low. In relation to the number of blockages, Council has never had a Type 1 incident (sewer overflow of greater than 1 ML) and had 86 Type 2 incidences (sewer overflow less than 1ML) in 2018-2019. In contrast to SA Water reported 42 Type 1 incidences in 2017-2018 and 90 Type 2 incidences in the same year (SA Water 2017-18 Annual Report). The asset performance of Council’s CWMS network is not dissimilar to SA Water’ sewer network.

Paragraph 5 “While it is fair to say that the system is not about to collapse tomorrow, it is also fair to say that the system has been in a steady state of decline for decades, with very little evidence of any attention paid by the council to planning for its future. In fact, at a recent community meeting, we heard that in the late nineties and early 2000s the council had come to the realisation that the system was not about to be taken off their hands. What was the council's response then for the following 20 years? Nothing.”

Council takes a proactive approach to managing its assets that is consistent with best practice asset management. Council actively undertake asset inspections and rehabilitate, renew and upgrade assets in accordance to the CWMS asset management plan. A total of 10km of CWMS were condition assessed in the last two years, which is approximately 9% of the CWMS network. In the late nineties to early 2000s, Council has undertaken approximately 16.7km (approximately 14.4% of all CWMS infrastructure) of asset renewals, of which 2.5km of renewals of CWMS mains were undertaken in the last 10 years. The total capital expenditure to renew CWMS mains over the last 10 years was approximately $2.1m.



Speech by Member of Newland Council’s Comments The capital works that were undertaken during this period is Council’s commitment to ensure that our customers have ongoing wastewater services that are reliable and safe. Council had reviewed the CWMS Asset Management Plan, which was adopted by Council in June 2018. In addition, Council has been in contact with SA Water since June 2018 to develop a plan moving forward to convert CWMS to sewer. Senior staff members from Council, including the CEO and members of the executive leadership team have met with SA Water senior staff on at least two occasions to discuss conversion from CWMS to sewer. During these meetings, SA Water reiterated that it would not participate in any commercial undertaking that would potentially lead to financial loss for the organisation.

Paragraph 6 “On that point, in only very recent years an asset management plan was produced that makes for some pretty concerning reading. Moreover, in only very recent months, the council made the decision to jack up the annual services charge by almost 30 per cent over the next few years”

The increase in the CWMS annual service charge is in direct response to ESCOSA’s Price Determination whereby all minor and intermediate water retailers are required to comply. CTTG is licensed by ESCOSA to operate as an intermediate water retailer that provides CWMS services. The Price Determination requires the application of full cost recovery in setting a CWMS Service Charge. The CWMS Service Charge includes recovery of all operating costs (including depreciation), Return of Capital and Cost of Risk. Besides depreciation cost, the operating cost also includes the maintenance of the network of CWMS drainage across CTTG, repair and rehabilitation of CWMS infrastructure, asset management, planning and design. Prior to the Price Determination, Council were not required to account for full cost attribution of service delivery, which includes Return of Capital and Cost of Risk. The rationale of ESCOSA’s Price Determination is to ensure that in the long-term, there are sufficient cash reserves to finance renewals and upgrades on CWMS assets. The income obtained will be reinvested into the



Speech by Member of Newland Council’s Comments CWMS scheme to maintain and improve service delivery to meet current and future needs.

Paragraph 7: Line 1 to Line 5 “Unsurprisingly, now that residents realise the council had been completely asleep at the wheel for decades, there is a great deal of concern and, in many cases, white-hot anger from members of the community. I must say that that anger is shared by me. There is absolutely nothing unusual or surprising about infrastructure ageing over time; this is completely normal and should have been planned for well before now.”

In Council’s response to Paragraph 5, Council has invested considerable funds into managing the CWMS infrastructure. This includes condition assessment of 10km of CWMS mains in the last two years, renewing and upgrading 16.7km of CWMS mains since the early 1990s. The capital invested into the CWMS scheme is Council’s commitment to provide reliable and safe wastewater services. The capital work ensured the system was functional over the years and met the increase in system demand. Assets were either rehabilitated or renewed/upgraded through the 1990s to 2000s. Assets were replaced when they had aged to a point of requiring renewal or upgrade. Council had invested approximately $2.1m in capital to renew and upgrade CWMS assets in the last 10 years.

Paragraph 7: Line 5 to Line 6 “I was shocked to learn that between 2012 and 2016 not a single dollar was placed into council's CWMS reserve.”

The Water Industry Act came into effect in 2012, which required the City of Tea Tree Gully to operate as an intermediate water retailer and comply with ESCOSA’s Price Determination. In response to the Price Determination, the LGA CWMS Committee developed accounting guidelines and principles for local government organisations. The LGA CWMS Committee released the final version of the CWMS Accounting Principles in December 2016, which provided guidance to staff and elected members in planning, constructing, operating and maintaining CWMS schemes.

Prior to 2017, no movements of the CWMS Reserves to account for losses of the water industry entity occurred because the guidelines were not developed and there was uncertainty in relation to accounting for cost of risk and capital. Council was audited in 2019 by BRM Holdich, which confirmed that the accounting principles of the water industry entity was compliant with the Price Determination and CWMS Accounting Principles. Losses for the water industry entity of $637,297 was recorded in 2019, which resulted in negative movement in the CWMS Reserve.



Speech by Member of Newland Council’s Comments Paragraph 9 to paragraph 11 “To that end, I have been in regular contact with the Minister for Environment and Water in respect of any role that SA Water may play in the future of the council's CWMS system. I can reconfirm that SA Water is open to continuing commercial discussions with the council, and I have provided contact details to the council so that they can recommence discussions with SA Water at a higher level than had occurred previously. I would strongly urge the Tea Tree Gully council to engage with SA Water. The ball is in the council's court. Residents understand that there is no simple solution to this problem, but they want a plan. Residents are not interested in finger-pointing or any further abdication of responsibility: they want solutions. As I said before, SA Water is open to having commercial discussions with council, and I would encourage the council to engage fully and work towards the best possible outcome for our community as we were all elected to do.”

Council has been in contact with SA Water since June 2018 to develop a plan moving forward to convert CWMS to sewer.

Senior staff members from Council, including the CEO and members of the executive leadership team have met with SA Water senior staff on at least two occasions to discuss conversion from CWMS to sewer.

During these meetings, SA Water reiterated that it would not participate in any commercial undertaking that will lead to financial loss for the organisation.

Attachments

1. Estimates Committee B 30 July 2019 CWMS questions raised by Frances Bedford2. CWMS Speech from Member of Newland

Report Authorisers

Thornton Harfield Director Assets & Environment 8397 7283

Ryan McMahon Director Organisational Services & Excellence 8397 7297

John Moyle Chief Executive Officer 8397 7201



Council Meeting Minutes – 24 September 2019 Page 4 of 7

Estimates Committee B 30 July 2019 CWMS questions raised by Frances Bedford Attachment 1



Council Meeting Minutes – 24 September 2019Page 5 of 7

Estimates Committee B 30 July 2019 CWMS questions raised by Frances Bedford Attachment 2



Council Meeting Minutes – 24 September 2019 Page 6 of 7

CWMS Speech from Member of Newland Attachmentt 2



Council Meeting Minutes - 24 September 2019Page 7 of 7

CWS Speech from Member of Newland Attachment 2




COUNCIL MEETING

24 SEPTEMBER 2019

QUESTION ON NOTICE

Questions on Notice - Community Wastewater Management System (CWMS) Upgrades and Financial Statements (Cr Lintvelt) D19/61706

Cr Lintvelt asked the following question on notice:

1. Can Council’s Chief Executive Officer provide the financial statements provided toselect residents as per their requests for the Community Wastewater ManagementSystem (CWMS) over the past 10 years and advise whether any movement in theCWMS reserve has occurred and if so why and if not why not?

2. Can Council’s Chief Executive Officer provide a summary of upgrades to Council’sCommunity Wastewater Management System (CWMS) over the last 10 years andidentifying how any works have been funded?

Cr Jessica Lintvelt 18 September 2019

Attachment 2 - Question on Notice

Attachment 2 - Question on NoticeCommunity Wastewater Management System (CWMS) Upgrades and Financial Statements

Page 357



COUNCIL MEETING

24 SEPTEMBER 2019

QUESTION ON NOTICE - RESPONSE

Questions on Notice - Community Wastewater Management System (CWMS) Upgrades and Financial Statements (Cr Lintvelt) D19/61706

1. Can Council’s Chief Executive Officer provide the financial statements providedto select residents as per their requests for the Community WastewaterManagement System (CWMS) over the past 10 years and advise whether anymovement in the CWMS reserve has occurred and if so why and if not why not?

Response

The financial statements for the last 10 years are provided as Attachment 1 CommunityWastewater Management System (CWMS): A breakdown of income, expense andassets for the Community Wastewater Management System from 2011 to 2020.Movements in the CWMS Reserve are shown in Page 2 of Attachment 1.

The Water Industry Act came into effect in 2012, which required the City of Tea TreeGully to operate as an intermediate water retailer and comply with ESCOSA’s PriceDetermination. In response to the Price Determination, the Local GovernmentAssociation (LGA) CWMS Committee developed accounting guidelines and principlesfor local government organisations. The LGA CWMS Committee released the finalversion of the CWMS Accounting Principles in December 2016, which providedguidance to staff and elected members in planning, constructing, operating andmaintaining CWMS schemes.

Prior to 2017, no movements of the CWMS Reserves (to account for losses of the waterindustry entity) occurred because the guidelines were not developed and there wasuncertainty in relation to accounting for cost of risk and capital. Council wasindependently audited in 2019 by BRM Holdich, which confirmed that the accountingprinciples of the City of Tea Tree Gully water industry entity was compliant with the PriceDetermination and CWMS Accounting Principles. Losses for the water industry entity of$637,297 were recorded in 2019, which resulted in negative movement in the CWMSReserve.


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2. Can Council’s Chief Executive Officer provide a summary of upgrades toCouncil’s Community Wastewater Management System (CWMS) over the last 10years and identifying how any works have been funded?

Response

The following table shows the summary of capital renewals and upgrades over the lastten years.

Financial Year

Ending

Length of CWMS Main Renewed or

Upgraded (m)

Capital Cost ($)

2010 21 $8,590.00 2011 220 $22,394.50 2012 93 $436,788.87 2013 200 $146,960.80 2014 593 $280,291.00 2015 575 $212,660.55 2016 435 $184,420.69 2017 36 $13,289.00 2018 99 $423,960.42 2019 124 $336,161.60

A total of 2,397m of CWMS mains have been renewed or upgraded. The total cost of the capital works undertaken during this period is $2,065,517. Attachment 2 shows the list of the capital works over the last 10 years.

Attachments

Attachment 1: Community Wastewater Management System (CWMS): A breakdown of income, expense and assets for the Community Wastewater Management System from 2011 to 2020

Attachment 2 List of Capital Works 2009 to 2019

Report Authorisers

Thornton Harfield Director Assets & Environment 8397 7283

Ryan McMahon Director Organisational Services & Excellence 8397 7297

John Moyle Chief Executive Officer 8397 7201


Page 359



Breakdown of income, expenses and assets for the Community Wastewater Management System, from 2011 to 2020 1

BRM Holdich Report – Profit and Loss 3

BRM Holdich Report – Operating Revenue 4

BRM Holdich Report – Operating Expenses 5

6BRM Holdich Presentation to Audit Committee

Community Wastewater Management System (CWMS)

A breakdown of income, expenses and assets for the Community Wastewater Management System, from 2011 to 2020.


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City of Tea Tree GullyCWMS InformationBreakdown of Income and Expenses for a ten year period

Ref 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011Budget Actual* Actual Actual Actual Actual Actual Actual Actual Actual

RevenueService Charge revenue (connected) 1 3,079,080$ 2,800,475$ 2,673,650$ 2,518,151$ 2,361,445$ 2,253,960$ 2,080,500$ 1,986,530$ 1,891,380$ 1,813,980$ Service Charge revenue (unconnected) 2 67,940$ 67,645$ 58,400$ 57,380$ 45,720$ 41,055$ 39,270$ 38,115$ 39,300$ 43,210$ Total Service Charge 3,147,020$ 2,868,120$ 2,732,050$ 2,575,531$ 2,407,165$ 2,295,015$ 2,119,770$ 2,024,645$ 1,930,680$ 1,857,190$

Other Income 3 80,000$ 84,070$ 77,189$ 48,263$ 28,757$ ‐$ ‐$ ‐$ ‐$ ‐$

Total Revenue 3,227,020$ 2,952,190$ 2,809,239$ 2,623,794$ 2,435,922$ 2,295,015$ 2,119,770$ 2,024,645$ 1,930,680$ 1,857,190$

ExpensesEmployee costs ‐ maintenance staff 4 515,627$ 552,991$ 499,880$ 487,344$ 438,541$ 391,419$ 330,406$ 202,495$ 202,516$ 229,073$ Contractual expenses 5 538,000$ 459,951$ 446,903$ 362,537$ 345,073$ 416,615$ 442,798$ 309,491$ 291,993$ 283,866$ SA Water Discharges 6 620,000$ 738,092$ 578,299$ 566,662$ 657,077$ 648,125$ 635,592$ 624,850$ 586,734$ 559,180$ Plant, materials and maintenance 7 131,500$ 114,006$ 105,969$ 142,740$ 139,210$ 26,895$ 80,762$ 77,345$ 84,470$ 105,224$ Sub‐total Expenses 1,805,127$ 1,865,041$ 1,631,051$ 1,559,282$ 1,579,902$ 1,483,054$ 1,489,558$ 1,214,181$ 1,165,713$ 1,177,344$

Depreciation 8 447,083$ 355,000$ 351,000$ 343,095$ 343,000$ 360,364$ 356,000$ 346,000$ 450,000$ 409,000$ Employee costs ‐ administration staff 9 492,177$ 478,421$ 477,629$ 418,531$ 420,066$ 450,808$ 437,490$ 366,249$ 359,657$ 326,759$

Total Expenses 2,744,387$ 2,698,461$ 2,459,680$ 2,320,908$ 2,342,968$ 2,294,226$ 2,283,047$ 1,926,430$ 1,975,370$ 1,913,102$

Non operating expenditureCost of capital 10 314,021$ 254,784$ 254,784$ 252,085$ 252,085$ 250,616$ 249,505$ 247,653$ 245,311$ 245,311$ Cost of risk 11 653,551$ 636,243$ 623,518$ 611,047$ 598,826$ 586,850$ 575,113$ 563,611$ 552,338$ 541,292$

Total Non Operating Expenditure 967,571$ 891,026$ 878,301$ 863,132$ 850,911$ 837,466$ 824,618$ 811,263$ 797,649$ 786,603$

Total expenses 3,711,958$ 3,589,487$ 3,337,981$ 3,184,040$ 3,193,879$ 3,131,692$ 3,107,665$ 2,737,694$ 2,773,019$ 2,699,705$

Funding Gap 484,938‐$ 637,297‐$ 528,742‐$ 560,246‐$ 757,957‐$ 836,677‐$ 987,895‐$ 713,049‐$ 842,339‐$ 842,515‐$

7,191,656‐$ Total funded from general rate revenue from 2011 to 2020


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City of Tea Tree GullyCWMS InformationBreakdown of Income and Expenses for a ten year period

Other Information Required

Ref 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011Additions at cost 12 280,000$ 282,000$ 408,000$ ‐$ 222,000$ 168,000$ 280,000$ 354,000$ 796,000$ 2,000$ Asset Value (carrying amount) 13 45,333,000$ 45,333,000$ 29,944,000$ 29,887,000$ 29,644,000$ 29,765,000$ 31,769,000$ 31,689,000$ 31,180,000$ 30,980,000$

CWMS Reserve ‐ Opening Balance 14 2,651,703$ 3,289,000$ 3,489,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$ 2,634,000$ ‐ Movement 15 484,938‐$ 637,297‐$ 200,000‐$ 200,000$ ‐$ ‐$ ‐$ ‐$ ‐$ 655,000$ ‐ Closing Balance 16 2,166,764$ 2,651,703$ 3,289,000$ 3,489,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$ 3,289,000$

Number of properties to SA Water:

Information and Assumptions:

Year 2020Year 2019 *

Employee costs ‐ maintenance staff 4

Employee costs ‐ administration staff 9

CWMS Reserve 15 The movement in 2017 and 2018 is due to the Grenfell Road project being delayed.

Additions at cost 12

Contractual expenses 5The 2011 figure is different from the 2011 Annual Report as a variance was found while compiling this report

As we are now on the path to Full Cost Recovery we will be taking the annual funding gap from the reserve. 2019 and 2020 movements are only estimates based on these figures. Should there be any surplus that will also be added to the reseve, that is not expected for a few years.

AS we are now on the path to Full Cost Recovery we will be taking the annual funding gap from the reserve. 2019 and 2020 movements are only estimates based on these figures. Should there be any surplus that will also be added to the reserve, that is not ex

Council currently does not have a formal program to transition CWMS customers to SA Water. Typically, some customers are given the option to transition to SA Water as an alternative wastewater service provider when SA Water extends their sewer network. The extension of SA Water’s sewer network may bring sewer services to an area where in the past had only Council’s CWMS infrastructure. The residents will get in contact with SA Water to obtain a connection cost and have to decide if they would like to connect to SA Water’s scheme. The information that I could get out of Assetic states that there were 5 properties from 2016 to 2019 that transitioned to SA Water. There were another 105 properties that transitioned to SA Water between 1989 to 20 2007.

These expenses are more accurate in the recent years due to more mature job costing and allocation processes of the councilThese expenses include an allocation of the non‐direct CWMS staff salaries and also an allocation of Finance, IT, Customer and Communication Department wages and does not include senior management. It is based on the ESCOSA reporting model.

The income and expenses for this financial year are estimates and still subject to adjustments before financials are finalised, data based as 1 August, prior to Audit

The income and expenses for this financial year are based on the budget which has been approved by council


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City of Tea Tree GullyProfit and Loss

1 2 3 4 5 6 7 8 9 102018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

RevenueService Charge revenue (connected) 0 2,685,830 3,457,075 3,650,735 3,839,325 4,013,323 4,198,385 4,631,372 4,788,218 5,019,830 5,402,398Service Charge revenue (unconnected) 0 73,040 75,231 77,488 79,813 82,207 84,673 87,214 89,830 92,525 95,301Connection Fees 0 135,000 139,050 143,222 147,518 151,944 156,502 119,405 122,987 126,677 130,477State / SA Water Grants 0 0 0 0 0 0 0 0 0 0 0User charges 0 0 0 0 0 0 0 0 0 0 0CWMS other income 8,002 8,242 8,489 8,744 9,006 9,277 9,555 9,841 10,137 10,441 10,754

Total Revenue 2,902,112 3,679,845 3,880,188 4,075,662 4,256,751 4,449,116 4,847,832 5,011,172 5,249,472 5,638,930Growth in revenue 26.8% 5.4% 5.0% 4.4% 4.5% 9.0% 3.4% 4.8% 7.4%

ExpensesEmployee costs ‐568,692 ‐606,675 ‐626,695 ‐647,376 ‐668,739 ‐690,808 ‐713,604 ‐737,153 ‐761,479 ‐786,608 ‐812,566Contractual expenses ‐999,335 ‐1,114,936 ‐1,126,766 ‐1,152,395 ‐1,156,982 ‐1,196,730 ‐1,237,868 ‐1,280,444 ‐1,324,509 ‐1,370,118 ‐1,417,325Plant, materials and maintenance ‐15,000 ‐15,750 ‐16,538 ‐17,364 ‐18,233 ‐19,144 ‐20,101 ‐21,107 ‐22,162 ‐23,270 ‐24,433Infrastructure maintenance ‐207,243 ‐213,430 ‐216,112 ‐218,666 ‐221,074 ‐223,318 ‐228,876 ‐230,724 ‐232,340 ‐233,696 ‐234,765Insurance 0 0 0 0 0 0 0 0 0 0 0Depreciation 0 ‐387,363 ‐400,654 ‐414,610 ‐466,044 ‐482,335 ‐499,440 ‐563,609 ‐584,563 ‐607,665 ‐684,184Other expenditure ‐109,010 ‐114,104 ‐119,509 ‐175,250 ‐131,352 ‐137,844 ‐144,758 ‐205,878 ‐159,990 ‐168,386 ‐177,359Support costs allocated 0 ‐200,000 ‐206,000 ‐212,180 ‐218,545 ‐225,102 ‐231,855 ‐238,810 ‐245,975 ‐253,354 ‐260,955

Total Expenses ‐2,652,258 ‐2,712,274 ‐2,837,841 ‐2,880,969 ‐2,975,281 ‐3,076,502 ‐3,277,725 ‐3,331,018 ‐3,443,097 ‐3,611,587

Non operating expenditureCost of capital 0 ‐314,021 ‐376,220 ‐445,370 ‐517,978 ‐594,217 ‐687,609 ‐781,001 ‐883,966 ‐992,079Cost of risk 0 ‐653,551 ‐666,128 ‐749,323 ‐763,492 ‐778,396 ‐882,498 ‐899,153 ‐922,410 ‐1,035,264

Total Non Operating Expenditure 0 ‐967,571 ‐1,042,348 ‐1,194,693 ‐1,281,470 ‐1,372,613 ‐1,570,107 ‐1,680,154 ‐1,806,376 ‐2,027,343

Total expenses ‐2,652,258 ‐3,679,845 ‐3,880,188 ‐4,075,662 ‐4,256,751 ‐4,449,116 ‐4,847,832 ‐5,011,172 ‐5,249,472 ‐5,638,930Growth in expenditure 38.7% 5.4% 5.0% 4.4% 4.5% 9.0% 3.4% 4.8% 7.4%

Profit / Loss 249,854 0 0 0 0 0 0 0 0 0

CASHFLOW ANALYSIS

Cashflow from operations 637,218 1,368,225 1,456,957 1,660,737 1,763,805 1,872,053 2,133,716 2,264,717 2,414,041 2,711,527Capital ‐1,334,465 ‐1,316,379 ‐1,382,198 ‐1,536,679 ‐1,613,513 ‐1,694,189 ‐2,075,382 ‐2,075,382 ‐2,288,108 ‐2,402,514Free Cash Flow ‐697,247 51,846 74,759 124,057 150,291 177,864 58,334 189,335 125,932 309,013Non operating expenditure 0 ‐967,571 ‐1,042,348 ‐1,194,693 ‐1,281,470 ‐1,372,613 ‐1,570,107 ‐1,680,154 ‐1,806,376 ‐2,027,343Cashflow after non operating expenditure ‐697,247 ‐915,725 ‐967,589 ‐1,070,636 ‐1,131,179 ‐1,194,749 ‐1,511,773 ‐1,490,818 ‐1,680,443 ‐1,718,330

3

BRM Holdich Report


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City of Tea Tree GullyOperating Revenue

1 2 3 4 5 6 7 8 9 102018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Service Charge revenue (connected) 2,685,830 3,457,075 3,650,735 3,839,325 4,013,323 4,198,385 4,631,372 4,788,218 5,019,830 5,402,398Service Charge revenue (unconnected) 73,040 75,231 77,488 79,813 82,207 84,673 87,214 89,830 92,525 95,301Connection Fees 135,000 139,050 143,222 147,518 151,944 156,502 119,405 122,987 126,677 130,477State / SA Water GrantsUser chargesCWMS other income 8,002 8,242 8,489 8,744 9,006 9,277 9,555 9,841 10,137 10,441 10,754

Total income 2,902,112 3,679,845 3,880,188 4,075,662 4,256,751 4,449,116 4,847,832 5,011,172 5,249,472 5,638,930

Service charge growth rate 27.95% 4.98% 4.55% 3.92% 4.00% 9.84% 2.95% 4.39% 7.17%Service charge 595.00$ 595.00$ 761.30$ 799.20$ 835.54$ 868.31$ 903.07$ 991.94$ 1,021.16$ 1,066.01$ 1,142.40$ Unconnected service charge 415.00$ 415.00$ 427.45$ 440.27$ 453.48$ 467.09$ 481.10$ 495.53$ 510.40$ 525.71$ 541.48$ Connection charges 5,000.00$ 5,000.00$ 5,150.00$ 5,304.50$ 5,463.64$ 5,627.54$ 5,796.37$ 5,970.26$ 6,149.37$ 6,333.85$ 6,523.87$

3,457,075‐$ 3,650,735‐$ 3,839,325‐$ 4,013,323‐$ 4,198,385‐$ 4,631,372‐$ 4,788,218‐$ 5,019,830‐$ 5,402,398‐$

AssumptionsSource:

Current Service Charge 595.00$ FY2018/19 Fees and charges scheduleUnconnected Service Charge 415.00$ FY2018/19 Fees and charges scheduleConnection fee 5,000.00$ FY2018/19 Fees and charges scheduleService charge growth rate 6.50%Connection charge growth rate 3.00% Assume CPI

4

BRM Holdich Report


Page 364



City of Tea Tree GullyOperating Expenses 1 2 3 4 5 6 7 8 9 10

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Other expensesEmployee costs 568,692 606,675 626,695 647,376 668,739 690,808 713,604 737,153 761,479 786,608 812,566Contractual expenses 999,335 1,114,936 1,126,766 1,152,395 1,156,982 1,196,730 1,237,868 1,280,444 1,324,509 1,370,118 1,417,325Plant, materials and maintenance 15,000 15,750 16,538 17,364 18,233 19,144 20,101 21,107 22,162 23,270 24,433Infrastructure maintenance 207,243 213,430 216,112 218,666 221,074 223,318 228,876 230,724 232,340 233,696 234,765Insurance 0 0 0 0 0 0 0 0 0 0 0Depreciation 0 387,363 400,654 414,610 466,044 482,335 499,440 563,609 584,563 607,665 684,184Other expenditure 109,010 114,104 119,509 175,250 131,352 137,844 144,758 205,878 159,990 168,386 177,359Support costs allocated 200,000 206,000 212,180 218,545 225,102 231,855 238,810 245,975 253,354 260,955Total 1,899,280 2,652,258 2,712,274 2,837,841 2,880,969 2,975,281 3,076,502 3,277,725 3,331,018 3,443,097 3,611,587

Assumptions:Council support costs 200,000 Other expenses per assumptions in AMP Depreciation based on calculated asset value on 'Assets' sheet

5

BRM Holdich Report


Page 365



BUSINESS ∙ RESOURCE ∙ MANAGEMENT


CWMS Pricing

March 2019

6


Page 366




Regulatory framework

• Since 2012, South Australian CWMS are subject to the Essential ServicesCommission of South Australia (ESCOSA) regulatory regime, as authorised byPart 4, Division 3 of the Water Industry Act 2012

• ESCOSA released a Price Determination for Minor and Intermediate Retailerswhich CTTG are required to adopt to ensure compliance

• The Price Determination requires the application of full cost recovery in setting aCWMS Service Charge. This includes recovery of all operating costs (includingdepreciation), Return of Capital and Cost of Risk

• To date ESCOSA has taken a light handed approach to regulation. At aminimum, minor and intermediate retailers should be able to demonstrategradual application of cost recovery principles

• LGA has also provided guidance to assist Councils with costing and charging forCWMS Schemes (CWMS Costing and Accounting Principles Paper)

7


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History

• CTTG has not previously implemented a CWMS Pricing Model built inaccordance with the regulatory framework (but has consistentlysubmitted annual returns to ESCOSA).

• CWMS Service Charges have historically been set with reference to theprevious year Service Charge plus an increase (generallycommensurate to increases in Council Rates)

• CTTG are developing a CWMS Pricing Model aligned to the regulatoryframework which considers:

• Forecast operating performance;

• Planned capital renewal (informed by the CWMS Asset Management Plan);and

• Providing for a Return on Capital and Risk.

8


Page 368




Asset Management Plan

• An updated version of the CWMS Asset Management Plan wasprepared in 2018 (endorsed in July) and is available on CTTG’s website

• That AMP identified that the CWMS assets were wearing out faster thanthey were being renewed and that there was a need to significantlyincrease capital investment in the CWMS scheme

• CTTG is currently undertaking due diligence regarding the capitalinvestment / upgrades foreshadowed in the AMP including:

• Verification of the condition of the network

• Verification of the priority and schedule of proposed capital works

• Verification of the value of the proposed upgrade works

9


Page 369




CWMS Scheme overview

• Traditional CWMS scheme with no treatment infrastructure (all effluent is‘passed through’ to SA Water network for treatment)

• A majority of the CWMS assets are pumps and connections

• Total Property Units: 4,663 (4,478 connected and 176 unconnected)

• Current Service Charge: $595 (connected) and $415 (unconnected) perproperty unit

• SA Water current pass through charge $131 per property unit.

10


Page 370




Pricing Model

• We have developed a 40 year CWMS pricing model which is informed by:

• FY2019 CWMS trading performance

• CWMS AMP

• Principles of full cost recovery, which includes recovery of the Cost of Capital,Cost of Risk and Full Cost Attribution of Council overheads.

• Key assumptions to ensure compliance with ESCOSA requirements:

• Opex based on 2019 trading

• Maintenance linked to AMP assumptions (reduced maintenance followingcapital investment)

• Council support costs / Overheads of $200k (indexed) – to be further verifiedby CTTG

11


Page 371




Pricing Model

• Key assumptions (cont.)

• Written down Asset Value - $26 million

• Depreciation based on 100 year useful asset life

• Cost of risk starting a 2% of WDV of assets, reducing each year (proportionately tocapital spend) as the scheme is upgraded and the risk of scheme failure declines

• Cost of capital calculated on asset base of $4.3 million (post 2007 legacy date levels ofinvestment in the CWMS)

– Rate of return of 4.5% is commensurate to a long term borrowing rate.

– Capital in the Pricing Model is assumed to be funded from Council reserves. This will be verifiedas part of the Asset Management Plan due diligence process review.

– Under the pricing regime, CTTG earns a return on the capital it commits to the CWMS throughan increased Service Charge. This offsets any ‘funding costs’ that it incurs in funding thecapital.

12


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Pricing Model

• The pricing model has identified that a 28% increase in the ServiceCharge would be required to ensure immediate compliance with ESCOSApricing principles (from $595 to $761)

• Future Service Charge increases are higher than CPI (average ofapproximately 5% over 40 years) to fund the additional capital proposedunder the AMP (depreciation and capital recovery)

13


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Implementation

• ESCOSA has stated it will continue to take a light handed approach toregulation for minor and intermediate retailers

• There is an opportunity to gradually move towards full compliance with theregulatory regime over a period of time

• Reduce the immediate impact on Service Charges

• Further work required:

• Verify assumptions in the Pricing Model and AMP (CTTG)

• Submit Report to accompany the Pricing Model (BRMH)

• Make a recommendation to Council for the FY2020 CWMS Service Charge(draft budget currently assumes a 6% increase)

14


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BRM HoldichLevel 8, 420 King William StreetAdelaide SA 5000.

Phone: 08 8168 8400Fax: 08 8168 8499

www.brmholdich.com.au

15


Page 375



Attachment 2: List of capital Works 2009 to 2019

Year of Construction Street Name Suburb

Length of CWMS Main Renewed or Upgraded (m)

2009 Byron Tea Tree Gully 152009 Austral Street Hope Valley 102009 Austral Street Hope Valley 112010 Hobart Crescent Banksia Park 122010 Allan Street Vista 132010 Allan Street Vista 22010 Allan Street Vista 362010 Alawa Avenue Modbury 692010 North Street Tea Tree Gully 112010 North Street Tea Tree Gully 162011 Barker Avenue Tea Tree Gully 352011 Tamar Crescent Banksia Park 102011 Highfield Drive Tea Tree Gully 122011 Pitanda Road Banksia Park 262012 Eurora Avenue Banksia Park 232012 Lee Avenue Ridgehaven 222013 Willow Street Redwood Park 192013 Barkala Court Redwood Park 422013 Oleander Drive Banksia Park 342013 Aries Avenue Hope Valley 1062013 Burns Street Tea Tree Gully 172013 Esk Street Redwood Park 232013 Janlyn Road Vista 232013 Arkaba Road Banksia Park 2022014 Karawa Crescent Fairview Park 1882014 Oleander Drive Banksia Park 272014 Oleander Drive Banksia Park 1132014 Tree Top Street Tea Tree Gully 512014 Oleander Drive Banksia Park 12014 10-12 Taworri Road Fairview Park 162014 Elinga Road Fairview Park 352014 Shannon Rise Banksia Park 392014 Karawa Crescent Fairview Park 892014 Karawa Crescent Fairview Park 1202014 Oleander Drive Banksia Park 182015 Janlyn Road Vista 232015 44 Cotton Street Fairview Park 342015 Grenfell Road Banksia Park 172015 North Blvd Tea Tree Gully 1202015 Orkney Lane Vista 342015 Shelley Street Tea Tree Gully 492016 Saratoga Avenue Redwood Park 252016 Grenfell Road Banksia Park 472016 Grenfell Road Banksia Park 1162016 Grenfell Road Banksia Park 1232016 Grenfell Road Banksia Park 422016 17 & 17A Davenport Street Banksia Park 102017 Oleander Drive Banksia Park 262017 Argus Avenue Hope Valley 382017 14 Yarramie Avenue Banksia Park 15

1


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Attachment 2: List of capital Works 2009 to 20192018 Cotton Street Fairview Park 372018 37 & 37A Minnamurra Drive Redwood Park 102018 252 Hancock Road Redwood Park 112018 Leonis Avenue Hope Valley 172019 38-40 Perseverance Road Tea Tree Gully 282019 Alawa Avenue Modbury 142019 Oleander Drive Banksia Park 202019 Nagle Avenue Fairview Park 162019 Heine Street St Agnes 19

2


Page 377



Banksia Park Kindergarten and Primary School

Banksia Park Kindergarten

Banksia Park Primary School

Banksia Park Sports Area

Attachment 3 Page 378


Surrey Downs Primary School

Surrey Downs Primary School

Vine Reserve

Attachment 4

Page 379


Highbury Primary School

Contact Details

PO Box 571, Modbury SA 5092 571 Montague Road, Modbury Tel (08) 8397 7444 Fax (08) 8397 7400

Disclaimer

© Copyright 2019. All rights reserved. All works and information displayed are subject to Copyright. For reproduction or publication, written permission must be sought from the City of Tea Tree Gully. Although every effort has been made to ensure the accuracy of the information displayed, the City of

Highbury Primary School

Attachment 5Page 380


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Attachment 6 Page 381


Documents

MINUTES OF THE COUNCIL MEETING OF THE CITY OF TEA TREE ... · Ms A Dinevski Continuous Improvement Coordinator ... That the meeting be adjourned for a 3 minute break. Carried Unanimously