PROPOSAL FOR NEWSPAPER KIOSK LICENSING SYSTEM · PLANNING COMMITTEE REPORT Agenda Item 5.1 4 September 2007 PROPOSAL FOR NEWSPAPER KIOSK LICENSING SYSTEM Division Sustainability &

P L A N N I N G C O M M I T T E E R E P O R T Agenda Item 5.1 4 September 2007

PROPOSAL FOR NEWSPAPER KIOSK LICENSING SYSTEM

Division Sustainability & Regulatory Services

Presenter Geoff Robinson, Manager Engineering Services

Purpose

1. To seek approval:

1.1. to introduce and implement a new licensing and permit system for the improved management and operation of Council’s newspaper kiosks (“ Kiosks”) throughout the municipality; and

1.2. to negotiate and issue licences with the current Authorised Newsagents, and permits to the current Sub-Agents of the Kiosks, as set out in this report.

Recommendation from Management

2. That the Planning Committee recommend that Council:

2.1 approve the proposed licensing and permit system as detailed in this report including the principle that all sites will be initially licensed and permitted for 5 years from 1 January 2008, and tendered to the market place at the expiration of the first licence and permit term on 31 December 2012;

2.2 enter into a licence with each of the current Authorised Newsagents (“Licensee”) for Council’s newspaper kiosks on the following terms and conditions:

2.2.1 a licence term of five years commencing on 1 January 2008;

2.2.2 a commencing monthly licence fee of between $1,041 and $1,666 exclusive of GST (in accordance with the ‘Independent Rental Advice Report’ in Attachment 1) with market review on the first anniversary and CPI review on subsequent anniversaries;

2.2.3 the licensee must keep Council’s newspaper kiosk clean, tidy and in good repair; and

2.2.4 such other terms and conditions as may be required by the Manager Legal Services to fully protect the interests of the Council.

2.3 enter into a permit with each of the current Sub-Agents for Council’s newspaper kiosks on the following terms and conditions:

2.3.1 a permit term of five years commencing on 1 January 2008;

2.3.2 a one off permit fee of $300 exclusive of GST as negotiated with all parties;

2.3.3 the permit holder must only use Council’s newspaper kiosk as a newsagency and for the sale of usual ancillary items;

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2.3.4 the permit holder must conduct business from Council’s newspaper kiosk in good faith and in accordance with best business methods and in a reputable manner; and

2.3.5 such other terms and conditions as may be required by the Manager Legal Services to fully protect the interests of the Council.

Key Issues

3. Council was joined as a respondent to 7 separate applications made to the Office of the Small Business Commissioner (OSBC) in 2006 in relation to the occupation of the Kiosks. The applications were brought by some of the parties operating the Kiosks in an attempt to obtain a fixed term lease from 1 May 2004 to 30 April 2009 inclusive. Currently, there is no lease or licence in place and the newspaper kiosks are occupied as street trading sites on a month-to-month basis pursuant to Council’s Activities Local Law 1999.

4. A mediation session was held by the Office of the Small Business Commissioner on 20 October 2006 and again on 6 March 2007 to resolve the way ahead. The parties operating the kiosks agreed on the proposed introduction and implementation of a two-tiered licence and permit system. The parties have agreed on the form of the licence and permit subject to agreement by Council, and favour a 5 year term before sites are tendered to the market place.

5. The administration sought professional advice as to the current market values of its newspaper kiosks and pillars in the context of the mediation. The independent market rental advice report by DTZ can be viewed on Attachment 1.

Time Frame

6. Subject to Committee and Council endorsement, and further consultation with key stakeholders, the licensing and permit system will be implemented from 1 January 2008.

Relation to Council Policy

7. The principles contained in the revised licensing system are consistent with Council’s strategic objectives. This will ensure that the energy of the city is evident through its vibrant street life. The licensing system is aligned with the Strategic objectives found in the City of Melbourne Council Plan 2005-2009:

7.1. Innovative and Vital Business City. Support the establishment and growth of innovative new businesses and business support services; and

7.2. Engaging City. Adopt a new urban strategy and implement initiatives to improve amenity, safety and the quality of the city’s public environment.

Consultation

8. Since July 2005, the Street Activity Branch has been consulting with the following key stakeholders:

8.1. Flinders City Authorised Newsagency - Stephen McKinnis and Ron McKinnis

8.2. Mitty’s Authorised Newsagency - Neville Lyon;

8.3. Melbourne Central Authorised Newsagency - James Klashovski;

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8.4. Ledermans Authorised Newsagency - Noel Williams;

8.5. The Age Newspaper;

8.6. The Herald and Weekly Times;

8.7. Staff, employees, and sub-agents of all kiosks; and

8.8. Victorian Authorised Newsagents Association.

9. The OSBC mediation process has also provided an invaluable opportunity for the City of Melbourne to participate in a round table consultative discussion with individual operators and the Authorised Newsagents to clarify interests. Clearly, the administration has been better placed to move forward once aware of the position of all the parties.

Finance

10. The adoption of market rate fees as indicated by DTZ is likely to generate and extra $132,000 of revenue per annum from $88,000 to approximately $220,000. In the 2007/08 year, $66,000 (half of this annual increase) would be realised. This increase is not reflected in the current budget.

Legal

11. Ongoing legal advice has and will continue to be provided in relation to Council’s newspaper kiosks.

Sustainability

12. The proposal is guided by economic sustainability themes linked to Council’s strategic direction for the City, particularly in terms of economic prosperity that seeks to support business and market growth. The proposed licence system seeks to protect and enhance the value of city assets. Further, it provides certainty of occupation by Authorised Agents and Sub-Agents for five years as opposed to the current month-to-month arrangement.

Newspaper Kiosks

13. In terms of managing current operations in a fair, transparent and consistent manner, the administration proposes the following in relation to the Kiosks:

13.1. a licence and street trading permit for a period of five years from 1 January 2008 be issued to the current Authorised Newsagents and Sub-Agents. This approach accords with Council’s resolution of 29 July 1997 in the endorsement of a schedule of Street Trading Sites. Further, it provides certainty of street trading for 5 years for the current operators;

13.2. upon the expiry of the above licences and permits (31 December 2012), it is proposed that all Kiosks be publicly tendered out. The advantages of conducting a public tender include application of the Activities Local Law 1999 and Council’s standard tender and contract practices, which are currently used for Council’s flower and fruit kiosks. Ultimately, this will assist the City of Melbourne to manage and facilitate fair, consistent, safe and responsible street trading, i.e. it will ensure that any person will have an opportunity to apply for a Kiosk.

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Newspaper Pillars

14. The pillars are also currently subject to continuing month-to-month arrangements with Authorised Newsagents. The 12 Newspaper Pillars are currently provided free of charge.

15. The use and monthly street trading fees may be determined by offering the pillars to the market by way of competitive tender. On the basis of the market valuation analysis by DTZ it is considered possible to charge modest fees in the range of $250-$350 per month.

16. Given the poor operation and appearance of most pillars, it is considered appropriate that a future examination and strategy be put forward by the administration to better manage the future use of pillars. The review of Street Trading Strategy of 2007/2008 is considered the appropriate review process to determine the future use of pillars. This review is not scheduled to begin until later in 2007.

Other Options

17. Two other options were canvassed at the mediation as options for Council to consider in relation to the term and fee of any licence or permit to be issued, although not favoured by all parties to the mediation:

17.1. two year term from 1 January 2008 to 31 December 2009, permit fee to be $300 exclusive of GST, and licence fee to be set at the current rate ($564.51 plus GST) for the first year and current rate plus CPI for the subsequent year; and

17.2. four year term from 1 January 2008 to 31 December 2011, permit fee to be $300 exclusive of GST, and licence fee to be set at discounted market rate plus GST.

Background

18. Prior to 1993, Council’s newspaper kiosks and pillars were owned by the Herald and Weekly Times through the Newspaper Publishers Association of Melbourne (“the Association”). Newspapers were sold from various small steel structures and kiosks.

19. In May 1993 the Herald and Weekly Times and the Association decided to hand over ownership and control of newspaper kiosks to the Council. Subsequent to this decision, in 1993 Council’s Urban Design Branch designed a prototype newspaper kiosk and between 1994 and 1996 Council progressively constructed and installed 14 newspaper kiosks in the locations outlined in Table 1.

20. The following 4 Authorised Newsagents are recorded as the only authorised operators of Council’s 13 newspaper kiosks and 12 pillars and they pay a monthly street trading fee to Council in respect of the Kiosks (as previously indicated, no street trading fee is levied in relation to the pillars):

20.1. Ledermans Newsagency;

20.2. Mitty’s Newsagency;

20.3. Flinders City Newsagency; and

20.4. Melbourne Central Newsagency.

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Attachments: 1. Independent Rental Advice Report by DTZ Australia Pty Ltd

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Street Trading Strategy 1995

21. In 1995 the City of Melbourne endorsed a review of street trading that identified street trading as an activity that can enhance and add diversity to the City. The Strategy remains the overarching policy framework for the implementation and management of street trading activities in the public domain. The primary objective of the policy is to assist the City of Melbourne to manage and facilitate fair, consistent, safe and responsible trading and entertainment on streets and public places, and to increase the attractiveness and comfort of these places.

22. It should be noted that a plan for newspaper kiosks and pillars was not included in this Strategy. The design, construction and installation of newspaper kiosks between 1994 and 1996 occurred outside of the study.

23. Subsequent to the Strategy, Council in 1997 endorsed a schedule of new Street Trading sites that included sites for Fruit Kiosks, Flower Kiosks, Food Vans, Ticket Booths and a Sunday Arts and Craft Market. In response to this, the City of Melbourne created key sites appropriate for the new Street Trading activities.

24. A system for administering permits was devised and interested parties were given the opportunity to periodically express an interest, and submit a tender for conducting street trading at those sites, with Council (through a process managed by Street Trading) issuing a ‘permit’ to successful applicants in accordance with Council’s Standard Tender and Contract practices.

25. As newspaper kiosks and pillars are yet to be shifted to a permit system, a similar permit system to the above would be an effective way to regulate newspaper kiosks and pillars and provides for flexibility going forward.

2003/2004 Review of Street Trading Strategy

26. The Street Trading Strategy Review conducted in 2003/04 was instrumental in assessing the performance of existing street trading activities through wide public consultation and outlined the future direction of street trading through extensive market research. The primary objective of this review was to outline a management Strategy for the City of Melbourne that provides guiding principles, decision making criteria and administrative guidelines for the effective management of street trading now and in the foreseeable future.

27. An examination of the operation of newspaper kiosks and pillars formed part of this review, and formed the foundation of the current licensing strategy.

28. One of the principal findings of the review and extensive market research identified that while Council assets such as fruit kiosks and the flower kiosks in the city are presented attractively, it was recognised that, in particular, the newspaper kiosks were worn and in need of an upgrade and an improved management structure.

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DTZ

Level 15, 1 Collins Street Melbourne VIC 3000 Australia Tel: +61 (0)3 9655 9999 Fax: +61 (0)3 9655 9900 www.dtz.com/au

A list of directors’ names is open to inspection at the above address Director and Licensed Real Estate Agent - Andrew Stern DTZ Australia (VIC) Pty Ltd ABN 65 069 488 866 Registered office Level 15, 1 Collins Street, Melbourne VIC 3000, Australia

Mr Raj Singh Street Trading Coordinator Melbourne City Council 1

st Floor Council House

200 Little Collins Street Melbourne VIC 3000 Date: 8 June 2007

Email: [email protected] Direct Tel: +61 (0)3 9655 9905 Direct Fax: +61 (0)3 9655 9900 Your ref: Order No. 481647 Our ref: 9669V – MCC Street Trading Rental Advice

Dear Sir, MELBOURNE CITY COUNCIL, STREET TRADING SITES – RENTAL ADVICE

1 INTRODUCTION Further to recent correspondence and our previous rental advice dated 18 August 2005, we confirm that we have been instructed to provide updated market rental advice to Melbourne City Council (MCC) in relation to various street trading sites in the municipality. The subject sites are as follows:

• 13 newspaper kiosks • 11 newspaper pillars

MCC has specifically requested that DTZ provide an estimate of gross market rental value for each newspaper kiosk. The details of each of the trading sites are provided below:

2 SUBJECT PROPERTIES 2.1 Newspaper Kiosks There are 13 newspaper kiosks located at prime sites around the CBD where there are high levels of pedestrian traffic. The kiosks each have an area of approximately 4.5 sqm, but when the doors are open the effective retail area is significantly larger. Construction is of a very good quality with careful attention to aesthetic design features. (Refer to image below). The kiosks typically sell newspapers, magazines, confectionary, cigarettes, cold drinks etc. The tenancy schedule for the newspaper kiosks is detailed overleaf:

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Text Box

Attachment 1 Agenda Item 5.1 Planning Committee 4 September 2007

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Location Permit Holder Fee

Next

Review

Date

Review

Type

1 Flinders City Newsagency $6,774.12 1/09/2007 CPI

2 Melb Central Newsagency $6,774.12 1/09/2007 CPI





7 Ledermans Newsagency $6,774.12 1/09/2007 CPI






13 Mitty's Newsagency $6,774.12 1/09/2007 CPI

$87,925.20

**

NW Cnr Collins & Elizabeth St

SE Cnr Elizabeth & Lt Bourke St

(GPO Kiosk)SE Cnr Elizabeth & LaTrobe St

(Daimaru Kiosk)

NE Cnr Bourke & Queen St

(Elders Kiosk)NE Cnr Collins & King St

(Collins Kiosk)

SE Cnr Elizabeth & Franklin St

NE Cnr William & Bourke St

NW Cnr of Bourke & Swanston St

S Cnr of Collins & Spring St

As per the Tenancy Schedule supplied by the Managing Agent we note that there has been no review pattern exercised

for the street trading site - newspaper kiosk at the SW Corner of LaTrobe & Swanston Streets as at 4 May 2007.

In front of Village Roadshow Centre,

Bourke St

**SW Cnr LaTrobe & Swanston St

21 Swanston St, Outside CBA

SE Cnr Collins & Queen St

The kiosks are occupied under Street Trading Permits which we understand have been in place for some years and are continuing on a monthly basis. A tender process is undertaken every five years. The licence fees for all the kiosks (with the exception of the kiosk located at the south west corner of LaTrobe and Swanston Streets) are set at a uniform rate that is currently $6,774.12 pa inclusive of all outgoings. We understand that the Council undertook internal reviews of the fees in 1992 and 1997 and since then fees have been increased annually approximately in line with CPI, with the last review occurring 1 September 2006. The occupancy of the kiosks has never been tendered to the market. 2.2 Newspaper Pillars There are 11 newspaper pillars located around the CBD. Most of these were installed in the late 1990’s. These are stainless steel columns with a diameter of about 1.4 metres. The columns open up with double doors to display newspapers and magazines. (Refer to image right). The locations of these pillars are detailed overleaf:

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Location Permit Holder

1 260 Collins St Flinders City Newsagency

2 461 Collins St Melbourne Central Newsagency

3 NE Cnr Swanston & Lonsdale St Melbourne Central Newsagency

4 Spencer St opp Bourke St Melbourne Central Newsagency

5 NW Cnr Swanston & Collins St Ledermans Newsagency

6459 Collins St

(SW Cnr Collins & William St) Ledermans Newsagency

7 SE Cnr Bourke & Elizabeth St Ledermans Newsagency

8205 William St

(Owen Dixon Chambers) Ledermans Newsagency

9 SW Cnr Swanston & Collins St Ledermans Newsagency

10 SW Cnr Swanston & Lt Collins St Mittys Newsagency

11SE Cnr Collins & Exhibition St

(ANZ Bank) Mittys Newsagency

The pillars are occupied under Street Trading Permits. No fees have been charged for the pillars since they were installed.

3 MARKET COMMENTARY & RENTAL EVIDENCE 3.1 Market Overview Research conducted by leading CBD agents suggests that demand to set up shop in Melbourne’s CBD retail core remains solid with vacancies continuing to hover below 1%. After plateauing for the past two years, the CBD has started to see positive rental growth in all sectors of the retail core. The Docklands precinct has provided a new feature of retail in the CBD, opening up the western corridor to new opportunities, in particular the Southern Cross Station redevelopment which includes the Spencer Street DFO (Direct Factory Outlet). The December 2006 quarter reflected a vacancy closer to that achieved three years prior, at just 0.69%. This is down from 0.96% vacancy in June 2006. Whilst a large proportion of street frontages have zero vacancies, both Collins Street and Swanston Street contain the highest vacancy by “street” with noticeable increases to 2.1% and 1.1% respectively. The “balance of Bourke Street”, Elizabeth Street and Little Lonsdale Street in the core also recorded vacancies, although minimal at 0.71%, 0.63% and 0.61% respectively. Rents in the super prime Bourke Street Mall have experienced a 6.3% rise since June 2006, and are currently in the range of $5,100/sq m to $5,800/sq m. Typically, rents in prime locations along Swanston, Collins and Elizabeth Street are between $1,500/sq m and $3,900/sq m. Secondary locations such as Bourke and Flinders Streets range between $800/sq m and $2,000/sq m, and on average are achieving $1,300/sq m.

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Laneways and Arcades within the Melbourne CBD core recorded vacancies by gross floorspace as at December 2006, of 2.9% with research suggesting that a large proportion of Laneways and Arcades have zero vacancies. After recently being refurbished, Equitable Place currently holds the highest gross lettable vacancy rate of 21.0%. Despite having one of the lowest vacancy rates in September 2006, Howey Place experienced an increase of 9.7 percentage points during the December 2006 quarter; the result of two tenants vacating the fashionable laneway. Other vacancies were recorded in both McKillop Street (11.8%) and Hardware Lane (8.0%). Locations such as Howey Place, Manchester Lane, Royal Arcade, Equitable Place and Degraves Street offer new dynamics and are now being recognised as favoured locations for retail tenants. As at December 2006, fashion retailers dominated the CBD’s laneways and arcade retail floorspace, representing 32.0% of total stock. This is followed closely by specialised food retailing (30.6%) and personal services (12.9%). The Walk Arcade is the most specialised, with Clothing, Footwear and Soft Good retailers representing 83.3% of their total stock. Retail along Hardware Lane is dominated by cafés and restaurants, with Food retailing accounting for 60.0% of shops. Strong demand in the Melbourne CBD for well located retail property in the core is likely to keep vacancies low and enable rental growth to continue into 2007. Moving past market fundamentals, Melbourne’s retail is now being supported by broader factors, led by strong population growth in the central city area and the evolution of the Docklands precinct which has provided a new feature of retail to the CBD. 3.2 Market Rental Evidence In practice, rental values for retail premises are predominantly influenced by analysis of the retail business that is likely to use/occupy the premises. In general terms, retail tenants typically incur gross occupancy costs in the range of about 15% - 25% of turnover. However, there are numerous exceptions to this for certain types of retailers. Most shopping centres require tenants to provide turnover information to enable effective management of the centre and to estimate what is an affordable rental range. Most retail leases avoid having market rent reviews because market rents for retail premises are problematic to determine. Most lessors prefer to adjust rents to a market level at lease expiry when it becomes a commercial negotiation or when the premises can be offered to the market and other retailers can assess and offer what they can afford to pay in rent. We have researched market rental evidence for small retail accommodation in the CBD and our findings are set out in the following schedule:

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Address Tenant RentNet/

GrossArea Sqm $psm

206-218 Bourke Street, Melbourne Bubble Cup $22,932 Gross 10.0 $2,293 Leased from Nov 01 for 5 years, annual reviews

206-218 Bourke Street, Melbourne New World Travel $30,000 Net 11.0 $2,727 Leased from Apr 03 for 5 years, reviewed annually

91-107 Swanston St Nationwide Money Exchange $82,000 Gross 12.0 $6,833 5 years from June 03, annual reviews 5%.

142-146 Elizabeth St Money Exchange $46,755 Gross 15.0 $3,117 4 years from February 04, annual CPI increases

Corner Toorak & Rockley Street, South Yarra Florist $15,000 Net 18.0 $833 Leased from Jul 2006, annual 4% increases

219-233 Elizabeth Street, Melbourne GCG Enterprises $32,000 Net 21.0 $1,524 Leased from Oct 01 for 5+5 years

109 Collins St Interforex (currency Exchange) $57,500 Gross 23.0 $2,500 6 year lease from 12/01

Shop G3 125-133 Swanston St (Lt Collins frontage)Jurlique $69,758 Gross 24.0 $2,907 3 year lease from 6/04, 5% pa increases

Shop 5B Flinders Lane at r/o 114 Flinders St Shoe Repairer $27,563 Gross 24.2 $1,139 4 year lease from 6/02, annual 5% increases

206-218 Bourke Street, Melbourne Frusion Juice Bar $57,750 Gross 25.0 $2,310 Leased from Aug 02 for 5 years, annual yearly reviews

Hub Arcade Little Collins Street, Melbourne Undisclosed $14,000 Gross 25.0 $560 Leased from Feb 01 for 3+3 years, annual 4% increases

331-339 Bourke Street Mall, Melbourne Paint n Powder $15,835 Net 27.0 $586 Leased from Apr 01 for 3 years

Shop 9A, 2 Elizabeth St Juice Station $130,000 Gross 27.0 $4,815 6 years from June 04, 5% pa increases

18 Howey Place, Melbourne Undisclosed $50,000 Net 30.0 $1,667 Leased from Feb 05

Shop 2, 15 Collins St Collins Place Flowers $71,560 Gross 33.0 $2,168 5 years from May 02, 4% pa increases

Shop 5 261 Bourke St Travelex $100,674 Net 36.0 $2,797 4 years from Sept 02, annual CPI increases

221 Queen Street, Melbourne Nourishes Gourmet Sandwiches $41,588 Net 37.0 $1,124 Leased from Jul 04 for 5+2x5 years, annual 3.5% increases

206-218 Bourke Street, Melbourne Duchess $59,280 Net 41.0 $1,446 Leased from Jan 03 for 5 years, reviewed annually

155 Queen Street, Melbourne Lord Sandwich Deli $51,600 Net 43.0 $1,200 Leased from May 04 for 3+2x3 years, annual 4% increases

389 Lonsdale Street, Melbourne East China Trading Co. $41,810 Net 44.0 $950 Leased from May 04 for 3+2x3 years, annual 4% increases

Ticket Kiosk & Pillars, Melbourne Cigna Tobacconist $40,691 Net 45.0 $904 Leased from Feb 03 for 4+1x4 years, annual 5% increases

221 Queen Street, Melbourne Café Cita $45,000 Net 46.0 $978 Leased from Oct 04 for 4+2x5 years

219-233 Elizabeth Street, Melbourne Sono Australia $55,000 Net 47.6 $1,155 Leased from Oct 01 for 5+5 years

Elizabeth Street, Melbourne 7-Eleven $180,000 Net 49.0 $3,673 Review information undisclosed

36-38 Degraves Street, Melbourne Café Andiamo $70,000 Net 50.0 $1,400 Leased from Jul 04 for 3+2x3 years

245 Lonsdale Street, Melbourne Undisclosed $45,240 Gross 50.0 $905 Leased from Jan 03 for 5 years, reviewed annually

241 Lonsdale Street, Melbourne Undisclosed $41,000 Gross 50.0 $820 Leased from Jan 03 for 5 years, reviewed annually

389 Lonsdale Street, Melbourne Quizons Club $49,507 Net 52.0 $952 Leased from Jul 04 for 5+1x5 years annual 4% increases

Flinders St Station Flawless Flowers $15,000 Gross Review information undisclosed. Rental as per August 2005 advice.

Shop 8A Campbell Arcade, Degraves St Newsagent $18,000 Gross 68.0 $265 3 year term from 1/7/04

Centreway Arcade Newsagent $30,000 Gross 18.5 $1,622 5 year option from 9/7/05, 5% pa increases

Flinders St Station Newsagent $24,000 Gross Review information undisclosed. Rental as per August 2005 advice.

Flagstaff Station Newsagent $22,000 Gross Review information undisclosed. Rental as per August 2005 advice.

Parliament Station News-stand $4,800 Gross Review information undisclosed. Rental as per August 2005 advice.

103-107 Russell Street

Kiosk (newspapers & watch

repairs) $8,250 Gross Review information undisclosed. Rental as per August 2005 advice.

Lease terms

CBD RENTAL EVIDENCE – SMALL RETAIL AREAS

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3.3 NEWSPAPER KIOSK RENTAL VALUES Each of the 13 kiosks provide accommodation that is approximately similar, with all of the locations benefiting from very high pedestrian traffic flows. However, each location has individual characteristics as a result of customer catchment and competition issues. We understand that the kiosks have never been offered to the market by way of competitive tender and the fees are set at a uniform rate which has been adjusted over the last 13 years approximately in line with CPI. Most retail rents in the CBD have increased by significantly more than CPI since the early 1990’s when the economy was in recession and before the CBD was revitalised. News kiosk businesses apparently have low margins on most of the items sold which indicates that the gross occupancy cost to turnover ratio should be relatively low compared to other types of retailers. As a result it is appropriate to consider rental evidence from other types of small shops such as jewellers or currency exchange kiosks as having very limited comparability. Where available, we have had primary regard to rental evidence for news kiosks/shops and news-stands and also our ‘off record’ discussions with leasing agents active in the CBD market. The evidence outlined above, whilst not directly comparable, provides some indication that the current rental applied to the newspaper kiosks of $6,774.12 per annum and $6,635.76 per annum, respectively, may be too low. We have also made further enquiries of Sydney City Council which leases small kiosks located around the Sydney CBD. We understand that there are approximately 60 kiosks ranging in size from 4 – 5 square metres. The kiosks are supplied with electricity and some have a water supply. The current approach to occupancies is to grant a 3 year tem with no option and annual CPI rent reviews. We understand that the occupancy is granted by way of a Street Vending Consent issued under the Roads Act. There is provision for tenants to sell their businesses, and the occupancy is transferable. Each kiosk has an individual user clause which is determined partly by historic use. The rents vary widely depending on what the user clauses allow the kiosks to sell and where the kiosk is actually situated Our recent discussions indicate that average rentals for the kiosks range between $10,000 to $20,000 per annum. When a kiosk becomes vacant it is tendered to the market with the Council quoting an expected rental range. The criteria for selecting tenants primarily focuses on the business plans and experience of the prospective tenants rather than purely being driven by rental amount. We believe that whilst the above comments and the evidence detailed earlier is of some relevance the most appropriate method of determining current market rental values for the subject kiosks is to arrange competitive tenders. We understand that Melbourne City Council is currently in the process of “issuing licences and permits and is not going to competitive tender.” The kiosks appear to be suitable for leasing to small business operators who may be willing to pay higher rents than the large newsagencies.

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Location Permit Holder

Assessed

Gross Market

Rent/Fee

Current

Passing

Gross

Rent/Fee

Next

Review

Date

Review

Type

1 Flinders City Newsagency $20,000.00 $6,774.12 1/09/2007 CPI

2 Melb Central Newsagency $20,000.00 $6,774.12 1/09/2007 CPI





7 Ledermans Newsagency $15,000.00 $6,774.12 1/09/2007 CPI






13 Mitty's Newsagency $15,000.00 $6,774.12 1/09/2007 CPI

$220,000.00 $87,925.20

NW Cnr Collins & Elizabeth St

SE Cnr Elizabeth & Lt Bourke St

(GPO Kiosk)SE Cnr Elizabeth & LaTrobe St

(Daimaru Kiosk)

NE Cnr Bourke & Queen St

(Elders Kiosk)NE Cnr Collins & King St

(Collins Kiosk)

SE Cnr Elizabeth & Franklin St

NE Cnr William & Bourke St

NW Cnr of Bourke & Swanston St

S Cnr of Collins & Spring St

In front of Village Roadshow Centre,

Bourke St

**SW Cnr LaTrobe & Swanston St

21 Swanston St, Outside CBA

SE Cnr Collins & Queen St

As previously reported the kiosks are in prime locations and have very good exposure. The external walls and doors are used to display numerous marketing posters. To a certain extent the kiosks block the pavements and at busy times pedestrians have to slow down whilst they walk past the kiosks, in effect increasing their exposure. On the basis of the available evidence, discussions with leasing agents and our judgement, we consider the market rental values are conservatively in the range of $12,500 - $20,000 pa gross with approximate and individual assessments of each of the thirteen (13) newspaper kiosks detailed as follows:

The above assessments have been primarily based on the following:

• locational attributes of each individual newspaper kiosk and exposure to passing pedestrian traffic.

These assessments have also been compared with similarly located kiosks in the Sydney CBD, referencing our discussions with Sydney City Council representatives.

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3.4 NEWSPAPER PILLAR RENTAL VALUES The 11 newspaper pillars are provided free of charge and have not been offered to the market by way of competitive tender. We have not been able to uncover any directly comparable market rental evidence. On the basis of the limited available market evidence we consider that it may be possible to charge modest fees for the newspaper pillars in the range of $250 - $350 per month. However, this can only be determined by offering the pillars to the market by way of competitive tender.

4 CONCLUSIONS In light of the specific reporting requirements by MCC we have assessed indicative gross market rents for each of the individual newspaper kiosks directly referencing retail rents for small tenancies within the Melbourne CBD and having regard to rents charged by Sydney City Council for various kiosks similarly located within the Sydney CBD. We reiterate our comments made throughout the body of this report and to the comments previously made in our report of 18 August 2005, that the fees for the newspaper kiosks appear to be low and that our assessments are estimates only. In order to ascertain more accurate market rental values, we recommend that MCC offer the newspaper kiosks to the market by way of competitive tender. No fees have ever been charged for newspaper pillars. We consider it may be possible to charge fees, but this can only be determined by offering the pillars to the market by way of competitive tender. However, the exercise may not be warranted due to the small rental sums involved. We trust that the above meets with your present requirements. We advise that this Report is confidential and intended only for the use of the party to whom it is addressed, namely Melbourne City Council and for no other purpose, and no responsibility or liability is accepted to any third party not named above for the whole or any part of its contents. Before the Report or any part of it is reproduced or referred to in any document, circular or statement, our written approval as to the form and context of such publication must be obtained. Yours sincerely, DTZ Australia (VIC) Pty. Ltd.

Brooke Penning Michael Silvester Senior Valuer – Valuation Services Associate Director – Valuation Services

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APPENDICES Location Maps of CBD 1 Newspaper Kiosks 2 Newspaper Pillars Photographs 3 Newspaper Kiosks 4 Newspaper Pillars

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APPENDIX 1

CBD Location Maps – Newspaper Kiosks

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13/21

APPENDIX 2

CBD Location Maps – Newspaper Pillars

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14/21

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15/21

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16/21

APPENDIX 3

Photographs – Newspaper Kiosks

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NEWSPAPER KIOSKS

NW Cnr Collins & Elizabeth Streets

SE Cnr Elizabeth & Lt Bourke Streets

SE Cnr Elizabeth & LaTrobe Streets

NE Cnr Bourke & Queen Streets

NE Cnr Collins & King Streets

SE Cnr Elizabeth & Franklin Streets

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NEWSPAPER KIOSKS - Continued

NE Cnr William & Bourke Streets

NW Cnr Bourke & Swanston Streets

In front of Village Roadshow Complex, Bourke Street

SW Cnr LaTrobe & Swanston Streets

21 Swanston Street, Outside CBA

SE Cnr Collins & Queen Streets SW Cnr of Collins & Spring Streets

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19/21

APPENDIX 4

Photographs – Newspaper Pillars

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20/21

NEWSPAPER PILLARS

260 Collins Street

461 Bourke Street

NE Cnr Swanston & Lonsdale Streets

Spencer Street, opposite Bourke Street

NW Cnr Swanston &Collins Streets

459 Collins Street

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NEWSPAPER PILLARS - Continued

SE Cnr Bourke & Elizabeth Streets

205 William Street

SW Cnr Swanston & Collins Streets

SW Cnr Swanston & Lt Collins Streets

SE Cnr Collins & Exhibition Streets

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Agenda Item 5.1 Planning Committee

4 September 2007

FINANCE ATTACHMENT


The financial implications are contained in the body of the report. Revenue from current licence fees are included in the 2007/08 Budget and are included in total Street Trading Charges ($284,400).

Joe Groher Manager Financial Services

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Agenda Item 5.1 Planning Committee

4 September 2007

LEGAL ATTACHMENT


The report accurately describes the legal issues and the recommendation put forward is open to be made.

The provisions of Council’s Activities Local Law 1999 with respect to street trading are set out in Part 5. The Local Law requires that a person must not sell any goods or services on or in a public place unless in accordance with a permit. Therefore, a permit is necessary to authorise the selling of goods from Kiosks whereas a licence provides for the physical occupation of the site itself.

Ongoing legal advice has and will continue to be provided in relation to Council’s newspaper kiosks including:

• any licence or permit to be issued; and

• any correspondence with or appearance before the Office of the Small Business Commissioner concerning disputes involving Council’s newspaper kiosks.

Kim Wood Manager Legal Services

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Documents

PROPOSAL FOR NEWSPAPER KIOSK LICENSING SYSTEM · PLANNING COMMITTEE REPORT Agenda Item 5.1 4 September 2007 PROPOSAL FOR NEWSPAPER KIOSK LICENSING SYSTEM Division Sustainability &