Huge shire debt based on wrong business case
By Michael Sinclair-Jones
THE FORMER Toodyay Shire Council used the wrong business case three years ago to justify burdening ratepayers with the biggest loan in shire history to pay for the town’s new $15 million sport and recreation centre.
The council voted 6-3 in December 2017 to borrow $2.7 million (later increased to $4.5 million) for the new facility but based its decision on a business case for a different project that was scrapped after only a fortnight because former CEO Stan Scott (pictured left with former shire president Brian Rayner) botched the figures.
The $2.7 million loan was in addition to a 2013 council decision to borrow $1 million to buy the rocky 13ha site on the eastern edge of town from Perth property developer Ironbridge Holdings.
Many Toodyay residents wanted only a long-sought public swimming pool, which shire costings showed would have required an easily manageable $60,000 loan.
Total loan debt for the newly completed project now stands at $5.24 million.Read more
It jeopardises the shire’s 2018 long-term financial plan which requires 10 years of annual rate increases of 2.5 per cent.
The recreation centre debt also hamstrings this year’s shire budget after the council froze Toodyay’s 2020-21 rates in response to WA Premier Mark McGowan’s call on local government to ease financial stress on the community due to Covid-19 job losses.
Cr Susan Pearce told last month’s council meeting that she was concerned that shire debt might affect long-term financial support for the annual Toodyay Agricultural Show.
The lack of a fresh business case for the council’s hastily revised $12.1 million plan (now $15 million) in December 2017 was revealed in answer to a public question by former Toodyay Progress Association chair Larry Graham at last month’s council meeting.
Shire CEO Suzie Haslehurst said a business case for an “original concept’ was presented to the former council in November 2017 but there were “some amendments to those concepts”.
$9m pipe dream
Shire records show the former CEO originally recommended that the council approve a whopping $8 million loan on top of the $1 million it had already borrowed.
The plan included a new oval for football and cricket which he said would “cater for events such as the Toodyay Agricultural Show plus festivals, trade shows and community celebrations”, a rectangular playing field for hockey, soccer and rugby, netball basketball and tennis courts, and a new function centre for corporate events.
The $23.1 million scheme was approved 6-2, including former acting president Therese Chitty and recently retired Cr Paula Greenway in favour, and Cr Ben Bell and former councillor Sally Craddock against.
Former shire president Brian Rayner was absent on council-approved leave.
The December 2017 Herald reported that an $8 million loan would cost $10 million in interest, quadruple shire debt, cost ratepayers $900,000 a year for the next 20 years and require annual rate rises of 17 per cent.
The former CEO later denied that the shire planned to sell the historic showground to pay off the huge debt, though his business case said the first stage would “cater for events such as the Toodyay Agricultural Show”.
The massive costings blunder forced former shire president Rayner to call a special council meeting two weeks later to rescind the flawed November 28 decision.
The special meeting was presented with a new plan that had to be rushed through the council to meet a December 19 Federal funding deadline.
The former CEO used the same business case and cost-benefit analysis from the previous flawed decision to justify his new plan at the December 12 council meeting.
It was carried 6-3, including former president Rayner, former deputy president Chitty and former Cr Greenway in favour, and Cr Bell and former councillors Craddock and Di Granger against.
No public record of that meeting was posted on the shire website.
The omission was questioned by The Herald at the start of this month.
Ms Haslehurst said she would check the shire’s 2017 online public records.
Shire President Rosemary Madacsi – who was re-elected to the council last October after a four-year absence – said in answer to public questions last month that what occurred in 2017 was “well before our time”.
“To be quite frank, it is done and dusted – that business was already in place,” she said.
“We are dealing with the impact now and moving forward now.”
The council is now considering how to manage next year’s budget with a wafer-thin surplus of only $40,000 due at the end of this financial year and the first full year of increased monthly debt repayments starting on July 1.