In 2014, the Queenscliffe Council made a thinly veiled attempt to commercially develop the Point Lonsdale Lighthouse Reserve. Strong statements were made by the Council and then Mayor, Helene Cameron, that only a commercial operation on the Reserve could stem the financial impost placed on Council from running this iconic site. To back its claims, the Council spent over $150,000 on two consultancies which not surprisingly backed its viewpoint.
For almost two years a robust and at times bitter dispute raged in the small communities of Queenscliff and Point Lonsdale which spilled onto the pages of The Age and Geelong Advertiser - even the Victorian National Parks Association weighed in. At the time, it seemed like it was the Queenscliffe Council versus the World and it was not without much wriggling that the Council finally gave up its development plan with threats of a maintenance levy on residents (quickly dropped!).
Since May 2015 when the Council gave up the battle, virtually nothing substantial has happened on site. The heritage structures have continued to deteriorate, temporary fencing (leased!) remains around the dilapidated Toc-H buildings, weeds continue to infest much of the site although the Engine Shed has been brought back renovated by the Lonsdale Board Riders with grants from the Queenscliffe Council.
However, there have been two developments which are positive:
We remain hopeful that the Council is now aligning with the community in wanting to see the Reserve taking its place as one of the jewels in the crown of the Victorian coast. The application for National Heritage is the next step - whether the Council gets behind this remains to be seen.
To get an understanding of why the Council's scheme fell over we strongly recommend reading the consultancy reports. Click for Planisphere Report and click here for Urban Enterprise Report.
We concluded the reports were written to tell a story, not tell all the facts needed for the ratepayers and residents to make an informed decision on the future of the Reserve. Our view was that both reports had a strong over-emphasis in favour of commercial development of the Lighthouse Reserve. Fortunately, the community also made up its own mind that there was insufficient evidence to substantiate the need for commercial development and there was an overwhelming groundswell against commercial development which the Council could not ignore.
Below are observations and assessments made of the consultancy reports - there is a lot to read but unfortunately the Council provided much to write about! We're also leaving these comments here to provide background and context to the ongoing fight to protect the Point Lonsdale Lighthouse Reserve:
OBSERVATION 1 - COUNCIL WAS CREATING UNFOUNDED CONCERNS ABOUT A REVENUE SHORTFALL
In many sections, the Planisphere report gave excessive importance to the financial aspects of the options, for example:
“Failure to generate new revenue will require Council to investigate alternate options to fund the capital and ongoing operating costs of upgrading the reserves. These options could include rate increases, re-directing funds from existing spending thus impacting on current services, or handing the sites back to the State Government.” (in case you miss this it’s repeated no less than three times) or
“Council is constantly facing financial challenges” or
Of the five QBC directions in the 4 year Council Plan, the ONLY strategic direction cited is “a local vibrant economy” which emphasizes tourism investment and accommodation. Why not emphasize the social and environmental aspects of living or holidaying in Point Lonsdale?
"The Council's intention was...to generate funds to enable Council to improve and better maintain this and other coastal land"
It was self-evident that the role of all Government bodies to prioritize expenditure and it was and is obvious that no council has all the budget it wants. However, ratepayers were interested that the most optimistic revenue stream from the hand-over of a considerable part of the Reserve to the private sector may only raise around $0.2M to $0.3M. This was hardly ‘rivers of gold’ especially in context of tourism’s contribution of $41M to the Borough’s economy!
The Council stated it must offset the costs of taking on management of the Reserve, implying maximizing revenue from the site was a necessity. This claim was unsubstantiated and was considered a distraction. It was notable the Council’s 2013/14 budget paper stated in Section 8.2 that “Service delivery strategy – Service levels have been maintained throughout the four year period. Despite this, operating surpluses are forecast.” Additionally, Section 8.3 dealing with Key Financial Indicators stated that there was a forecast improvement in Council’s financial performance/financial positions over the forward estimates in the following areas:
Rate revenue per assessment
Adjusted total revenue
Total and new assets
Asset renewal and total depreciation
This position was confirmed in the Auditor General’s report “Local Government: Results of the 2012–13 Audits December 2013” under the section dealing with small shire councils financial sustainability risk assessment, the Borough of Queenscliffe was classified as having low risk of financial sustainability concerns i.e. there were no high-risk indicators (refer Figure E33).
The Council’s financial viability was commended, but ratepayers wanted to know why the report (and the Mayor’s public statements) were used to underpin commercial development in the context of a fiscal urgency that by all accounts was clearly not warranted.
OBSERVATION 2 – THE COUNCIL SHOULD NOT BE INVOLVED IN PICKING BUSINESS WINNERS
It was and is our view that it is not a Council’s role to hand over public land to underwrite the development of commercial activity. There is a big difference in providing a well-administered local government zone and being an active participant in a business venture. We had and have no objection to commercial activity provided business risks reside firmly with the enterprise establishing the venture. We considered the Council’s core role is to provide services and to establish facilities which encourages the private sector to undertake economic activity. There have been numerous business failures on public Crown land for example Phillip Island Seal Rocks, Mt Buffalo, Erskine House Lorne, Queenscliff Harbour etc which show that governments are challenged when picking business winners. These failures have occurred despite other Government departments and agencies having far greater experience and technical ability than the Queenscliffe Council to undertake assessments of a business’s viability.
OBSERVATION 3 – THE COUNCIL IGNORED NON-FINANCIAL ATTRIBUTES OF THE LONSDALE RESERVE
The Council’s contemplation of Options 3 and 4 was perhaps indicative of how removed its decision makers were from understanding why generations of residents and holiday makers choose Point Lonsdale over other coastal towns. The residents and ratepayers regard the Point Lonsdale Reserve as being part of their natural inheritance and one reason why they own property, live or holiday in Point Lonsdale.
The survey the Council undertook in late 2013 regarding the Lighthouse Reserve showed the Point Lonsdale community wanted the existing site to be cleaned up, re-vegetated and progressively remediated over time. The Council ignored this feedback.
The Council’s emphasis on two development options was juxtaposed to the Constitution of the Point Lonsdale Civic Association. The PLCA aims to promote:
the conservation, protection and maintenance of the beaches, foreshore, dune systems, natural environment and beauty of Point Lonsdale area, Queenscliff and the adjoining area in the City of Greater Geelong, and areas in and around Swan Bay;
the conservation and maintenance of historic buildings, sites and precincts within the Borough of Queenscliffe;
as far as is consistent with orderly and compatible development, the retention of the character of Point Lonsdale as a peaceful holiday resort and residential area, which is attuned to the interests of young families and those requiring a relaxed and quiet lifestyle, and
the provision and maintenance of public facilities in Point Lonsdale and in the wider Region.
Anything that upset the delicate lifestyle balance enjoyed by Point Lonsdale residents would likely be strongly opposed and it was mystifying why the Council would have included for consideration two options which go against tightly held and long-established community values. It was interesting that at the community open day both Planisphere and reps from the Council virtually blamed Urban Enterprise as being responsible for putting forward Option 4!
OBSERVATION 4 – THE COUNCIL IGNORED IMPORTANT FEEDBACK FROM MEMBERS OF ITS OWN REFERENCE COMMITTEE
As part of the community consultation process, up to April 2014 the Council was advised by members of the Lighthouse Reference Group of areas of serious concern with the Planisphere report:
No detail on either capital or recurrent costings underpinning assumptions (high level costs since supplied in Urban Enterprise report).
No detail on accommodation demand (limited analysis since supplied in Urban Enterprise report).
No detailed financial modelling or business risk analysis.
No triple-bottom line assessment looking at the site’s social and environmental attributes.
No detail on costs and risks of geo-thermal drilling.
No car parking shown for either development Options 3 or 4.
No fencing shown on plans of development Options 3 or 4 which delineates area of public exclusion.
No consideration to defraying costs by engaging with other responsible stakeholders such as the Port of Melbourne Corporation, the Department of Environment and Primary Industries, Tourism Victoria or Regional Development Victoria.
No consideration to staging works over years to minimize financial impact of Option 2.
The QBC never provided a detailed response to any of the Reference Group’s request for further information, and further, the March 2014 Draft Discussion Paper did not appear to take into account any matters raised by either the Reference Group or through the community consultation in early November. It was our view that the above missing elements from the study would have a material impact on the viability of the commercial development options.
Additionally, the QBC ignored the very clear response from the 2013 survey that those consulted wanted the site cleaned up, appropriate improvements made and no significant development to occur on the site. Ratepayers and residents were aggrieved why such very reasonable concerns raised by informed members of the community were not addressed before the Planisphere report was issued.
OBSERVATION 5 – WHERE WAS THE COUNCIL’S VISION FOR THE SITE OTHER THAN AS DEVELOPMENT OPPORTUNITY?
It was accepted by the community that the Point Lonsdale Lighthouse Reserve should rank in importance with Point Nepean and Sydney Heads with their world-class views. Each site has extensive environmental, historical, recreational attributes. These non-financial attributes were down-played in the Planisphere report and ignored in the Urban Enterprise report.
An example of minimizing non-financial factors from the Planisphere report, look no further than the fact the Point Lonsdale Reserve is the gateway to the western Port Phillip Heads Marine National Park which Parks Victoria states is an internationally recognised marine environment.
To quote the Management Plan “the Port Phillip Heads Marine National Park is significant in the representative statewide system as it contains some of Victoria’s most treasured marine and coastal environments, and is within easy access of Melbourne and Geelong. The six areas making up the park have outstanding environmental, cultural and recreational values. Foremost among these values are:
the incised entrance to Bay (the Rip) and the ‘Heads’ at Point Nepean and Point Lonsdale
spectacular dive sites such as the Lonsdale and Nepean Walls and popular recreational dive locations
intertidal rock platforms at … Point Lonsdale”
Neither Planisphere nor Urban Enterprise tried to leverage off this glowing endorsement of the natural attributes of the Lonsdale Lighthouse precinct.
Likewise, the Lonsdale and Queenscliffe lighthouses annually attracts hundreds of lighthouse enthusiasts to the area and at times thousands flock to the Heads to watch famous ships go through the Rip. Despite this, the Council has passively allowed the Lonsdale Lighthouse Reserve to run down by failing to hold other responsible government agencies to account. It is a fair assumption that well-planned civic improvements to the Lonsdale Reserve together with a better targeted marketing strategy would attract even more visitors who would then make use of existing businesses as part of their visit experience. A vision for the site simply does not need to focus just on accommodation to stimulate economic activity.
Unfortunately development pressure was (and is) occurring all around Port Phillip Bay. Interested readers were encouraged to follow similar stories on the website of the Port Phillip Conservation Council - not happy reading.
Long time observers of the Queenscliffe Council noted how Council ‘adjusted’ its vision - in earlier planning documents Queenscliff was nominated as the commercial hub whereas Point Lonsdale was a low key family-oriented village. The Council’s support for large commercial development in Point Lonsdale demonstrates was going against its own planning framework (noting the Reserve is designated a ‘Public Park and Recreation Zone’).
It was telling that in the Queenscliffe Coastal Management Plan (2006) Page 13, it states "A major study of the Victorian coast identified Pt Nepean, Pt Lonsdale and Queenscliff as of outstanding scenic quality (VCC 1998). A ‘Coastal Spaces’ study of the Bellarine area found that Pt Lonsdale and the Lighthouse were culturally important and highly visible landscape elements. Both the Queenscliff landscape and Pt Lonsdale headland/views were valued by the community. Large-scale development and excessive development on dunes were identified as threats."
It was also very telling when Planisphere's most recent report was contrasted to its 2006 report 'Coastal Spaces Landscape Assessment Study'. Some of Planisphere's earlier thoughts were:
Future Character Directions (P.7)
This Character Area will continue to be characterised by a wild coastal character and absence of intrusive built development. Development within this Character Type will ensure that natural landscapes dominate long stretches of the coast outside settlements and views to undeveloped coastal landmarks including headlands and dune beaches are protected."
Opportunities and Threats (P.8)
Opportunities - Ongoing protection and enhancement of coastal vegetation throughout.
Threats - Dominance of built form over natural landscape features (topography and vegetation), including large-scale developments within townships which dominate coastal locations...
Landscape Management Objectives (P.8)
To protect and increase indigenous coastal vegetation throughout the Character Area, and ensure that it is the dominant feature of the landscape, particularly when viewed from the foreshore and offshore.
To strengthen the presence of indigenous vegetation in existing settlements or built areas exposed to views from the coast...
To protect cultural vegetation patterns within the settlements of Point Lonsdale and Queenscliff.
To contain the development of settlements and retain a natural landscape break between them, particularly at the coastal edge.
To ensure that development in and around the settlement does not impact on the characteristics of surrounding landscapes
To ensure that long stretches of the coastal strip between settlement areas remain free of development and retain their wild coastal character.
To minimise the visual impact of infrastructure throughout the Character Area.
To protect views to historic cultural features such as the lighthouses at Point Lonsdale and Queenscliff.
It was noted that on Pages 17 and 19 of the March 2014 Planisphere report (which cited its own earlier study) no mention was made of its previous strong environmental assessment. Instead, the only references made were to managing sustainable coastal development, and encouraging tourism! What had changed in the intervening period? When questioned at the community "Open House" about why Planisphere had changed its tune about the importance of preserving the natural landscape, consultant Kate Dundas stated a spa development on Crown Land was about providing a choice which was met with derision.
OBSERVATION 6 - WHERE WAS THE MASTER PLAN FOR THE BOROUGH?
The Council did not articulate a capital works master plan for the Borough which demonstrated a vision for the area which was affordable while meeting community expectations. The Planisphere report became an exemplar of the Council’s fragmented approach of focussing on individual projects. However, it became evident that ratepayers and residents wanted to evaluate such proposals in a wider planning context with the the Council planing fornot just the Lonsdale and Queenscliffe Lighthouse Reserves but also long-term unresolved matters such as:
Redevelopment of the Point Lonsdale Surf Lifesaving Club
Future of the Queenscliff Fort
It was asked whether higher and better financial returns could be achieved by having a mix of accommodation types elsewhere in the Borough. If there was an unmet need for Eco-Cabins or a Boutique Accommodation and Thermal Spa, where was the analysis to substantiate the Point Lonsdale Reserve was the best location for either of these developments. There were arguably better locations, such as the Golightly Caravan Park or Fort Queenscliff which would have the advantage of water views. It was reasonable to assume these sites would have much greater appeal to a potential developer and to people who seek accommodation at these types of facilities rather than on the Point Lonsdale Lighthouse Reserve. Similarly, perhaps it would generate more revenue for Council to have a seasonal café at Rip View as it offers ocean views, extensive parking and adjoining walking trails. Even the Urban Enterprise report noteed at Page 30 that Rip View has 190,000 visitors annually compared to 90,000 at the lighthouse.
OBSERVATION 7 – THE COUNCIL BIT OFF MORE THAN IT CAN CHEW
Ratepayers and the wider community criticized the Council for taking on the management of the Point Lonsdale Lighthouse Reserve without considering the full implications of doing so:
Why didn’t the Council insist that the previous Government authorities remove the asbestos buildings?
Why were roadways, paths and parking allowed to deteriorate?
Why were heritage defence and maritime buildings been allowed to crumble?
Why should these costs now be to the balance sheet of QBC ratepayers?
Even after taking on the site, why didn’t the Council take any steps to mitigate the costs of running the site such as demolishing the TocH buildings immediately (as it did with the other brick buildings on the site) to avoid incurring temporary fencing costs. At least this would have given the impression that the Council was discharging its management responsibilities to some minor degree.
In many ways the Queenscliffe Council’s approach was a common response to asset management in smaller councils. The 2013 Victorian Auditor General findings on “Asset Management and Maintenance by Councils” found that in relation to asset management practices:
Council asset management information systems are underdeveloped.
Councils struggle with resources for asset management skills and knowledge - especially smaller councils.
There is poor monitoring, evaluation and review.
There is poor reporting to the community on asset management.
In relation to Crown Land sites like the Lonsdale and Queenscliff lighthouse reserves, the Victorian Auditor General also published a highly relevant report in February 2014 called “Oversight and Accountability of Committees of Management (CoM)”. This report investigated the effectiveness of management arrangements now controlling both lighthouse reserves.
Inter alia the Auditor General found governance of CoMs needs significant improvement:
They need consistent and appropriate governance arrangements.
They give insufficient consideration of environmental and social risks.
The governance is not adequately targeted nor informed by analysis of key information.
Sustainability of CoMs is not assured.
In relation to ongoing management of Crown Land CoMs, the Auditor General found Department of Environment and Primary Industries (DEPI) has not
taken adequate steps to ensure the sustainability of CoMs:
DEPI does not select delegated land managers strategically.
DEPI has not ensured a sufficient volunteer base for CoMs.
Allocation of limited funds to CoMs is not fully informed.
Funding of particular concern with operational and maintenance costs problematic and no direct funding from DEPI and limited grant funding.
Consequent risks—public safety, strain on CoMs.
There is a need to develop an informed approach to understanding the funding needs of committees of management, so that funding decisions appropriately consider and address risks, including the sustainability of committees.
It was observed that the experience and approach of the Queenscliffe Council seemed to conform fairly accurately to the findings of the Auditor General.
DETAILED REVIEW AND ANALYSIS OF:
1. Planisphere's consultancy report
2. Urban Enterprise's consultancy report
The devil is indeed in the detail.
The Planisphere and Urban Enterprise reports were reviewed in detail by numerous community members with dozens of years in public and private sector management. We concluded that the analysis in the reports was not sufficient for ratepayers or residents to make an informed decision about the future of the Lonsdale Lighthouse Reserve.
Readers of the reports may not have had experience in assessing similar project proposals. To assist with this situation, Victorian Department of Treasury and Finance (DTF) makes available a very useful suite of documents to evaluate such projects.
Both reports were compared against DTF’s guidelines and while some reasonable background research has been completed, we found the level of financial and risk analysis was not detailed, some key assumptions could not be substantiated and the report was silent in key areas of concern to residents and ratepayers.
DTF’s benchmark asset management framework (under which most Victorian departments and agencies operate) requires that options analysis should be consistent with best practice infrastructure investment guidance. The options analysis should be based on quantifiable data. The extent and detail of the data depends on the nature of the proposal and the level of objective data available. Recommended data sets typically used in options analysis include:
present demand and cost projections
whole-of-life cost estimates (concept, development concept or preliminary design estimates)
service delivery models and performance requirements
technical information, e.g. locality plans, topographical and geological data
permits, consents or approvals
site characteristics and constraints
any revenue expectations
suitability, performance or condition of any relevant existing infrastructure.
Additionally DTF requires that preliminary studies are required to support an options analysis including:
financial and economic analyses (e.g. preliminary cost-benefit assessment or cost-effectiveness assessment)
market research and community consultation
planning, environmental and engineering studies.
In our view both the Planisphere and Urban Enterprise reports failed to meet many of these requirements or consider them in a high-level manner whereas detail would have been reasonably expected at the option assessment stage.
Using the DTF guidelines as a template we regarded the following as areas of serious concerns:
CONCERN 1 - OMISSION OF RISK ANALYSIS AND MODELLING/SENSITIVITY ANALYSIS OF FINANCIAL ESTIMATES
DTF requires robust benchmarks to support an options analysis - detailed risk analysis needs be undertaken to determine which options, if any, are suitable prior to the level of development of the full business case. The Planisphere report was absolutely silent on the issue of risk to Council – this is really quite remarkable and concerning – it goes without saying that the higher the capital value of each option, the higher the risk. For the Council to even consider an option without having a comprehensive risk analysis was highly unusual.
Options 3 and 4 represented a significant risk to the Borough – there have numerous business failures on Crown Land (Seal Rocks, Lorne, Mt Buffalo, Queenscliff Harbour etc) where the burden of revenue shortfalls ultimately falls on taxpayers or ratepayers to meet. There was a real risk that any developer taking on either option would not be successful and that the Borough would be subsequently faced with taking over the operation of the facility or responding to an operator’s request to expand the development to make it viable in the future. This was not an operational or planning position we believed the Borough should take on. As the Victorian National Parks Association stated in direct reference to the Queenscliffe Council's plans for both the Point Lonsdale and Queenscliffe lighthouse reserves, "providing up-market tourist accommodation on scarce public land because private operators are not doing it on costlier private land should not be seen as the function of municipalities." See VNPA 'The Coast is Unclear' P.84 & 85.
Neither Planisphere nor Urban Enterprise's reports contained modelling and sensitivity analysis on the variability of costs. For such a significant project it would have been reasonable to have undertaken a financial analysis to a detailed level. This should have included a risk assessment undertaken on the impact on the scale of the development if the capital costs are wrong by a significant factor. Clearly the robustness of the figures went to the viability of the options and the associated risks carried by the Council and, by default, ratepayers.
CONCERN 2 - INADEQUATE ANALYSIS OF ACCOMMODATION SEASONALITY AND THE TARGET MARKET
Critical assumptions in the Planisphere and Urban Enterprise reports were not tested. For example, despite the obvious seasonality of accommodation in Point Lonsdale and the periodic failure or closure of some hotels and other accommodation types, the consultants did not provide any details about how projected occupancy rates were calculated (which underpin the estimated financial returns to Council).
The Urban Enterprise report used a lot of assumptions based on the Great Ocean Road tourism market - an hour away. Of concern is that the Urban Enterprise report clearly showed that "visitation to the Borough peaks during the month of January, corresponding with school holidays, and drops dramatically during the winter months" (Page 21). How would any operator of a commercial development be able to make a profit from such capital intensive projects in such a short time (the occupancy rate in winter is 20% of summer occupancy levels)? Surely something would have to give - less return to Council - more intensive development - who knows?
The analysis also failed to address financial issues such as fluctuating levels of demand for accommodation in the Borough and the suitability of other sites in the Borough for Options 3 and 4 such as the Queenscliff Fort. No structured survey of accommodation providers in Point Lonsdale wasundertaken to ascertain their views on various options and no assessment has been made of services already provided by others (including another day spa service in Point Lonsdale).
Despite Urban Enterprise noting that over the past decade several accommodation establishments have closed in the Borough resulting in a loss of 84 rooms (Page 17), it was assumed without any formal demand analysis, that the very presence of boutique accommodation or “eco-cabins” would fulfill a latent demand that had not been met by the private sector (despite ample opportunity and a profit objective). This assumption is particular paradoxical as Urban Enterprise also cited research showing "there has been an 11% decrease in visitors staying in hotels and motels over the past decade and a 4% in B&B. This decline has not been experienced in neighbouring destinations or surrounding regions" (Page 28).
Urban Enterprise also claimed that the development options were targeted at “high-end couples market and international travellers” (Page 37). However, was this a correct assessment of the market? On Page 23 Urban Enterprise writes "The high proportion of visitors earning over $200,000 per annum suggests that there is a strong, existing market for high-end accommodation and other tourism products". Wrong? This may just show that these people are staying at their own holiday houses which are expensive (ipso facto property owners would be wealthier). Indeed on Page 26 Urban Enterprise notes "the proportion of visitors staying in their own property is significantly higher than the Geelong and Regional Victoria average. However, the NVS commonly undercounts holiday home visitors, and it is likely that the number of holiday home owners is higher than represented in the survey"! So why was it assumed this cohort would be interested in eco-cabins or spas?
Likewise, the other target market segment, international visitors, are virtually not existent. Urban Enterprise notes on Page 27 "The low number of recorded international visitors (average of 2,790 per year over the past decade), prevents detailed analysis of international visitor markets."
In summary, it was not clarified exactly how these two groups, "high-end couples and international travellers" would lead Point Lonsdale's tourism revival. With key assumptions and conclusions unable to be substantiated, ratepayers were being asked to accept without question that projected occupancy figures are correct. The approach seemed to be that if you build it they will come.
CONCERN 3 - LACK OF DETAIL ON FINANCIAL ESTIMATES
Under DTF’s Investment Lifecycle Guidelines, the project budget should be developed to Cost Plan B at the particular stage the project was at, yet a detailed budget was not provided in the Planisphere report for ratepayers to examine.
DTF requires that agencies have a database that supports a good understanding of the full lifecycle costs of project assets controlled to assist in project estimating and providing a reality check on more detailed estimates especially during the options analysis and business case phases. DTF requires these estimates to be regularly updated, including at project completion, and should cover operating time series information as well as asset investment estimates. Importantly, indicative risk-adjusted costings are expected to be developed for different phases of the project, depending on the project type – such costings were not in the Planisphere report.
On the budget estimates contained in the Planisphere Draft Concept Options, if the figures are unpacked it was seen the estimate for the Spa is $12.5M and the cabins $3.3M - this equated to $4,400m2 and $2,062 respectively (using construction areas nominated in an earlier Planisphere report). Same-time data published by the well-known quantity surveying firm Rider Levett Bucknall estimated the construction cost of high quality boutique accommodation at a bit over $4,300m2 and a 3 star development between $2,850m2 and $3,350m2. However, these figures were construction costs ONLY and excluded other high cost elements such as:
Loose furniture & fittings
Site works, power, sewerage and water reticulation (note all in-ground services need upgrading)
Regional cost allowances for construction and delivery to site
Telephony & data
Clearly inclusion of these costs (potentially another $1,000m2) would have meant the estimates in the discussion paper were seriously under-done.
A quick word on the land valuation process adopted in the Urban Enterprise financial analysis on Pages 48 and 49. To start, the plans for Options 3 and 4 did not make it clear exactly how big the parcel of land would be so how was it even been valued? Urban Enterprise seemed to have gone off the building footprint size of 1,600m2 for Option 3 and 2,700m2 for Option 4. Despite the fact that Option 1's footprint is only 60% of Option 2, the consultants adopted an average site range value of $328,000 for Option 3 and, wait for it, $5.5 million for Option 4. Go figure that out. In any case, who can remember when a 1,600m2 parcel of land in arguably the best part of Lonnie cost $328,000? Talk about giving it away!!! There was some serious explaining required to justify these assumed land values.
As the site is highly sensitive Crown Land, it would have been prudent to have obtained valuation advice from the Office of the Valuer-General to support the financial assumptions. Without obtaining a valuation assessment from the designated Government agency it was possible the rental assumptions are incorrect to the extent financial viability is affected.
The Valuer-General’s Guidelines for Valuation Practices 2010 states “Valuations for government property transactions must be correct and seen to be correct. To ensure financial responsibility by government, it is imperative that valuations made for government are independent. The role of the Valuer-General Victoria (VGV) is to ensure not only correct values are achieved but also a transparent process in this critical aspect of government land dealings. That is, that land valuations are undertaken with the highest levels of probity, accountability and transparency.”
Click for Valuer-General Guidelines for Government Property Transactions
As a further example of lack of detail on the financial analysis, the proposed spa development would come under the Geothermal Energy Resources Act (as it deals with the drilling for and extraction of “geothermal energy resources” meaning geothermal water, rock or any other material occurring naturally within the earth containing heat energy). In view of this the Planisphere report did not advise what consideration has been given to complexities of the geothermal aspects of Option 4 which were:
The subject land is already covered by a permit issued to Greenearth Energy. Under the Act, the Crown retains all rights that it has in relation to any geothermal energy and geothermal energy resource on or below Crown land. The Planisphere report is silent on whether discussions were been held with either Greenearth about a sub-licence and/or with the responsible department regarding the overall viability of the project.
Under S.103 of the GERA the extraction of geothermal resources requires a payment of a royalty to the Minister. The Planisphere report was silent on the scale of this payment or whether it was even been included in the financial analysis and, if not, what impact would this have on the viability of the site.
The CSIRO has done some recent research into the geothermal exploration. It seems that the target zone for drilling is typically at depths between 0.7 km and 3 km. To quote the CSIRO: “Exploration holes drilled to these depths require a large investment before a resource can be defined as:
Geothermal reservoirs are hotter than the petroleum reservoirs;
the crystalline (granitic/metamorphic) formations expected in geothermal wells are generally harder and more fractured that the sedimentary formations typically encountered in petroleum reservoirs;
geothermal wells are usually completed at larger diameters than petroleum wells;
salty water is more corrosive than oil and gas requiring different casing materials and cementing methods;
the effects of thermal expansion require different approaches to well completion;
high temperatures effect bit life;
high temperatures effect drilling muds, and these muds require cooling at the surface;
drilling muds can cause formation damage and need to be carefully managed. “
The CSIRO put the cost of drilling geothermal wells at almost $3,000 per metre. With the Lonsdale spa, if it is assumed the depth is only 0.7 km – that equated to $2.1M. The Planisphere report was silent on whether this cost is captured in the budget estimates.
While on the subject of omissions from financial analysis, the Planisphere plans for the two development options did not show car parking adjoining any buildings, (nor was there any provision for underground car parking!). In a glaring omission, Urban Enterprise based its Option 4 financials on 70 car spaces (Page 49) but only 25 were on the Planisphere plan shown at the Council "Open House" and these were for lighthouse visitors.
The Council was advised of this error before the Planisphere report was issued but chose to ignore it. This may seem a trivial omission but consider the 45 car parks required for guests, management, cleaners and maintenance staff. In fact, a very large area is required for parking by visitors, management, cleaners, maintenance and technical staff. These bays would need to be exclusive use so barriers would need to be installed and the area may even need to be fenced as 4 star visitors would expect a reasonably high level of security. Comparing how much land was taken up by the 24 car parks shown in the plans (which could be assumed were for other users of the lighthouse precinct), then a very large allotment was needed for the commercial development parking requirement. This inevitably meant a further loss of open or treed space.
Importantly a comment must be made about Urban Enterprise's revenue forecast. Despite referring to an average occupancy level throughout the year of 60% for existing Borough accommodation (Pages 3 and 29), the financial analysis was predicated on 65% average occupancy for the eco-cabins and 70% for the spa rooms (Page 49). Don't forget, this is from Day 1.
CONCERN 4 – CONTRADICTING COUNCIL’S OWN POLICIES
The Planisphere report glossed over how Options 3 and 4 clearly contradicted then existing Council objectives. In terms of 'walking the talk', there was no discussion around how either a boutique spa or cabins contributed to the Council’s stated:
draft project principles of protecting the natural environment and significant vegetation
values statement of being “very passionate about the unique coastal environment” and that “enhancing the environment is one of the key focus areas of Council” and that further “residents are encouraged to support Council’s efforts”
Strategic Objective 3 – A unique natural environment - Reducing greenhouse gas emissions within Council operations and the community are a key priority, as is dealing with Climate Change.
With regard to the ‘Key Findings’ and ‘Implications For The Concept Plan’ sections, there was an excessive focus on development and exclusion of findings which did not support either little or no development, for example:
the majority of respondents to the 2013 survey did not want any development and wanted the area returned to bushland
it was widely acknowledged both in the Council that development of the Lonsdale site in particular has potential to become quite divisive
restoration of the land to a dune environment could be a significant positive environmental statement about Council and community values.
Perhaps one of the most telling aspects of the Planisphere report which pointed to the Council’s direction was in the “Design Principles” on Page 54. Under the section dealing with ‘Unique Natural Environment’, Planisphere simplistically proposed the appropriate design outcomes from any commercial development would ensure there was; weed control; development didn’t exceed the equivalent footprint of previous/existing buildings; and, buildings must sit sensitively within the landscape. Readers were entitled to ask is this the best the consultants could come up with as a design response to Point Lonsdale’s ‘unique natural environment’.
Clarification was sought about this vague design objective of “not exceeding the footprints of earlier buildings”. This supposed “constraint” was just a furphy. Guests paying to stay in a 4 star resort would not want the general public to be able to walk through the site while having a spa or sunning on a veranda. Consequently discreet perimeter fencing would have inevitably been required, no doubt with a considerable set back to give a better look and feel for guests. It was notable the Planisphere site plans did not show that actual perimeter of the site which would be given over to the commercial developer under either Options 3 or 4.
CONCERN 5 – A WARNING FROM THE CSIRO ON GEOTHERMAL DRILLING
In reference to Option 4 spa development, the CSIRO flagged some serious concerns about drilling, however the Planisphere report was silent on the following clear words of warning on geothermal extraction and the associated project risk: “There may also be community concerns about interaction of geothermal reservoirs with other groundwater systems, perceptions about radioactive material associated with heat producing granites, induced seismicity, and noise and visual amenity issues… The occurrence of seismic events associated to geothermal developments, in particular during stimulation, has raised concerns in the community about the safety of geothermal developments. Recent negative publicity around hydraulic fracturing (fraccing) … will add to these concerns. Reservoir stimulation either causes movement on existing fractures or development of new fractures. This movement is typically rapid, producing seismic events. The majority of these events are small with magnitudes less than ML 1. However, larger events have occurred at several projects, … and… there is a need to develop procedures for managing the risk of seismic activity during stimulation and production from geothermal reservoirs. This management involves understanding the levels of induced seismicity that may occur ...” That was interesting to many in the community but ignored by consultants.
CONCERN 6 – A WARNING FROM THE VICTORIAN NATIONAL PARKS ASSOCIATION
In the context of environmental impact assessment, the Planisphere’s report ignored the comprehensive review of coastal development commissioned by the Victorian National Parks Association (VNPA) issued in 2014 called “The Coast is Unclear – the uncertain future for nature along the Victorian coast”.
In brief, the VNPA study identified that:
Victoria is entering a new phase of coastal development, including residential and tourism, that will further damage the conservation and social values of the coast. The current resourcing of coastal planning, protection and management is inadequate to deal with these and other existing and emerging threats.
Coastal nature on coastal crown land is largely found in narrow strips squeezed between the sea and developed land. Coastal development and rising sea levels are increasing the squeeze. Their narrowness accentuates the edge effects of adjoining land uses and land use change which leads to habitat loss, invasion of weeds and pest animals and indiscriminate access.
The two main drivers of change in the condition and extent of coastal nature, now and in the future are climate change and the destruction, degradation and fragmentation of coastal nature caused by the land development and urbanization stemming from population growth.
There is inconsistent application by local governments of planning scheme tools that could be better used to protect and expand coastal nature.
Communities are working with local councils, CMAs and government agencies to plant trees, pull weeds, build fences and monitor wildlife to improve the quality and extent of coastal nature.
To enhance the protection, maintenance and restoration of coastal nature will require collaborative, well-planned, targeted and adequately resourced action involving governments, private land owners, public land managers and the community, but this is being undermined by recent planning and development decisions.
The VNPA observes that:
"the dash to develop will pay smash head-on with the coastal planning and management framework that has been reformed over the past two decades…(which)…recognized the need to protect coastal nature and coastscapes and to better engage with local communities in looking after their local coasts.”
“Coastal public land is being viewed as cheap and available while satisfying the three basic criteria for commercial development – position, position, position."
“Victorians do indeed love their coast… but that love can be lethal. Each poor planning and management decision adds to the pressure from the previous ones – death by a thousand cuts.”
Readers were encouraged to read Pages 84 and 85 of the 'The Coast is Unclear' as it dealt specifically with the situation at the Point Lonsdale Lighthouse and makes some excellent points:
"Point Lonsdale and Queenscliffe Lighthouse Reserves are under threat of development that could be inappropriate to the natural and built heritage." (P.84)
"The Point Lonsdale Lighthouse Reserve (6.6ha), comprises…. ecologically sensitive coastal landscape and sand dunes and heathland. The precinct is recognized as having architectural, historical and archeological significance and is abutted by the Port Phillip Heads Marine Park on two sides." (P.84)
"The attitude of the mayor is consistent with the view that coastal land is a cost that must be met by development. It is the same view that has led to the development of many foreshore reserves" and that "always forgotten in such a view is that if it were not for coastal public land there would be very little coastal tourism" (P.85)
"The two lighthouse reserves provide the Borough of Queenscliffe, Victoria's smallest municipality, with a remarkable opportunity to view coastal nature as an asset that needs to be maintained and expanded." (P.85)
The Queenscliffe Council "should abandon excessive development proposals for the lighthouse reserves and create management plans thast focus on expanding coastal nature and public open space." (P.85)
In the context of the VNPA assessment of coastal environmental pressure, the Planisphere report comprehensively failed to analyse comprehensively the environmental impact or missed opportunities from the development options (3 & 4).
CONCERN 7 - ENVIRONMENTAL IMPACT IN GENERAL
The Planisphere report maked no attempt to assess how commercial development would put further pressure on the Borough’s natural resources and there was no consideration given to the Council offering leadership in environmental matters. The Planisphere report was silent on the Victorian Government's then recent purchase and demolition of 190 houses on Phillip Island’s Summerland Peninsula and the integration of resumed land into a coastal park.
The above observations support the view that the Council has no environmental vision and is not engaged with the local community sufficiently and additionally has an undue focus on commercial development as being the panacea to perceived financial woes. The Planisphere report fails to consider why people seek to reside in the Borough – ignoring factors which motivate people to live in Point Lonsdale such as low commercial intrusion, low density, quiet roads, closeness to nature, fewer crowds (i.e. the feedback from the 2013 survey).
In late 2013, the Queenscliffe Council nominated ten people as the Point Lonsdale Lighthouse Reserve Reference Group to provide information and advice to the project consultants and Council about design principles and Concept Plan options. In September 2014, the Reference Group wrote to the Council with a comprehensive scope of works which the Group considered will provide substantial positive outcomes by:
1. formalizing better long-term protection for the Reserve's historic and environmental assets
2. making excellent use of community resources and skills to help deliver the works program
3. assisting local businesses remain viable
4. importantly, ticking the box of 'no commercial development' in line with community wishes.
This is what the Reference Group wrote:
"AGREED STATEMENT BY THE POINT LONSDALE LIGHTHOUSE REFERENCE GROUP
The Point Lonsdale Lighthouse Reserve Reference Group unanimously endorses Option 2 as the preferred option, however within that broad agreement there is further refinement proposed for exactly what Option 2 entails. The Reference Group therefore requests the the Queenscliffe Council adopt an open community consultative process to develop and finalize the following next stages:
While it is appreciated that development of a strategy and action plan for the Reserve will be complex and lengthy, the key goal for the Reference Group is to ensure there is an ongoing open consultation process to maximize ownership of the site's future by the community. We are firmly of the opinion that with an appropriate vision and staged implementation program, the Point Lonsdale Lighthouse Reserve and adjoining areas will be a massive tourism drawcard for the Borough, not with accommodation but with its open space and heritage listed structural icons, world-class ocean views, unique flora and fauna and walking paths that both residents and visitors alike will use and enjoy. We look forward to the BoQ working collaboratively with the community to remediate and develop the natural and heritage features of this area to their full potential. With this in mind the following is sought:
Subject to, and without limiting the output of, the community engagement process, the following scope of works is proposed:
NATIONAL PARK/HERITAGE OPTION
Friends of the Point Lonsdale Lighthouse Reserve
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