A fundamental role of councils governing for the present day and the future is the responsible management of public assets. By planning for the long term and taking into consideration the cumulative effects of all decisions made regarding public assets, responsible asset management by council is essential in ensuring the best outcomes for the community.
Sale of land
Compliance with the legislation is mandatory and a failure to meet these requirements may be sufficient to invalidate a sale. Transparency to the community is an essential part of the advertising and sale process.
A sale that occurred in February 2015, for Lots 16 and 17 in Kaniva Industrial Estate, was examined. The combined sale price of the properties was $29,000. It was identified that a public notice published at least four weeks prior to the sale was not undertaken. The sale details were published on the council website, however this is not sufficient to meet legislative requirements. A valuation of $29,000, dated September 2013, was provided, however there was no evidence that a valuation was completed within six months of the sale in accordance with the legislation.
Council has recently introduced an Asset Disposal Policy, which details that the sale process must be in accordance with the Act, but the Inspectorate was not informed of any relevant policy in place at the time of the sale.
- Council must ensure that relevant staff understand the requirements of section 189 of the Act and council’s Asset Disposal Policy and adhere to them.
- Council must ensure that sale of land transactions are at all times transparent to the community, in accordance with Local Government Best Practice Guideline for the Sale, Exchange and Transfer of Land.
Lease of land
When leasing council-owned land, there is a clear obligation to obtain the best overall value for the community.
The Inspectorate reviewed one example of a lease and use of council land and a potential conflict of interest and/or misuse of position by the successful tenderer who is a current councillor.
A council-owned property, the Kaniva Aerodrome, was identified by council as no longer required for its previous purpose. During the financial years 2016 to 2018, the property was being used to graze sheep, despite no formal lease being in place. Other than an annual fire levy payment, no rental payments or compensation was paid on the land. This exposes council to potential liability risk. While tenders were called for in December 2016 and two submissions were received, no formal lease was entered into.
In October 2017, expressions of interest were called for and a lease was formally entered into for a rental return of $300 per annum. Council could not demonstrate that the rental value agreed upon was market tested and provided best value.
Based on the rental agreement in place and yearly rental return, there was no requirement in accordance with the Act for the council to publish a public notice at least four weeks prior to the proposed lease.
While a breach of the Act was not identified, it appears that council knowingly provided access to the property to a current councillor and their family, without having a formal lease arrangement in place for that period of time. The community is entitled to rightly question the inappropriate advantage provided to the councillor.
- In all circumstances where council land is being utilised by a body/entity other than the council, there should be a formal lease agreement in place and the value of the rental/lease payments must meet public expectations.
- Council should develop a policy, or include in an existing policy, guidelines that outline the process in relation to the lease of council land.