Commercial Skydiving in Wollongong · ITEM 1 COMMERCIAL SKYDIVING IN WOLLONGONG ... (SKB) has operated ... approached Council in 2011 with a proposal to construct a new building consistent

Ordinary Meeting of Council 27 April 2015 4

File: IW-005.04.75.001

ITEM 1 COMMERCIAL SKYDIVING IN WOLLONGONG

Commercial Skydiving has been occurring in Wollongong since 1996. It originally commenced in Stuart Park and in 1997 transferred to Dalton Park. Following the failure of the business at Dalton Park, skydiving ceased for a short period until a new operator again commenced skydiving activities at Stuart Park. That operator later sought to use Dalton Park as an alternative landing site when wind conditions dictated.

In 2001, skydiving was approved (development consent and licence) for a third operator in Reed Park, Dapto, but this activity ceased in 2002 due to lack of business. That operator now operates a successful beach skydive business on the south coast.

Mr Anthony Boucaut of Skydive the Beach (SKB) has operated skydiving activities from Stuart Park under licence from Council in its capacity as trustee for the Stuart Park Reserve Trust since 5 June 1999 with landing zones licensed in Stuart Park and an alternative zone at Thomas Dalton Park, Fairy Meadow. He also entered into a licence for the use of the ‘caretaker’s cottage’ in January 2000. The current lease over the cottage expired on 30 September 2014 and has continued on the holding over clauses since that time. The licences on the landing zones have also expired and are operating on holding over clauses in the licences.

In keeping with a 1989 resolution of Council, the Blue Mile Master Plan contemplated the relocation of the SKB facility to the southern fringe of the park with access to George Hanley Drive to accommodate eventual demolition of the ‘caretaker’s cottage’ and creating open space in that location. Following an assessment of the condition of the ‘caretaker’s cottage’ by Council staff, the principal of SKB, Mr Anthony Boucaut, approached Council in 2011 with a proposal to construct a new building consistent with the Blue Mile Master Plan to facilitate continuity of the business.

As the two licences for the activity and the lease over the cottage are due for renewal, and as a Development Consent for a new building in Stuart Park has been issued, this report provides a history of the activity of skydiving in Stuart and Dalton Parks.

RECOMMENDATION

1 Council reaffirm its resolution of 28 April 2014 that ‘Council support in principle the activity of skydiving at Stuart Park and reaffirm this component of the Blue Mile Master Plan’.

2 Council note that a Call for Proposals will be undertaken and in terms of current policy and delegations, the outcome will be reported back to Council for decision.

ATTACHMENT

Location map


REPORT AUTHORISATIONS

Report of: Peter Coyte, Manager Property and Recreation Authorised by: Greg Doyle, Director Corporate and Community Services – Creative,

Engaged and Innovative City

BACKGROUND

This report provides a background to skydiving in the city and, essentially, details three compounding decisions that are required:

1 Does Council support commercial skydiving in the city?

2 Is Stuart Park the most appropriate place for a skydiving landing site?

3 As the current licences and lease have expired, how will Council manage the issue of new licences and lease?

SKYDIVING IN WOLLONGONG

A summarised history of skydiving in Wollongong is as follows:

1996 Skydiving commenced in Wollongong at Stuart Park.

1997 Transferred to Dalton Park.

1998 Following the failure of the business at Dalton Park skydiving ceased for a short period.

1999 Skydiving recommenced at Stuart Park and has operated there since.

2001 Skydiving was approved (development consent and licence) for a third operator in Reed Park, Dapto, but this activity ceased in 2002 due to lack of business. That operator now operates a successful beach skydive business on the south coast.

2005 Stuart Park operator sought and gained approval to use an area of Dalton Park east of the cycle track as an alternative landing site when winds did not allow landing in Stuart Park.


A brief history of the skydiving development consents and licences is as follows:

Date Operator Term Approval Rental Basis Consent

Crown

Approval

9/08/1996 Wings 6 months

Council

25/9/96 $480 Neg D96/225 Yes

8/04/1997 Wings 12 months

Council

3/2/97 $960 Neg

DA96/225

[am1] Yes

7/12/1998

A Boucaut

and L

Wright 12 months GM $1,000 Neg

DA98/617

12 months Yes

7/12/1999

A Boucaut

and L

Wright 12 months GM $1,025 CPI

DA98/617

[am1] ‐ 2

years Yes

7/12/2000

A

Boucaut

5 years + 1

year carry

over

GM

reported to

Counci to

affix seal $1,100 CPI above Yes

7/12/2006 A Boucat 5 years

GM ‐

reported to

Council to

affix seal $5,000 Neg

DA98/617

[am2] Yes

7/12/2012 A Boucat

Holding

Over

[monthly] $5,470 CPI

DA2009/681

not limited

by time

Landing Zone ‐ Stuart Park

Note – General Manager approval has been under Delegated Authority from Council and in terms of Council Policies.

A brief history of skydiving at Dalton Park is as follows:

Date Operator Term Approval Rental Basis Consent Crown

26/09/2005

A

Boucaut 5 years GM

$1,400

plus GST Neg

DA‐

2005/473 Yes

26/09/2010

Holding

over

Landing Zone ‐ Dalton park


Licences have been negotiated by Council staff and reviewed by the Crown Lands Division. There is not a lot of comparable data that can be used to assess the appropriate level of licence fee, which is demonstrated by the following information that has been researched as a prelude to gaining a commercial valuation for the landing rights. It demonstrates a very broad range of fees charged.

Region Location Airfield Landing Zone Fee

Hunter Valley Branxton private airfield parachute club N/A

Newcastle Belmont private airfield private airfield $20,000pa

Port Phillp Vic St Kilda Moran Reserve

$125,000 pa [plus

State Government

park entry fee $2.40

per adult and $1.60

per child]

Great Ocean Road VicBarwon Heads

Barwon Heads

Airfield Barwon Heads airfield N/A

Yarra Valley Vic Lilyfield

Lilyfield

Airfield Lilyfield Airfield N/A

York WA York private airfield private airfield N/A

Perth WA Perth City $160 per annum

Rockingham WA Rockingham

Jandakot

Airport

Rockingham Naval

Memeorial Gardens $1150 per annum

Whitsundays Qld Airlie Beach

Airlie Beach

Airport Port of Airlie N/A

Other operators

Byron Bay

Tyagerah

Airport Byron Beach $12,000pa

Coffs Coast Coffs Harbour

Coffs Harbour

Airport $1,400pa

It can been seen that fees range from $160 per annum for a trading licence to land in a prime Perth park by the Swan River to $122,500 to land in a park adjacent to Melbourne’s premier beach, where the per person fees are State Park Entry Fees.

Benefits of Skydiving in Wollongong

Skydiving has contributed to Tourism and Economic Development in Wollongong by providing additional tourism product, particularly in Adventure Tourism.

Benefits of skydiving to the city and region have been:

Employment;

Visitation;


Marketing the city – change of image; and

Contribution to activity and interest at our major tourist destination.

Employment

A consequence of skydiving has been the increased employment, both direct by the operators of skydiving and indirect through the packaging with other tourism operators. The additional spend by participants in skydiving and their friends and relatives who accompany them in the city have benefited other tourist operators. Employment by the current operator and the flow-on through the economic multiplier effect as assessed by Council’s Economic Development team are:

Direct employment – 71 full time equivalent positions (89 people)

Indirect employment – 52 full time equivalent positions

Total employment – 123 full time equivalent positions

Visitation

The current operator advises that they sold 19,000 jumps in 2013-14 and that those jumpers were accompanied on average by 2.8 friends and relatives. Of those 72,000 customers and friends, 80% were international travellers or came from the Sydney Metropolitan area, who visited the region directly as a result of skydiving.

skydivers 19,000

Friends + relatives 53,000

Total 72,000

Exclusive visitors 57,600

Marketing

The sight of parachutes descending into Stuart Park has become a regular feature of the city. Those images are used by Destination Wollongong and other operators to add to the ambience of the city. They assist in redirecting the image of the city from a manufacturing city to a tourist destination.

Skydiving Landing Zones

Skydiving activities including landing zones are regulated by the Australian Parachute Federation (APF). Landing zones are a complicated matter and the regulations vary dependent upon the type and level of licences held by the operator and their staff. In general terms, the technical requirements of a landing zone are:

Minimum of 100-250m2;

200-300m from any hazard;

600-1,500m from populated areas; and Must have a drop zone safety officer in contact with the aircraft.


The current licensee (SKB) operates below these minimum requirements as they have approval of a ‘Restricted Drop Zone’.

A restricted drop zone is achieved through:

A high level of licensing;

A strong safety history;

It is inspected by an APF Area Safety Officer; and It is approved by the Area Safety Council.

In addition to the Drop Zones, the flight zones are determined by the Civil Aviation Safety Authority (CASA) and there are a number of constraints that are demonstrated with the following CASA Visual Terminal Chart.


The map indicates two danger zones:

1 Due to the level of air traffic into and out of Illawarra Regional Airfield at Albion Park, and the existence of the heliport at Port Kembla, any skydiving needs to be north of the heliport. A further map has been obtained that shows a large air training area exists over Shellharbour, which excludes that area also; and

2 Because of other air training, areas north of Bellambi Point are inappropriate.

It can be noted that SKB have, after six (6) years of effort had CASA establish a safety zone (a no fly zone airspace) over North Wollongong. It is represented by a purple trapezoid with a parachute symbol inside. This is different to the Restricted Drop Zone mentioned earlier, which relates to the actual landing area on the ground.

Conclusion

The conclusion that can be drawn is that skydiving is a great adventure tourism product that has contributed very strongly to the Illawarra economy and particularly to the Wollongong economy. The activity has contributed to the diversification of industry in the city. It has also assisted in rebranding the city from a coal and steel manufacturing city to a cosmopolitan service and lifestyle based city.

SKYDIVING AT STUART PARK

It is worth noting that at its meeting on 20 November 1989, Council resolved to:

Demolish the existing residence in Stuart Park Reserve; and

Construct a new residence at the southern fringe of the Stuart Park Reserve, with direct access to George Hanley Drive.

This resolution informed the 2000 Plan of Management and, later, the 2007 Plan of Management and the location of a future skydiving operations building to replace the cottage.

Skydiving has been occurring in Stuart Park since 1996, when the original operator commenced the activity. He operated as Wings, Skydive over the Beach, until 1997 when he moved to Thomas Dalton Park but the business suffered a downturn in patronage at that location and ceased operating.

SKB has operated skydiving activities under licence from Council in its capacity as trustee for the Stuart Park Reserve Trust since 5 June 1999. The operators at that time were A Boucaut and L Wright trading as Adrenalin Sports Skydiving. In 2001, the development consent and a licence were issued to Mr A Boucaut solely.

Apart from the landing zone licensed in Stuart Park, a licence was issued for an alternative zone at Thomas Dalton Park, Fairy Meadow in 2005. As stated, the business originally operated as Adrenalin Sports Skydiving, later acquiring the ‘Skydive the Beach’ name and changing to it in 2003. The current operators have continued to operate at Stuart Park since then as Skydive the Beach.


In their development application in 1998, Adrenalin Sports asked the question “Why Stuart Park” and provided the following:

In promoting Wollongong as a scenic area, Stuart Park is by far the most attractive beach park.

Stuart Park offers a full tree bound enclosure, attractive and well maintained grasslands, nearby modern resort style buildings and amenities, hotels, restaurant and cafes that would benefit from increased tourist activity.

It would be logistically advantageous to have the ability to offer overnight and weekend packages utilising the surrounding amenities.

The activity in Stuart Park provides excitement for other park users who often clapped and made positive comments.

The passive security offered at Stuart Park for participants, through the level of users in the park.

They also pointed to the serious slump in customers when the previous business moved from Stuart Park to Dalton Park.

The advantages of Stuart Park to other locations are summarised as:

Stuart Park is a key tourist destination in the city. SKB advise that 80% of their customers come from the Sydney Metropolitan Area or are international travellers collected in Sydney and transported to Wollongong. These tourists are attracted by the activity, not the City. SKB spend around $900,000 per annum marketing skydiving and Wollongong which has a spin-off of marketing the city as a tourist destination.

As the skydivers arrive at and depart from their skydiving experience, they are in the centre of a major tourist location. This provides the best opportunity for local surrounding business to capture expenditure from these visitors. SKB operate about 19,000 jumps per year and advise that, on average, they have 2.8 additional people attend to witness the landings. That amounts to around 72,000 visitors to the city as a result of this activity. At other more remote areas, with less or no tourism infrastructure, there is less opportunity to retain those visitors and capture additional spend.

The skydiving activity adds to the vibrancy and excitement of the park as a major tourist centre. Visitors not associated with the skydiving activity, experience the landings and the thrill of watching the skydivers descend. This provides something unique in our major tourist location.

An earlier shift to another location saw that business fail along with a later business in a more remote location also fail.


At its meeting on 28 April 2014, Council resolved ‘Council support in principle the activity of skydiving at Stuart Park and reaffirm this component of the Blue Mile Master Plan’.

Other Activities in Stuart Park

Stuart Park, being one of the major open space areas in the city, has a high level of demand as follows:

Community Activities

There are a number of events in Stuart Park ranging from very large community based and school events to smaller family and school events.

ACTIVITY 2013 2014

Weddings 43 19

School Events 42 29

Community Events 2 92

Private Events 16 16

Charity Fund Raising Events 25 8

TOTAL EVENTS 128 164

There are a larger number of unbooked events happening at the site, but data is not held on those.

Commercial Activity

A range of commercial activities occur in Stuart Park which are:

Skydiving;

Lagoon Restaurant; and

Personal Fitness Trainers.

Lagoon Restaurant

The Lagoon Restaurant operates under a ground lease on an area of approximately 1,550m2. The Lagoon has a 20 year lease which expires 10 July 2026 and an annual licence fee of $58,635 pa which increases with CPI each anniversary and a review to market each five years.

Personal Fitness Trainers

Six personal fitness training licences have been issued for Stuart Park. Fitness Training has been an operation at Stuart Park since 2007 and fees are determined each year in the Fees and Charges structure.


Current licences for Stuart Park are listed below:

Licensee Licensed #'s Area Annual Fee Hours per day

Skydive the Beach

‐cottage n/a 360m2 $38,000 8 hours

‐ Landing Zone n/a 250m2 $5,470

80 minutes based on 8

jumps per day at 10

mins per jump

Lagoon Restaurant n/a 1,550m2 $58,634 12 hours

Surf School n/a

Fitness Trainers

Savvy Fitness

37‐ 54 per

session est up to 1,135m2 $4,398

Mon to Sat 6am to to

8pm and Sunday 7am ‐

10am

Definition Fitness

37 ‐54 per

session est up to 1,135m2 $4,398 as above

Katie Walsh Fitness

11‐18

participants

per session est up to 650 m2 $2,584 as above

VO2 Viatality

3‐10 per

session est up to 350m2 $1,760 as above

Body Mentality

3‐10 artipants

per session est up to 350m2 $1,760 as above

Teem Keen Coaching

3‐10 per

session est up to 350m2 $1,760 as above

Alternate Landing Sites

Council could seek to relocate the skydiving activity to an alternative location. However, the information provided by CASA and the current operator restricts that to north of Stuart Park and south of Bellambi Point. There are a number of other elements that need to be taken into consideration:

To be a successful business, they require access seven (7) days a week. Sports fields do not provide that level of availability; and

The dominant winds in Spring, Summer and August are easterlies, so a landing zone that allows an approach from the west. SKB currently use Stuart Park in these seasons due to the ‘clean air’ provided at Stuart Park. They use Dalton Park as an alternative when dominant north westerly winds operate and they land in a south to north area of the park.

Thomas Dalton Park

Thomas Dalton Park is used as an alternative landing zone when dominant winds are from the north-west. The skydiving landing zone is a north-south rectangular strip on


the east of the cycleway. To be used as a full time landing zone, the sports fields would need to be available for the majority of the year but are highly utilised as shown below:

Wollongong Touch Association Mondays, Tuesdays and Wednesdays AFL Sundays Illawarra Baseball League Saturday and Sundays Cricket Junior and Senior Saturday and Sundays South Coast Wolves Soccer Mondays and Tuesdays Illawarra Churches Soccer Saturdays

In addition to the above, during the 2013 to 2014 period, there were a total of 136 social bookings. These included:

Ultimate Frisbee Competitions Puka Puka Community Social cricket matches NSW Touch Football Association School touch football matches The Illawarra Grammar School Berkeley Public School AFL NSW/ACT AFL Gala days for local school Oztag Championships Illawarra Archers Inc Archery competition Corrimal High School Wollongong Catholic Education Office Local Catholic schools sports days Australian University Sport Wollongong University students social

sport days The Colour Run Towradgi Public School Wollongong High School of Performing Arts

Smiths Hill High School Edmund Rice College

Conclusion

As one of the city’s premier foreshore locations, Stuart Park has a high level of both community and commercial activity.

Skydiving has operated in Stuart Park since 1996 on a small area of the park but is not isolating large areas of the park for long periods of time. It uses the park at lower levels of time and intensity than other users and has not generated complaints over the 15 years of occupation.

Fitness activities have operated in Stuart Park since 2007 and isolate a substantially greater area of the park for longer periods of time than the skydiving. They also have greater impact on the park grounds and infrastructure.


Stuart Park is considered to be the best site for a viable skydiving operation given:

The opportunity for other local business to capture custom from the SKB customers;

The impression of the city left on the 72,000 visitors each year;

Two operators who have tried to operate at Dalton and Reed Parks have failed; and

The low impact on the park.

SKYDIVE THE BEACH

As already stated, Skydive the Beach commenced business at Stuart Park in 1999 when they recorded 1,486 jumps for the first year. That has been built to 19,000 jumps in 2013-14 at Stuart and Dalton Parks. Since then, they have built the business to include nine other sites around Australia and have established their National Head Office in Wollongong and their east coast maintenance centre at Illawarra Regional Airport:

Hunter Valley, Branxton;

Newcastle, Belmont;

Port Phillip Vic, St Kilda;

Great Ocean Road Vic, Barwon Heads;

Yarra Valley Vic, Lilydale;

York WA;

Perth WA;

Rockingham WA; and

Whitsundays Qld, Airlie Beach.

Skydive the Beach Group Limited listed on the Australian Stock Exchange on Friday 27 March 2003.

On 1 April, SKB acquired the business operations of Australia Skydive providing jump locations in northern NSW and Queensland and roughly doubling the organisation in terms of total jumps.

The Caretaker’s Cottage

Background

At its meeting on 20 November 1989, Council resolved to:

‘Demolish the existing residence in Stuart Park Reserve’; and

‘Construct a new residence at the southern fringe of Stuart Park Reserve, with direct access to George Hanley Drive’.


The cottage at that time was being used as a park ranger’s residence and was in such a state of disrepair that it was considered the cost of repairs on the building could not be justified. It is not clear from the property file why this did not proceed but seems to be linked to the discontinuance of a full time ranger at the park.

The Blue Mile Master Plan was adopted by Council at its General Meeting on 19 November 2007 and reflected a consistency in application of previous Plans of Management which proposed the move of the cottage to the southern fringe of the park with direct access to George Hanley Drive. An outcome sought in the Master Plan for Stuart Park was the demolition of the ‘caretaker’s cottage’ and relocation of the existing operation facility for SKB to the southern fringe of the Stuart Park Reserve with direct access to George Hanley Drive.

An assessment of the condition of the ‘caretaker’s cottage’ by Council staff in 2009 revealed the following current issues with the building:

Asbestos in walls, ceilings and eave linings;

Little underfloor clearance providing minimal underfloor ventilation;

Electrical wiring is building age and would require replacement;

Roof replacement is ideally required;

Windows require replacement;

Floor coverings require replacement;

Cement render is crumbling and requires replacement before painting;

Building is not DDA (Disability Access) compliant; and

Other Building Code of Australia issues such as exit lighting required for office type use.

The preliminary estimated cost to repair the building is $700,000, exclusive of professional fees and project management.

Lease/Licence

In early 2000, Council was preparing a Plan of Management over the Stuart Park Reserve. In May 2000, SKB approached Council ‘to use the derelict cottage’ as an office/storage centre for the North Beach operation. As the future of the cottage was still uncertain, but with a desire to demolish it, a short term licence was approved by Council’s General Manager under delegated authority, with advice to the Crown Lands Division. The Council Policy on Crown lands was that only licences in excess of five (5) years required public competition.

While Council provided the licence, it was on the basis:

That it made no representation as to the building being fit for use;

Was not prepared to contribute to any improvements or maintenance; and

SKB were required to immediately carry out repairs to ceilings and the electrical system.


SKB have completed the following work during their occupation since 2000:

Replaced some and repaired all ceilings;

Replaced the majority of window glass;

Replaced some internal and external linings;

Replaced and relocated hot water system;

Installed hand basin and repaired WC; and

Repaired external plumbing.

This work reflects the repairs identified in 1989, when the decision was made to demolish the cottage.

The lease arrangements over the cottage are:

January 2006 – commenced with a three year licence under the General Manager’s delegation and with approval from the Crown Lands Division.

October 2009 – a further five year lease was entered into again under the General Manager’s delegation and with approval from the Crown Lands Division.

October 2014 – has continued under the holding over clauses since that time pending the outcome of a development application to construct a new facility in Stuart Park.

A summary of these arrangements is as follows

Date Operator Term Approval Rental Basis Crown

10/07/2000

Adrenalin

Sports 6 months GM $100pw Neg Yes

10/01/2001

Adrenalin

Sports 6 months GM $100pw Neg Yes

10/07/2001

Adrenalin

Sports

1 month

then

holding

over GM $100pw Neg yes

1/01/2006 A Boucaut 3 years

GM ‐ reported to

Council for Seal $13,000pa Neg Yes

1/10/2009 A Boucaut 5 years GM $30,000pa

Valuation

$19,000 yes

1/10/2014

Holding

Over

Cottage


Note – General Manager approval has been under Delegated Authority from Council and in terms of Council Policies.

While the early arrangements were for a fairly nominal rent of the ‘derelict cottage’, which the lease has been required to improve and maintain, more recent leases have achieved a commercial rent, close to CBD commercial rates and have proven to be a sound return for Council.

Following the assessment of the building condition, the principal of SKB, Mr Anthony Boucaut, approached Council in 2011 with a proposal to lease land in Stuart Park, to facilitate construction of a new building. The location proposed was consistent with the Blue Mile Master Plan to facilitate continuity of the business. Given this involved direct negotiation, approval was sought and obtained from the Crown Lands Division to proceed with direct negotiation on the basis that SKB had a long history with the site and the business was one that had been established and grown by the company.

The proposal is that SKB will finance the construction of the facility and carry the responsibility for the maintenance of the building during a lease period. Mr Boucaut has sought lease conditions that will allow him to amortise the building cost over the term of the lease, while meeting a commercial rent over the land on which the building is to be constructed.

SKB have lodged a development application to construct a purpose built facility that will provide for reception and instruction/induction of customers, packing of parachutes and a small kiosk to service the firm’s customers. This was presented to the Independent Hearing and Assessment Panel on 20 January 2015 and received conditional support in a location different to that originally proposed, but as identified in Attachment 1. A development consent was issued on 16 March 2015.

The consent is for the facility to be constructed on the site of the current amenities building and public toilets (Attachment 1) at an estimated construction cost of $1,243,644. The existing buildings will be demolished and the new facility will include public toilets to replace those being demolished. The current toilet block has been assessed as having a remaining life of two years requiring replacement.

The amenities building is currently partly used by a Council Works Crew for storage and as a lunch room. It has an assessed effective life of eight years. It has been intended to relocate the storage and lunch room.

SKB has approached Council to negotiate an Agreement to Lease for the new facility to facilitate construction.

LICENCE/LEASE RENEWAL

As stated, SKB approached Council in 2011 with a proposal to construct a building to replace the cottage. At that time, Crown Lands policy allowed for the extension of a lease/licence for existing lessees where the tenant has demonstrated sound business management, is not in default of the terms of the lease or licence and will agree to a market review of rental. Given this involved direct negotiation, authority was sought and


received from the Crown Lands Division to proceed with those negotiations. However, current Crown Lands Policy is that unless there are exceptional circumstances, then all leases and licences on Crown Lands should proceed to public competition.

There are three separate licences under consideration:

Licence to conduct skydiving activities in Stuart Park under the current Development Consent DA-2009/681.

Licence to conduct skydiving activities in Thomas Dalton Park under current Development Consent DA-2005/473.

Agreement to Lease an area of 461m2 to facilitate the construction of a building to facilitate the operation of the skydiving activity at both locations. Consent issued for this building on 16 March 2015, or potentially a new lease on the existing cottage.

Council has three courses of action in respect to continuation of the skydiving activities in Wollongong for consideration under its current policy on leasing Council land:

1 Tender – a strict process with closely defined specifications which interested parties are invited to address;

2 Call for Proposals – while a clear assessment criteria is established. This is a more fluid process that allows alternatives to be proposed and explored which may be more beneficial than the stricter tender process. Examples of the key differences can be seen in areas such as lease Term. In a tender Council would define a term, whereas in a Call for Proposals the proponent can propose a lease term to best suit their proposed capital investment. Also in purpose in a Tender we would call for a specific purpose such as construct a new facility, whereas in a Call for Proposals a proponent might chose to propose renovation of the existing cottage; and may allow council to negotiate a contribution to certain items in a new building which meet our needs such as public toilets and staff facilities. This may be offset by a higher rent.

3 Direct Negotiation – continue to negotiate solely with the current licensee/lessee without any formal public competition or assessment criteria. This would require a strong Probity Plan and Negotiation Protocol and compliance with the ICAC Guidelines. Council sought and received approval from Crown Lands Division in 2011 to Direct Negotiate. However, in recent discussions with Crown Lands, they have advised that while it may be possible to continue with direct negotiation, in terms of their current policy, this would need to be reconfirmed with the approval of the Deputy Director General for Lands and Natural Resources.

A submission to continue with direct negotiation would need to demonstrate that the first principles of the ICAC Guidelines and address the “Uniqueness test as detailed in the NSW Government’s Unsolicited Proposals – Guide for Submission and Assessment 2014”.


1 TENDER

Positive

• Allows wide participation

• A transparent process

Negative

• Risk current operator could win but may not offer as high a price as presently paying;

• Strict application of criteria may lead to unintended consequences and can limit innovative proposals.

• May place current jobs at risk. Without the Wollongong operation, the current operator would have no need to retain both its National Office presence in Wollongong or its aircraft maintenance facility at Illawarra Regional Airport as these jobs are not location specific;

• Current operator has strong Sydney marketing and sales systems which he may move refocus to his Central Coast operation, which would mean the loss of 72,000 visitors to the City; and

• Given the current operator’s strong market position, a new incoming operator may not be able to maintain the activity levels of the current one or be able to build to the current level of activity.

2 CALL FOR PROPOSALS

Positive

• Allows wide participation

• A transparent process

• Allows broader negotiation than a straight tender

Negative

• Risk current operator could win but may not offer as high a price as presently paying;

• May place current jobs at risk. Without the Wollongong operation, the current operator would have no need to retain both its National Office presence in Wollongong or its aircraft maintenance facility at Illawarra Regional Airport as these jobs are not location specific;

• Current operator has strong Sydney marketing and sales systems which he may move refocus to his Central Coast operation, which would mean the loss of 72,000 visitors to the City;


• Given the current operators strong market position, a new incoming operator may not be able to maintain the activity levels of the current one or be able to build to the current level of activity.

3 DIRECT NEGOTIATION

Positive

• A known and well managed business that has grown, created employment and committed to the city and region.

• Negotiation is not limited to what is in a tender. Valuation and with a sound probity plan and negotiation protocol should ensure best value is obtained.

• Is there anyone who will do a better job, given the current operator has now listed on the Australian Stock Exchange, merged with the other major operator and is the major supplier in the market.

Negative

• Not seen as a transparent process that gives all available parties an opportunity.

• Is this the best value for Council?

Direct Negotiation

The first principles as outlined in the Independent Commission Against Corruption Guidelines on Direct Negotiation and highlighted in italics below are:

Obtaining best value for money – ‘Obtaining best value for money is a fundamental principle of public sector work. When it is known that there are other proponents who could feasibly compete for a contract, agreeing to direct negotiate with a single person increases the risk that the agency may not receive best value for money.’

A strong Probity Plan supported by a sound Negotiation Protocol and an independent valuation, should ensure value for money. Council’s Procurement and Record Keeping policies should ensure transparent and accountable decisions are made.

Providing a fair chance to do business with Government – ‘Doing business with government is a key driver of economic activity and many private firms and not-for-profit organisations rely on access to government contracts in order to stay in business. Direct negotiations can unfairly exclude capable firms that employ staff, pay taxes and contribute to the economy.’

While this is generally aimed at opportunity where government is seeking to issue a contract for goods or services, the following comments are made:

The current business has been built out of the proponent’s own efforts and has not resulted from Council’s activities or investments. The proponent took a risk with the failure of the previous business meaning Wollongong was an unproven location. The opportunity is one that is somewhat unique to the proponent having


proven the business viable with two failures. However, there are 69 other skydive companies operating in Australia who, now that the location is proven, may bid for the opportunity.

Demonstrating accountability and transparency – ‘Accountability and transparency are related concepts. Accountability involves keeping good records that leave an audit trail. Transparency means opening processes to allow scrutiny and criticism.’

Council’s policies require appropriate record management and independent review to ensure appropriate accountability and transparency are provided. The opportunity is highlighted in both the Plan of Management prepared for the foreshore and the Blue Mile Master Plan. These plans have been subject to a substantial level of community consultation.

Dealing with Conflicts of Interest – ‘Direct negotiations can create an environment where private interests could influence or be seen to influence the outcome of the contract.’

Council’s policies require that where an officer has a personal interest that could have an impact on the manner they undertake their public responsibilities, they are to declare the conflict and have an approved process to eliminate the conflict. Council officers involved have declared no conflicts. In addition, the final decision in respect to the Agreement and Lease terms will be taken by Council. It is also important to note that SKB officers and staff have had no input into the instructions provided to Council’s valuer.

Crown Lands Division Considerations

As stated, the proposal will require Ministerial approval in addition to Council’s approval. The considerations the Crown will take in assessing whether the lease terms are to be approved are:

Whether the proposed lease is in the public interest:

As stated earlier, the lessee has operated at the site since 1999, building a tourism business that contributes to the direct and indirect employment of 139 people and contributing to the local economy by an estimated $26.8 million per annum. Skydiving has become somewhat symbolic of Wollongong and adds to the vibrancy and activity in one of the City’s major tourist locations. The company has ‘packaging’ arrangements with five other local tourism operators.

Whether the purpose of the proposed lease is compatible with the reserve purpose:

Stuart Park was established by Proclamation under the Public Parks Act of 1884 for the purpose of ‘parks, or grounds for public recreation, or as places for bathing’. The use (skydiving) is considered to fit within reserve purpose.

Whether the granting of the lease is consistent with the principles of Crown Lands Management:


The principles of Crown Lands Management as set out in Section 11 of the Crown Lands Act 1989 are that:

(a) Environmental protection principles be observed in relation to the management and administration of Crown land;

(b) The natural resources of Crown land (including water, soil, flora, fauna and scenic quality) be conserved wherever possible;

(c) Public use and enjoyment of appropriate Crown land be encouraged;

(d) Where appropriate, multiple use of Crown land be encouraged;

(e) Where appropriate, Crown land should be used and managed in such a way that both the land and its resources are sustained in perpetuity; and

(f) Crown land be occupied, used, sold, leased, licensed or otherwise dealt with in the best interests of the State consistent with the above principles.

The proposed development and lease is consistent with these principles.

Whether the proposed lease was or is to be selected by public competition and, if not, the circumstances relating to the selection of the proposed lessee:

Public competition is proposed.

Whether the proposed rent represents a proper return to the public for the use of public land:

The licences fees and rent will be negotiated with the assistance of a commercial valuation by a leading commercial/independent licensed valuer.

Whether the proposed lease will contain provisions for the periodic review of the rent:

Lease terms are for CPI increase annually with review to market each five years.

Whether the proposed lease contains clauses relating to:

The indemnification of the reserve Trust, the Crown and the NSW against claims for compensation;

Appropriate insurance clauses; and

These provisions will be included in lease documentation.

As stated above, the Minister will advertise the intention to enter into a lease in the locality where the lease is to be granted to provide the community opportunity for comment.


OPTIONS

Council has the following options to consider: 1 Council decline to offer further leases and licenses to facilitate skydiving in the city;

2 Council decline to offer further leases and licenses to facilitate skydiving activities in Stuart Park but seek to find other locations where skydiving might occur;

3 Council support skydiving activities in Stuart Park and Dalton Park and proceed to a formal tender process. This would need to determine whether those activities were to be conducted from the existing cottage with renovations to be undertaken to bring it up to appropriate Building Code of Australia standards and Disability Access standards, or to construct a new facility;

4 Council support skydiving activities in Stuart Park and Dalton Park and Call for Proposals on how this would be facilitated; and

5 Council

a support skydiving in Stuart Park and Dalton Park b support direct negotiation on a landing zone in Dalton Park; and c seek approval from the Crown Lands Division [Deputy Director General] to

directly deal with the current lessee/licensee to provide licenses to land in Stuart Park and an agreement to Lease to facilitate construction of a building for the following reasons:

i Discussions and agreement to proceed to direct negotiation being agreed by Council and the Crown Lands Division in December 2011;

ii The matters raised in Schedule 3 of the ICAC recommendations on Direct Negotiation can be addressed;

iii The business activity is somewhat unique and has been built into its current level of activity by the efforts of the licensee,

iv The uniqueness is demonstrated by the licensee through his own efforts to established a “CASA Safety Exclusion Zone” over North Wollongong as well as a “Restricted Landing Zone” at Stuart Park. This and the processes and procedures established has resulted in an accident free operation since establishment in 1998;

v The business has committed to the region with its National Head Office in Wollongong and the servicing of its 16 aircraft servicing the east coast of Australia at Illawarra Regional Airfield at Albion Park;

vi The Federal Government provided $815,000 by way of an Illawarra Regional Innovation and Investment Fund Grant to support the business growth and provide jobs in the region. SKB have met all of their employment targets of 20 additional full time jobs set by the Government


well in advance of the timeline, creating apprenticeships in aeronautical engineering as well as traineeships in business management;

vii The current licensee has built the business from 1,486 jumps in 1999 to 19,000 last year. In this time, two other skydive operators in the city have failed with one moving to the south coast;

viii The business currently contributes 71 [FTE] direct jobs and an estimated 52 [FTE] indirect jobs to the region. It is estimated also that a further 30 jobs will be generated by the listing and acquisition of another company. These jobs are in the 18-35 age demographic so are meeting the highest demand area for employment in the city;

ix The business contributes direct and indirect gross regional product of $26.8 million to the region;

x There are no guarantees that another company could immediately establish at the same level of activity generating the economic benefits currently enjoyed by the city; and

xi The business has shown strong growth, recently listing on the Australian Stock Exchange.

PROPOSAL

Assuming that it is accepted that commercial skydiving in Wollongong provides a range of community benefits and is supported, there is essentially a cascading series of considerations to be made:

1 Does Council wish to confirm its resolution of 28 October 2014 and continue to support the activity of skydiving at Stuart Park and reaffirm this component of the Blue Mile Master Plan?

2 Does Council wish to continue with Direct Negotiation with SKB in regard to the license for the activity of skydiving in Stuart Park and Dalton Park?

3 how does Council wish to facilitate a license to operate the landing zones and an agreement for lease to facilitate the construction of a purpose built building to facilitate skydiving at Stuart Park, through the provision of a ground lease?

Council had originally considered a Direct Negotiation with the current Licensee/Lessor given that a robust argument could be established to do so based on the reasons outlined above.

However, it is recognised that the opportunity has not been placed to public competition to date and other skydive operators may wish to submit proposals. There are a reported sixty-nine other skydive operators nationally though none of comparable scale. In the event of a new or generic opportunity, Council would proceed to a public process.

Any lease or licence negotiated will also require Ministerial approval and, as already mentioned, the current policy of the Crown Lands Division is that unless there are


exceptional circumstances, all leases and licences should be by way of public competition. Council’s policy is that unless there is a clear community benefit that can be established, leases and licences will be awarded through public competition.

Public competition can be through tender, quotations or calls for proposals. The value of the business opportunity to the City is greater than just the level of licence fee/rent that can be achieved.

There is a need to try to preserve the employment and other economic benefit and to be seen to be continuing to promote business and tourism growth. To ensure that those benefits are not lost to the city, it is proposed to proceed to a Call for Proposals.

A Call for Proposals will allow opportunity from other established businesses in the skydiving industry to participate. The Call for Proposals will be seeking a fair rent based on an external valuation by a senior valuer and asking for indicative terms. It is proposed that the initial call for proposals will be assessed against:

- Demonstrated experience and ability to build a business with a strong history of safety. This will include the ability to maintain the current levels of activity and the potential to build into the future;

- What economic value will the proposal add to the city, particularly in employment and gross product?

- How will the proposal contribute to the marketing of the City and the rebranding from the traditional perception of Wollongong as a manufacturing city?

- Financial capacity and sustainability of the proponent to achieve the proposed business growth.

CONSULTATION AND COMMUNICATION

Prior to entering into Direct Negotiation, Council sought and received the approval of the Crown Lands Division. Council has recently confirmed with Crown lands Division that Direct Negotiation will only be considered in circumstances that include a unique opportunity and where ICAC guidelines, Schedule 3 can be clearly addressed. Council will continue to consult with the Crown Lands Division in seeking Ministerial approval.

Council has sought an independent valuation to support its negotiations of the lease terms.

Internal consultation with appropriate divisions has been undertaken and will continue to be held.

PLANNING AND POLICY IMPACT

This report contributes to the delivery of Wollongong 2022 under the Objective Local employment opportunities are increased within a strong local economy and Goal – We are an innovative and sustainable economy community.


It specifically delivers on core business activities as detailed in the Economic Development and Property Services Service Plan 2014-15.

Council’s ‘Lease or Licensing of Land, Buildings or Public Roads Policy’ allows for lease or license of Crown Land to be by way of Tender, Calls for Proposals or Direct Negotiation.

Council’s policy on lease/licence rent/fee renewal is that it is reviewed to market at either renewal date or every five years, whichever is the lesser and is increased by CPI at each interim anniversary. This is common commercial practice.

FINANCIAL IMPLICATIONS

Council currently receives:

$5,470 (plus GST) for the Stuart Park licence.

$1,540 (plus GST) for Dalton Park; and

$36,499 (plus GST) from rental of the ‘caretaker’s cottage’.

CONCLUSION

The activity of skydiving has provided substantial benefits to the city and the region by way of employment, assisting reposition of the city’s image and delivering returns to the city based on commercial valuations.

The activity in Stuart Park has provided opportunity for other tourism operators to capture spend from the skydiving activity. It has also added to the ‘tourism spectacle’ in one of the city’s prime tourist locations.

The issue of Direct Negotiation has been considered in light of the ICAC recommendations and although there is a strong case for direct negotiation to continue, public competition for the right to conduct skydiving on community land is considered to be appropriate.

Location Map

Documents

Commercial Skydiving in Wollongong · ITEM 1 COMMERCIAL SKYDIVING IN WOLLONGONG ... (SKB) has operated ... approached Council in 2011 with a proposal to construct a new building consistent