DRAFT
Schedule 16 Key principles Applied to Recharges
ORDINARY MEETING OF COUNCIL 28 JUNE 2016
InterCouncil Transitional Services Agreement Page
Doc ID 358096643/v1
ORDINARY MEETING OF COUNCIL 28 JUNE 2016
InterCouncil Transitional Services Agreement Page
Doc ID 358096643/v1
* Direct Cost Basis - Revenue and costs associated with operational Assets within transferring geographic areas will be recharged on an actual basis. This covers major services such as Branch Libraries, Child Care Centres, Aquatic Centres, Community Centres and services such as Parks and Road maintenance. Operational asset cost recharges should not in an allocation of group costs. One off emergency repairs and maintenance work will be charged on a direct cost recovery basis.
**Fixed Cost Basis - A Fixed Service Fee will be applied to a TSA in cases where direct costs are not easily calculated. This will generally be based on an estimated proportion of FTE’s undertaking the service currently. An example could be where a team of 10 park maintenance staff on average spend 20% of their time on a transferred area with a total monthly labour (incl. oncost) of $65k per month a recharge could be set at $13k per month. The basis of the fixed fees will be agreed in the TSA and will be related to an agreed schedule of work to be undertaken during the transition period.
*** Fee Charged Basis - A number of the services contained within the TS Agreements relate to items that have a direct ‘Fee for service’ in place in Councils Fees & Charges Schedule. These will in the main be statutory fees such as Section 149, 603
Certificates, DA assessment etc. The general principle to be applied is for services where Council receives a fee for completing work for a customer, that fee will be retained by the Council completing the work. The assumption is that fees are a
reimbursement of the cost incurred by a Council for undertaking the request. To comply with accounting/GST rules Councils will still be required to create a recharge equivalent to the revenue received from the Customer/Ratepayer as part of the monthly exchange.
**** No Charge Basis - Low cost and low time-intensive, internally resourced services undertaken on behalf of another Council should not be recharged. For example where the service being undertaken on behalf of another council is immaterial from a resource consumption perspective or only consumes a portion of time for a fully budgeted internal resource then this cost would not be subject to recharge eg. responding to GIPA requests, customer enquiries. This principle will help reduce administrative burden of calculating, invoicing and processing recharges between the new Councils.
4. Third Party contracted services will be recharged on an actual cost basis. An example of this would be a contract to maintain 3 water play parks where one park has been transferred to another Council. In this instance the supplier would continue to undertake the total contracted work with an apportionment of the total contract cost recharged to the new Council by the host Council – this could be a simple percentage split or a more detailed calculation for items such as waste services. The host Council would continue to manage the contract with the third party supplier. The key principle is to maintain all existing contract arrangements during the transition period with the host Council to ensure all services are maintained. An open book approach to the contract recharges should be adopted.
5. TSA recharge fees should be reviewed, and changes made after the first month of operation to ensure service fees agreed are still appropriate and in line with original estimates.
6. Recharges will be undertaken on a monthly basis (or as otherwise agreed). General ledger transactional data on any recharges should be provided on request. In order to reduce the administration burden, this information should only be requested if the actual cost is significantly greater than the agreed Budget.
ORDINARY MEETING OF COUNCIL 28 JUNE 2016
DRAFT
Schedule 16a Asset Transfer
The following principles have been agreed between Hills Shire Council and the City Of Parramatta in calculate the value of assets or liabilities that are transferred as a result of boundary changes within the guidelines outlined on the Local Government (City of Parramatta and Cumberland) Proclamation 2016.
Fixed Assets
x Only assets and liabilities directly related to the property within a transferred area should be transferred between Councils.
x Property assets of the former Councils are transferred to the new Council at book value on an as is where is basis.
x Any works that were commenced by a former Council and uncompleted at the proclamation date may be completed by the new Council as if it had been commenced by the new Council. However
agreement may be made with the former Council to complete the said works on behalf of the new Council and be reimbursed on an actual cost basis.
x The balance of funding attached to works in progress would be transferred to the new Council so that it can complete the works. If by agreement works are completed by the former Council the available funding would not be transferred to the new Council.
Cash & Investments
x Internally Restricted Reserves would only be transferred if they are directly related to transfer property, excluding employee leave entitlements which would be transferred on an actual employee basis.
x All Externally Restricted Reserve balances directly related to transfer property would be moved to the New Council. Eg Developer contributions , Domestic Waste Reserve
x No transfer of unrestricted cash investments.
Current Assets & Liabilities
x Only Receivables, Prepayments and Bonds directly related to transfer property would be moved between Councils.
x Rates & Annual Charge debtors for the transferred area would be moved to the new Council as the debt is tied to levied properties.
x No general allocation of balance sheet Sundry Receivables or Prepayments would be made between Councils.
Liabilities
x Liabilities/borrowings of the former Councils that are directly tied to a transferred asset would to be transferred to the new Council.
x Creditor/supplier balances at the time of proclamation would remain with the former Council.
x No transfer of general purpose borrowings would be made between Councils.
x No general allocation of balance sheet Sundry Payables would be made between Councils.
TSA Schedule 16a
COMMERCIAL IN CONFIDENCE 15 June 2016
ORDINARY MEETING OF COUNCIL 28 JUNE 2016
InterCouncil Transitional Services Agreement Page
Doc ID 358096643/v1