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Is the project going ahead?
At its meeting on 24 June 2020, Council reaffirmed its support for the development of a performing arts and convention centre in the Busselton Cultural Precinct (C2006/066).
The Australian Government has committed $10.35 million under the Regional Growth Fund to this project, subject to its completion by May 2022. The project programme has been developed to achieve this date which will require Construction Tenders to be awarded in early 2021. Acknowledging concerns regarding the impact of COVID19, the City has requested a 12 month extension to the project to delay construction and the opening until 2023.
Why do we need a Performing Arts and Convention Centre?
Busselton is the Events Capital of WA. It is also one of the State’s most visited regions and one of Australia’s key growth regional centres yet we do not have an indoor event venue. Events are held in marquees and hardly at all in winter. We are missing out on big name acts, a wide variety of performances and the ability to attract and cater for large conventions or provide adequate performance space to support the performing arts regional circuit.
Event related tourism is one of the major economic strategies of the City of Busselton that is sustaining and creating jobs. Each year, our brand as the Events Capital grows with people looking for a reason to come here. With the completion of the airport project and the foreshore hotel developments, the City will be able to target business events of a standard that require first-class facilities.
The City has, through its Economic Development Strategy, identified the need to diversify the range of visitors to Busselton to increase the number of interstate and international visitors, as well as attracting more business tourism (meetings, conferences, events etc) to reduce the seasonality of visitation.
The separate function spaces on the first floor of the BPACC can be opened up into one large space of 546m2 with the capacity to seat over 400 people in banquet table seating arrangements. This space can operate independently, enabling many events and activities to be undertaken in the facility at the one time. This results in a future-proofed facility to cater to the growing population and enables Busselton to maximise the number of business events and performances that it attracts.
The establishment of a dedicated convention, entertainment and performing arts venue in Busselton is the third pillar of a regional growth strategy alongside the Busselton and Dunsborough Foreshore Developments and Busselton Margaret River Airport upgrade. Investments like this help ensure our economy doesn’t stagnate and that we can support our current and future population.
What will it achieve?
How will it benefit me?
The Busselton Performing Arts and Convention Centre (BPACC) is designed as a multi-functional facility providing new experiences and opportunities for everyone to enjoy and to benefit from.
It will be a place to perform, graduate or receive an award with an audience of family and friends. You can meet for casual drinks in the laneway bar to cheer on the footy finals or enjoy a sunset cocktail.
Business will have the opportunity to cater for conference dinners, exhibit and network at tradeshows and conferences. Accommodation providers will benefit from increased visitation as will local restaurateurs, café owners and retailers.
Inspired by opera, ballet and orchestra performances, locals may like to take a drama, music or dance classes – we’ll have the space and the facilities you need!
Those interested in local produce can savour South West delicacies, boutique wines and craft beers at expos which, given the multi-functional floor space, can also cater for car shows.
The BPACC will be a hub for education and career growth. A place where you can grow your business and learn something new. A place where you can hold a think-tank in a meeting room and share ideas in the co-working space. The centre is an investment in our future and our youth.
Why has the project changed in scope (and cost) during the design phase?
The original concept design submitted as part of the successful Federal Government business case in 2018 costed the project at $21.23m. This was based on a Cultural Needs Assessment report in 2012 which identified the requirement for a 300 seat theatre in the district. Council accepted this report as a guide to future planning. A construction budget of $20 – $22m was identified for the future theatre at that time. This did not include separate conference room facilities, a new gallery, significant commercial lease space or a hub for creative industries (which is subject to State Government funding).
The business case did note that additional function space along with the potential for bar and additional dining space could be provided at a later stage. When the architectural designs were revisited these features were included in the scope. Other key changes included increasing the seating capacity to 600 seats (due to population growth forecasts) and sightlines, relocating the gallery and making it bigger and resolving disability access issues. It is more economical in the long run to develop a centre which is fit-for-purpose rather than redesigning later on.
The project cost, including the Creative Industries Hub was agreed at $30.3million. To date the City of Busselton has been unsuccessful in securing $9.5 million from the State Government to support the development of the BPACC. As a result and, in accordance with Council’s resolution 24 June 2020 (C2006/066), the project budget and scope has been reduced from $30.3m to $28.5m and will not include the Creative Industries Hub until further funding is secured.
How is this centre different from other regional performing art centres that don’t make a profit?
Many other performing art centres including Bunbury Regional Entertainment Centre (BREC) and the Albany Entertainment Centre have limited or no capacity for large scale conferences and business events. Nor do they have galleries or leased public bars. These business facilities are an important component of the BPACC business model and a clear differentiator.
We also have other key advantages – an airport which will soon see flights from Melbourne, a central town centre location, new hotel developments and an established reputation as the Events Capital WA. The BPACC concept design has been influenced by the Glasshouse theatre in Port Macquarie (approx. 600seats). The Glasshouse is a similar sized regional venue providing like facilities and catering to a community and lifestyle very similar to our own. Port Macquarie Township has a population of approx. 42,000 people, similar to the City of Busselton.
The City has also worked with both the BREC and the Margaret River HEART to ensure that all three facilities form a regional alliance, having their own point of difference so the facilities are complementary and work together to attract audiences and visitors, rather than competing. The City is working with these existing facilities and privately owned venues to grow markets and audiences through increased accessibility, economic viability and variety. As such a South West Business Events Strategy is in development.
Some people think this development is nothing more than a Performing Arts Centre which will likely be a "white elephant"?
What will drive revenue?
Once established the BPACC is forecast to generate revenues of $1.5m to $2m per annum. Sources include theatre and facility rentals, business events including conference room bookings, commercial leases and gallery exhibitions. The Creative Industries Hub had it been included would offer many opportunities for revenue generation through the recording studios and working spaces for hire. Other income sources include sponsorship and membership. Annual expected revenue and operating costs have been benchmarked against similar regional centres and are considered feasible.
What will it cost to run?
Nearly every facility that the City runs, from Leisure centres, Libraries and even our parks and sporting grounds all cost the rate payer. People also expect to use them at heavily subsidised rates. However, these investments are what makes where we live so great and these facilities aren’t usually viewed by the community in terms of how much they cost but how much they benefit.
The estimated annual cost to operate the BPACC is around $1.2 million per-annum, including asset management costs and provisions for asset renewal. This is similar to the cost of operating the Geographe Leisure Centre and considered a worthwhile investment in culture, the arts and the wellbeing of our community.
Other centres have shared their annual budget performance reports and net operating costs (expenses minus revenues) have been benchmarked against similar regional centres. Direct comparisons are difficult as there is no equivalent convention centre, operating models vary and others do not always include others provisions for asset renewal and all asset management costs. However, the forecast net operation position for the BPACC is commensurate with other similar centres and recognises the competitive advantage of its distinct differences.
To find out more about how the Centre will operate you can view the Business Operations Plan in the document library.
It was reported that the Port Macquarie Glasshouse Theatre costs $4.6m per annum to operate. How does this compare with BPACC?
The Port Macquarie Glasshouse Theatre operates differently than what is planned for the BPACC. Included in the operating cost of the Glasshouse is the Port Macquarie regional Visitor Information Centre (VIC) which is located in the foyer. The approximate costs of operating the VIC is $800k per annum which is reflective of a VIC operating at a regional level. In 2018/19 the Glasshouse loan repayment, based on a $28m loan, was approximately $2.5m and capital expenditure was approximately $60k, bringing the net annual operating cost to approximately $1.24m:
Total net operating cost: $4.6m (excl. depreciation)
Less loan repayments: -$2.5m
Less capital expenses: -$0.06m
Less VIC operations: -$.08m
Net operating cost for Theatre: $1.24m per annum.
The BPACC net operating cost is projected to total approximately $1.2m per annum, which aligns closely to the Glasshouse. Noting that the capital cost to build the BPACC is approximately $21.5m less than the Glasshouse.
Will conference facilities at the Performing Arts and Convention Centre negatively impact on private conference venues?
In April 2018 a review of the current local conferencing and event offerings was undertaken in a report undertaken by Studio Evans Lane for the City of Busselton. The following venues rooms, facilities, capacities, capabilities and distance to CBD were included in that review:
This information informed a Market Demand and Economic Impact Assessment Report by Lawrence Consulting and Studio Evans Lane. The report confirmed that there will be minimal displacement caused by the Busselton Performing Arts and Convention Centre as it will be designed to accommodate larger events as well as growing the meeting, incentives, conferences and exhibitions industry in Busselton. Growing this important industry should then allow for some organic growth for other local venues and scope for working in partnership.
What will it cost to build?
Stage 1 involves construction of a performance centre with a 625 seat auditorium, a new gallery, convention space and backstage and administration space. This is costed at $28.5m.
Stage 2, which includes the construction of the Creative Industries Hub, is costed at $1.1m, however the timing of any development is subject to external funding support.
How will construction be funded?
The project received a $10.35m funding commitment from the Federal Government in 2019. Funds received through the sale of the old Library building site in Mitchell Park Busselton ($2.6m) will be directed to the project. The City has submitted a Business Case to the State Government for $9.5m to support construction however this funding application has been unsuccessful. The City is continuing to advocate to the State Government for this funding.
The loan required could be as high as $15m but it could be as low as $7.5m. Either way, with interest rates currently around 2%, fixed for a term of 20 years, repayment is very manageable. If we don’t progress with the development the City will be required to hand $10.35m back to the Federal Government with little likelihood of re-securing funding in the future.
Construction of the BPACC is one of three pillar projects developed to drive the local economy. The Busselton and Dunsborough Foreshore Redevelopments and expansion of the Busselton Margaret River Airport have benefited from State and Federal Funding. The Busselton Performing Arts and Convention Centre has already received Federal Government funding and the City hopes that the State Government will see similar benefit in the project. The City of Busselton is the only regional City in WA as yet to receive State Government funding support for a Performing Arts Centre.
When will construction start?
To bolster the local construction industry and bring workers into the CBD, the City is now planning to start site preparation works in 2021. The Busselton Woodturners will be relocated to their new site at the Butter Factory in September/October 2020 enabling the demolition of non-heritage outbuildings. The Weld Theatre and ArtGeo gallery will remain operating during construction works and we’ll be working closely with them to minimise impact. As the City has requested an extension to the Federal Government funding agreement, the construction start date for the BPACC is currently unknown.
Would State Government funding Stop flights coming interstate?
The City has not received the $9.5m from the State Government for the new airport terminal building and the Minister for Regional Development has indicated that the funding will not be released by the State until such time as the Jetstar Melbourne/Busselton service is evaluated and further flight agreements signed. It is therefore unlikely the City will receive this funding for at least 3 years. The City has constructed an interim low cost terminal building to support commencement of the Jetstar Service once COVID-19 restrictions are relaxed.
As the City was advised by the State Government that the $9.5m funding would not be forthcoming until the new air service is evaluated, the City suggested the repurposing of the terminal funding toward is the BPACC to stimulate the economy and support recovery efforts. The City also requested that the $9.5m funding be forthcoming when there was demand for the new terminal. The City has since advised the State that it has reconsidered its request and prefer that it remain with the Airport project however funding still be allocated for the BPACC.
Is this the best time for the City to be taking out a substantial loan?
The time to build is now noting that the full draw down of the loan would not take place until construction is complete in 2 years. Interest rates have fallen to an historic low of approximately 2%, a standard loan facility of $15M has been modelled over a 20 year term, fixed at 1.95% per annum. In addition, the benefits of a longer term loan enable intergenerational contribution which is only fair given that future generations will also benefit from the new facility. Should we delay this project and interest rates were to rise to just 5% then that delayed decision could cost the rate payers a further $6m. It should be noted that external funding sources are also being explored. It may be the case that the City does not need to take out a loan of $15m to advance the project. The loan could be significantly lower, or the full extent not required at all.
What will be the impact on my rates?
At 2%, fixed over 20 years, the cost of the construction loan can largely be absorbed by the City of Busselton with little impost on ratepayers.
Over the next few years several higher interest rate loans will be repaid by the City. Given this and the fact that repayments of the new loan will not commence for two years, we do not see any significant change in rates associated with loan repayments on the construction loan.
There will be ongoing costs to ratepayers associated with operating and maintenance as is the case for all community assets. We estimate that average general rates will increase by $40 in the first full year of the venue’s operation. As the ratepayer base expands with population growth, it could be well less overtime.
Importantly the capital costs associated with this development will be shared across generations of users – they are not incumbent on current ratepayers.
Is the City in a financially strong enough position to take on more debt?
The City of Busselton’s financial position is solid.
The Financial Health Indicators on My Council do not take into consideration cash reserves. The City of Busselton has very healthy cash reserves of over $55million. If these reserves were taken into account on the My Council site, the City would rate as one of the most financially healthy Local Governments in the State – the WA Local Government Association has engaged a consultant to investigate the way ratios are calculated in a LG setting to provide a more accurate report to stakeholders.
Additionally the indicators do not take into account the relative “youth” of the City’s considerable asset base. The City has been through a significant capital construction program over the past 10 years. As these assets are new, less renewal costs are being spent on the existing assets.
The City’s Debt Service Coverage Ratio is more than 2 times better than the accepted ratio set by the Department and the City’s external auditor has stated over consecutive years, that while the City of Busselton’s current ratio is low, it’s significant cash reserves show that it is in a strong financial position.
How many people will be employed during construction?
120 full time equivalent positions are forecast to be created during construction - 41 directly and 79 indirectly.
The $10.35m funding from the Federal Government was granted on the basis of creating significant employment during construction and then ongoing, with a requirement to report back and also quantify jobs created for youth and our Aboriginal community. This will be a priority.
How many new positions will be created once the new facility is operational?
The current BPACC design is expected to deliver around 45.3 FTE in direct and indirect ongoing employment and Gross Value Add to the Busselton economy to the value of $3.4 million annually under a 7% discount rate, with a Benefit Cost Ratio of 2.01. This demonstrates the project is a sound economic investment, as well as providing significant social benefits in terms of increasing participation in culture and the arts and connecting the community.
Has the Project been properly investigated?
Extensive research, market analysis and industry consultation has been undertaken over the past decade. In 2016 the South West Development Commission identified and accepted a performing arts and convention centre in the City of Busselton as a major priority alongside the airport upgrade (South West Regional Blueprint). Since then the City has developed two project business cases. The first secured $10.35m in Federal funding and the more recently updated version is being considered by the State Government now. You can view the most recent business case in the Your Say library here.
Over the years we’ve sought input from industry experts and visited similar centres operating across the state and country. We looked very closely at what works – and what doesn’t! It was clear from these investigations that designing a fit-for-purpose facility was essential to its success.
City has liaised particularly closely with the Glasshouse in Port Macquarie which is a similar-sized regional City with
many like attributes. You can read more about the Glasshouse here
Underpinned by infrastructure like a passenger-ready regional airport, a multi-million dollar foreshore upgrade, future hotel developments and a strong events and tourism profile, the case for the Busselton Performing Arts and Convention Centre is very robust.
What has been the level of community involvement?
Community engagement on this project extends back to 2008. Visit the document library to view a timeline of engagement and decision making associated with the BPACC.
Where will everyone park?
Parking has been carefully considered and will be catered for by: