Council releases reports on Blue Haven Bonaira development

Kiama Council

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Kiama Council has released historical council reports relating to the design, construction and funding of Blue Haven Bonaira.

Blue Haven Bonaira development – cash position review contains 19 reports dating from May 2003 to December 2017.

Many of the reports were not made public at the time due to commercial-in-confidence reasons, which have now elapsed.

Council has now published them now to provide our community the facts of the planning, funding and building of Blue Haven Bonaira.

Further, communicating the final costs / construction costs for Bonaira is an action of the Strategic Improvement Plan and this report completes that item.

In summary the Blue Haven Bonaira development – cash position review concludes the following

  • The Blue Haven Bonaira project experienced escalating construction costs.
  • Council underestimated operational and staffing costs and did not correctly project revenue generation for Blue Haven Bonaira.
  • Council received advice to separate the ledgers of Council and Blue Haven as early as May 2003.
  • Significant internal loans (or working capital) from Council operations were used to bridge funding shortfalls, which had a significant impact on Council’s cash position
  • In September 2014, Bonaira was projected to cost $58m.
  • The project’s final cost, noted in Blue Haven’s 2019-20 annual report, was $106m.
  • The project was funded via Government loans, grant funding, RADs and ILU entry payments and Council reserves. However, our funding did not meet the project costs, creating a cash shortfall of approximately $26m.

“It is unclear from the information currently available, how the shortfall was intended to be accommodated,” Mayor Neil Reilly said.

“What we can say is that a significant cash shortfall for Council from the Blue Haven Bonaira project clearly exists.”

CEO Jane Stroud said: “We have been as transparent as possible with our community. Releasing this information is part of that and completes an action of the endorsed Strategic Improvement Plan.”

“We can’t go backwards. I am giving our community the facts, and we continue the important business of running Council and Blue Haven day to day.”

“My team and I are fully focused on moving forward and creating a stable financial situation for Council now and for many years to come.”

The Blue Haven Bonaira development – cash position review, including all 19 reports, is in the Business Papers (supplementary) for our Ordinary Council meeting on 28 June 2022 and will also be made available on our Blue Haven FAQs page: https://www.kiama.nsw.gov.au/bluehavenfaqs

Kiama Council has contracted KPMG to help separate the finances for Council and Blue Haven, with a projected start date of 1 July, which is also part of our Strategic Improvement Plan.

Related reports that were also endorsed in last night’s Council meeting include:

  • A report on the progress made for exploring options for Blue Haven Illawarra, including lease, sell, joint venture, or retain, with steps taken to commence to prepare a business case based on these options.
  • A report on a new, draft Prudential Standards Policy for Blue Haven, which states how the business will treat RADs and ILU entry payments. A percentage of these funds will be allocated to a restricted reserve and Council is seeking feedback on what percentage the community expects this to be.

Council has also completed its first round of community engagement with the residents, clients, families and staff of Blue Haven with another round due shortly.

We will let the community know how you can get involved. Sign up to our e-newsletter Kimunico for updates.

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