Bay Venues operates the Mount Maunganui Beachside Holiday Park, at the foot of Mauao. Photo / File
Bay Venues operates the Mount Maunganui Beachside Holiday Park, at the foot of Mauao. Photo / File
Council-owned businesses such as the iconic Mount Beachside holiday park and a popular gym and swim school should be sold, an independent review recommends.
A strategic review of Tauranga City Council's separate leisure and events facilities arm, Bay Venues Limited, has found it should be shut down and operations broughtback in-house at the council.
Some of Bay Venues' commercially-viable standalone businesses could be packaged up for sale or lease, with the money potentially going towards upgrading other city facilities.
But council staff have backed keeping Bay Venues, arguing that any attempt to bring even part of its biggest council-controlled operation (CCO) back in-house will increase its need for rates funding.
The commission governing the council is set to decide Bay Venues' fate in a meeting on Tuesday.
Bay Venues was established in 2013 to manage services and 24 facilities across Tauranga, including five swimming pools, 11 community centres and halls and Baypark. It employs 325 people and will receive close to $10 million in ratepayer funding in the 2020-21 financial year. It also helped establish the Bay Dreams festival.
Music festival Bay Dream is held at Baypark. Photo / George Novak
But a series of reviews has found it lacks strategic direction and struggles to balance the sometimes competing interests of delivering efficient community services and maximising commercial returns.
The latest review was by independent consultancy McGredy Winder in September. Last year, partner Peter Winder led a review that advised the Government to sack the council's elected members and replace them with an appointed commission.
The McGredy Winder report on Bay Venues, which was previously confidential but has now been published, found the organisation's business model was "not sustainable".
The reviewers gave the council three options for the future of the organisation, recommending the third: "wind up" the entity and bringing operations back in house.
They suggested selling some standalone businesses including, for example, the Mount Beachside Holiday Park, swim school Bay Swim, gym Clubfit, a catering business and an audiovisual outfit.
They said this would be pricey up-front but claimed it would have long-term benefits.
Option two would bring some activities back in house and give Bay Venues a stronger commercial focus, while option one would retain the organisation with an "enhanced" status quo.
Tauranga City Council commission chairwoman Anne Tolley. Photo / George Novak
A PWC report comparing the financial impact of the options found the potential cost to the ratepayer for option one was nil. Option three had a decrease or increase of $300,000.
Council staff have backed the status quo enhancement option, which would avoid a restructure, and added a few extra recommendations, including slimming down Bay Venues' board and giving it a stronger community focus.
Financial modelling by council staff found bringing any part of Bay Venues back in house would require more rates than budgeted for the next year.
In a report for the meeting, council general manager of community services Gareth Wallis said an overall judgment of the suggestions went into their recommendation.
Part of this was the Recreation, Sport and Leisure Consultancy benchmarking report which showed BVL managed facilities appeared to fare well compared to other council sport and recreation networks.
Wallis said the key changes under the staff recommendation would be:
• Restructuring and simplifying the organisation's financing and funding model and providing additional rates-funding to cover the real cost of non-commercial activities; • Developing a clearer statement of intent and performance indicators focused on delivering desired community outcomes; • Development of a more integrated governance model, with a new Board to be appointed with a mandate to broaden the organisation's focus on delivering non-commercial services and activities contributing to community wellbeing.
"The intent of these changes is to ensure that Bay Venues Limited's facility management activities are sustainable, community and commercially-focused and will continue to deliver significant benefits for the city," Wallis said.
Bay Venues interim chief executive Justine Brennan. Photo / George Novak
In a statement, the Bay Venues board and management supported the option recommended by council staff.
"The Bay Venues model enables a dedicated focus on the management of community facilities and has resulted in an outstanding track record in terms of customer satisfaction and providing value to the ratepayers of Tauranga and users of our facilities.
"We look forward to the commissioners' decision and the opportunity to work with council to enhance the current CCO model. We are hopeful that following this decision, we will be able to continue the important work of running the network of community facilities for the benefit of the people of Tauranga."
Bay Venues Limited funding:
Bay Venues receives ratepayer funding through grants for operations, renewals and debt retirement as well as a community outcome subsidy. It has other sources of income including user fees.
