THE HILLS BOWLING CLUB RENEWAL PROJECT
EXPLANATORY MEMORANDUM TO MEMBERS
17th October 2019
Introduction
The purpose of this Explanatory Memorandum is to provide members with all the information needed to enable a reasonable member to come to an informed decision as to whether he/she approves of the Concept Scheme and Commercial offer by Arden. The Board is of the opinion, supported by our legal representatives and consultants, that this document must be in plain English language that can be unambiguously understood by all members.
This document also sets out the resolutions to be voted on by members at the General Meeting to be held on Monday 11th November, 2019.
Important note. During the negotiations with Arden Sporting Clubs Pty Ltd and on advice from our legal team and other consultants, some information received by the Board has been deemed Commercial-In- Confidence and therefore will not be made available to members. Throughout this Explanatory Memorandum, a note is made with respect to any information and/or document deemed Commercial-in- Confidence.
Definitions
Exclusivity Deed
The document signed by the Club and Arden dated 8 January 2019, which sets out the terms and conditions for negotiating the proposed redevelopment of the Property. This document is deemed to be Commercial-in-Confidence.
Concept Scheme
The scheme for the redevelopment of the Property including the general layout of the clubhouse, greens, car parking, apartments, etc.
Commercial Offer
The offer made to the Club by Arden contained in this Explanatory Memorandum in accordance with the details set out in this document.
Project Delivery Agreement
The document which established the legal and contractual framework for the project to be entered into on or before expiry of the Exclusivity Period, or by 18 November 2019 in accordance with the Development Programme.
Core and Non-Core Property
Section 41E of the Registered Clubs Act states that core property of a registered club means any real property owned or occupied by the club that comprises the premises of the club, as well as any facilities provided by the club for the use of its members and their guests.
Registered Clubs Act Rules Associated with the Project
The Registered Clubs Act specifies how property may be disposed of in order to protect the interest of members and protect them from unscrupulous, irresponsible and dishonest Boards and management.
Section 41E of the Act states that a registered club must not dispose of any core property of the club unless:
(a) the property has been valued by a qualified valuer, and
(b) the disposal has been approved at a general meeting of the ordinary members of the club at which a majority of the votes cast supported the approval, and
(c) any sale is by way of public auction or open tender conducted by an independent real estate agent or auctioneer.
With respect to each of the above points:
(a) The Board has had an independent qualified valuer undertake a detailed valuation. This valuation has determined that the property owned by the Club under the current zoning is $8.6M
(b) The Board is proposing that the general meeting to be held on 11th November 2019 the members approve of the disposal of property
(c) There will be no sale of the property by public auction or open tender
The Registered Clubs Regulations provides that, in place of the above, core property can be disposed of if
"the terms and nature of the disposal (including details of the parties, property, price and valuation) are disclosed to the ordinary members of the club, and the disposal is approved at a general meeting of the ordinary members of the club".
Club’s Constitutional Obligations
The Club’s Constitution of June 2019 has a number of obligations and responsibilities of the Board when dealing with a club development such as this.
The Constitution states the Board shall have power from time to time to:
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sell, lease, exchange or otherwise dispose of any furniture, fittings, equipment, plant, goods or other rights (property or otherwise).
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sell, lease, exchange or otherwise dispose of any land belonging to the Club provided that the power of the Board to dispose of any land shall be subject to the requirements of the Liquor Act and the Registered Clubs Act.
However, the Board cannot exercise any powers as described above unless the exercise of the power has first been approved by an ordinary resolution passed at a general meeting if any of the following apply to the proposed exercise of the power:
a. The purchase in a single transaction of land and/or buildings at a cost exceeding 7.5% of the value of the nett assets of the Club as shown in the most recent balance sheet of the Club laid before an Annual General Meeting. The Board deems this to be not applicable for the project as the Club is not purchasing land and/or buildings.
b. The undertaking of building works where the estimated cost of such building works exceeds 7.5% of the value of the Nett Assets of the Club as shown in Most Recent Balance Sheet. The Board deems this to be not applicable as the building works are not costing the Club as the Developer is fully funding the project.
c. The sale, exchange or other disposition of all or any of the property and/or rights of the Club having a value which exceeds 10% of the value of the fixed assets of the Club as shown in the Most Recent Balance Sheet. The Board accepts that the Club is disposing of property with a value in excess of 10% of the value of fixed assets.
Due Diligence Report
Suburbanite was engaged to advise the Board on the following areas as part of the due diligence process;
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Defects risks and strategies to mitigate - the board is selecting the most appropriate measures to mitigate this risk
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Arden’s track record and other projects – the board is satisfied with this information
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Mortgage security risks – various strategies were presented and it is being deferred by the board to
the clubs’ solicitor for further advice and will be incorporated into the PDA
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Preliminary construction cost analysis has been undertaken by a suitably qualified Quantity
Surveyor for the Board’s consideration.
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An independent property valuer has determined the value of the land with the current RE2 zoning
is $8.6M.
Suburbanite has provided further due diligence on the following areas for the board to make decisions upon;
1. Review of the economics of the project
2. Review of the profit and risk allocation in the commercial deal
3. Provided advice on the cost benefit analysis of the commercial deal
4. Undertake sensitivity analysis on the financial elements of the project.
Suburbanite has submitted a detailed Due Diligence report to the Board. The Board considers this document to be Commercial-in-Confidence.
Property Ownership Split
The Club currently owns all the land and its current facilities, comprising of:
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Club House and facilities;
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Bowling greens; and
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105 on-grade carparks.
On completion of the development, the Club will have full ownership and title of lot(over5 levels) in the redeveloped Property, including the following:
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Upgraded Club House and facilities;
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Outdoor and indoor bowling greens; and
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200 undercover carparking spaces.
These facilities result in a significant increase in the gross building area of the Club from the existing facilities.
The Concept Scheme
Arden have presented the Concept Scheme to the Club which has been presented to members at three information sessions. In essence the Scheme includes:
Basement Carpark and Loading Dock
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Level 2 – Club parking spaces and plant
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Level 1 – Club Parking spaces, loading dock, driveway and lobby
Clubhouse Lower Ground Level
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Bowling member’s lounge
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Administration and Boardroom
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Amenities and bowler’s lockers
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Back of House (Prep kitchen, storage, etc.)
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Enclosed terrace and grandstand
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Walls and circulation
Clubhouse Ground Level
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Foyer and reception
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Social member’s bar, lounge and children’s play area
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Restaurant
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Back of House, Kitchen, servery and amenities
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Indoor dining and covered dining terrace
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Walls and circulation
Clubhouse Level 1
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Foyer
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Sports bar
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Function rooms
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Gaming areas – internal and external
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Back of House, Kitchen and amenities
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Covered terrace
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Walls and circulation
Bowling Greens and facilities
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Enclosed bowling green with surrounding circulation and terraced seating (Basement Level 1 and Lower Ground)
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Open Air Bowling Green with surrounding circulation and seating (Ground Floor)
Resolutions
Preamble to Resolution 1 – Arden have prepared the Project Concept Plan and Commercial aspects which have been endorsed by the Board at a meeting held on 12th September, 2019. The Concept Plan has been presented to members at three information sessions and include a new clubhouse, bowling greens, car park and associated facilities. We will be asking members to vote on the acceptance of the Arden Concept Plan which includes the design of the Club and bowling facilities as well as the commercial outcomes for the club.
Resolution 1 – That the Club approve the Concept Plan and Commercial Proposal submitted by the Arden Group.
Preamble to Resolution 2 – We be asking members to give the Board permission to negotiate, agree, approve and implement a Project Delivery Agreement with Arden which sets out how the development will proceed. In effect it is the formal Contract between the Club and Arden and defines how we establish the necessary contractual arrangements between the Club, Arden, the financiers, and subcontractors.
Resolution 2 – That the Club authorise the Board to negotiate the Project Delivery Agreement and when satisfied it meets all Club requirements, execute and implement the Agreement, without the need for further member approval.
Preamble to Resolution 3 – As set out in the Constitutional Obligations above, the sale, exchange or other disposition of all or any of the property and/or rights of the Club having a value which exceeds 10% of the value of the fixed assets of the Club as shown in the Most Recent Balance Sheet. The Board accepts that the Club is disposing of property with a value in excess of 10% of the value of fixed assets.
Resolution 3 – That Members approve the disposal of property of the Club despite having a value which exceeds 10% of the value of the fixed assets of the Club as shown in the Most Recent Balance Sheet.
Preamble to Resolution 4 – We own all of our property and it is currently deemed “core” property as per the Registered Clubs Act. To enable the project to proceed we will need to convert the “core” property to “non-core” property and this can only be done by a vote of the members. Once the project has been completed, we will change the property on which our club sits back to core property. We will be asking members to vote on the conversion of all of our property from “core” to “non-core”. This will not change the value of our assets.
Resolution 4 – That all property of the Club currently classified as Core property be reclassified Non-Core until the completion of the Project.
Board Recommendation
The Board has voted to accept the Arden Concept Scheme and Commercial Offer. Accordingly, the Board recommends a “YES” vote for all four resolutions by members present at the General Meeting on 11th November.
Ken Carroll
Chairperson
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