Community groups to face new rent bills as Burnside Council considers abolishing peppercorn leases

A local council is considering scrapping peppercorn leases that could result in higher fees for grassroots clubs and services. Vote in the poll.

A retiree playing bowls on the bowling green. Picture: iStock.

An eastern suburbs CFS brigade, bowls club and kindergym are among dozens of community groups facing new rent bills of up to $20,000 to lease council-owned buildings.

Burnside Council wants to scrap peppercorn leases for 35 tenants in its community buildings and clubrooms and introduce a new more “financially sustainable” rent model.

Under the draft policy, tenants would continue to be responsible for facility maintenance, but they would contribute $170,000 per year in rental income, on a cost recovery basis.

The money would go into a dedicated sinking fund – managed by the council – with rent used for building upgrades or renewals of the facility from which they were derived.

The changes would affect 17 sports clubs, four kindergartens and 14 community organisations, with rent ranging from $434 to $20,190 per year, according to council documents.

The policy, which was not released for community consultation, but was acknowledged by the council as “a significant change” was to be phased-in to align with lease renewals.

Burnside Kindergym president Sonia Dryden-Bowen said she was surprised to learn they faced a potential rent bill of $4611, after receiving no correspondence from the council.

“It was a shock. We’re not against paying rent, but we’d like to understand how they got to that figure,” Ms Dryden-Bowen said.

“For us, it means we’ll have to pass on an increase in our fees and it’ll push us over the GST threshold of being a not-for-profit, so we’ll also have to pass on GST.

“We’ve tried to keep our fees as low as possible, because we want people to be able to afford to come, especially kids in care and those on the NDIS who use it as part of therapy.”

Kensington Gardens Bowls and Tennis Club president Ken Watson said it was a “hell of a shock” to learn of their potential rent figure of $20,190.

“We accept the reality that the peppercorn lease is finished, but it’s what form the new lease will take that we’ll have to work out,” Mr Watson said.

“The idea of a sinking fund is OK as long as it’s set up in a way that makes sense to us.”

The policy was recommended for approval at Tuesday night’s council meeting, however the matter was tied with Mayor Anne Monceaux using her casting vote against the motion.

A variation to the motion was supported, which was for the council to undertake consultation with lessees on the policy’s key changes and a further report be provided to the councillors.

Burnside chief executive Julia Grant said the policy review was to establish an “equitable and financially sustainable” way to manage its facilities and “whether it is appropriate to charge a lease fee to clubs that have exclusive access to facilities on community land”.
“Should the council ultimately decide to adopt changes, including a potential cost recovery model, it will work closely with tenants to ensure any implementation is smooth, guided, and well-supported,” Ms Grant said.

Originally published as Community groups to face new rent bills as Burnside Council considers abolishing peppercorn leases