1. Purpose and intent of the policy
To ensure that tenures for land and properties owned or controlled by council, are undertaken in accordance with applicable legislation and conform with council delegations and powers, in a manner that secures appropriate and equitable consideration of tenures and risk management for council.
This policy is intended to maximise the use of council’s commercial and community assets in a responsible manner and be consistent with the Council Plan 2021-25 and council’s 2022 Asset Management Plan and Asset Management Framework.
2. Policy objective
The Commercial and Community Property Leasing Policy (policy) is designed to outline and support council to administer the granting of leases for council controlled land and properties.
3. Who this policy applies to
This policy is applicable to all council owned and occupied land and properties, including where council acts as the Committee of Management on Crown land.
This policy does not apply to premises that are exclusively occupied by council operated services such as pre-schools, libraries and maternal child health services.
Committees established by council under the Local Government Act 2020 are not considered to be occupants under the terms of this policy. These committees operate through a delegation of duties and powers from council or the Chief Executive Officer under specific requirements of the Local Government Act 2020.
In all other cases, there are no exceptions to this policy.
4. Definitions of key terms and acronyms used within this policy
CEO
Chief Executive Officer
Commercial activity
Council recognises that many community groups conduct activities in order to generate income and the surplus proceeds are reinvested in pursuit of the group’s service goals. These activities include the sale of goods (such as food and alcohol), conducting raffles, “sub-leasing” space to others (such as a café operator) and holding events (such as festivals and concerts).
Conflict of interest
A councillor or council employee who has an interest, pecuniary or otherwise, that could conflict with the leasing process must declare the conflict.
Council
Moyne Shire Council.
DEECA
Department of Energy, Environment and Climate Action
DCG
Director of Corporate and Governance
Lease
A lease of land (with or without buildings) either owned or controlled exclusively by council freehold or Crown land of which council is Committee of Management. It specifically excludes arrangements of Community Asset Committees and excludes licences with sporting clubs and other community groups that have defined use of council controlled land.
Lessee
A lease is a right granted by the owner of the land (landlord) to another person (tenant) to have exclusive possession of that land, or part thereof, for a fixed duration in return for rental payment. A lease creates an interest in land that is binding on third parties and is capable of being assigned, unless the lease specifies to the contrary.
Licence
A licence is a contractual agreement between council (licensor) and another party (licensee) that binds both parties to the terms of the agreement. A licence does not grant exclusive possession, nor does it create or transfer an interest in the land.
MFP
Manager Finance and Property.
Hire / occupancy agreement
A hire / occupancy agreement is an agreement that is not a residential tenancy agreement and is not subject to residential tenancies legislation. It will generally apply for an occupancy that occurs for a portion of the year, such as the hire of a facility.
PA Officer
Property and Assets Officer.
Relevant service manager
Person responsible for the delivery of the service that relates to the lease, i.e. recreation, port, caravan park, quarry or miscellaneous.
Valuation
The “market value” which is equal to the highest price in terms of money which a property will bring in a competitive and open market, under all the conditions requisite for a fair lease. A valuation is provided by a qualified and certified professional valuer.
5. Policy details
Responsibilities
The Director of Corporate and Governance (DCG) is responsible for all Moyne Shire leases supported by the Manager Finance and Property (MFP). This includes drafting of leases, reporting to Council, signing and sealing of leases and the ongoing management, treatment of options and review/renewal of leases. The MFP develops the lease intent and detail in liaison with the relevant asset service manager.
Council will determine all leases by formal resolution, unless by specific delegation to either the CEO or DCG.
Only council has the authority to enter into a lease of council owned or controlled property. Community asset committees, licensees, or other asset management groups do not have authority to lease or sub-let Council owned or controlled property.
Any leases of Crown Land of which council is the Crown appointed Committee of Management, must have the explicit and documented authority of DEECA for a lease to be granted, and must be in accordance with the relevant sections of the Crown Land Reserves Act 1978, and the Leasing Policy for Crown Land in Victoria 2018.
All property leasing matters, documents, negotiations, execution and ongoing lease management are the direct and sole responsibility of the MFP. Service managers are responsible for the management of the specific service being delivered from a property. Service managers are required to direct all leasing matters to the MFP.
Implementation
This policy will be the responsibility of council’s Manager Finance and Property and will be administered by the property team in conjunction with the various relevant internal departments.
Each lease or licence may be subject to three separate review processes; internal referral, council approval including relevant statutory permits where applicable and the statutory obligations under the Act.
a. The internal referral investigations process will provide relevant departments within council an opportunity to comment and provide any additional information relating to the proposed lease or licence.
b. Where a proposed lease (or licence) receives support from internal departments through the internal referral process, a report may be required to seek council approval.
c. Where required, the proposal will also be subject to the statutory obligations under Sections 115 of the Act. Section 115 will allow for persons to make a submission in relation to the proposed lease or licence.
d. Where the proposal receives support from internal departments through the internal referral process, a report may be required to seek council approval or alternatively a delegate of council may commence negotiations and approve the licence.
Legislation
Local Government Act 2020
Local Government legislation defines how council may enter into lease agreements. The main provisions for the leasing of land are defined under in Section 115 of the Local Government Act 2020. The Acts and regulations outline the parameters of the power council has to enter into a lease.
Any lease may be awarded under a competitive and transparent procurement process unless council and / or DCG has determined there are circumstances that obviate that necessity (subject to relevant legislation and/or policy).
Crown Land (Reserves) Act 1978
The leasing provisions in the Crown Land (Reserves) Act 1978 are used to authorise a wide range of leases for commercial and non-commercial purposes on reserved Crown land.
Agreements involving Crown land where council is the Committee of Management must be prepared in accordance with the guidelines provided by the DEECA . All leases situated on Crown land will use the standard lease agreement as prescribed by DEECA . Initial consent is required by Deeca through a ‘grant and purpose’ request by council, outlining the proposed terms and conditions of the lease.
Once initial approval is given by DEECA, and the documents have been compiled, signing of the agreement can occur by council, the tenant and then final approval is given by DEECA under the Crown Land (Reserves) Act 1978 by the minister or their delegate.
Leasing Policy for Crown Land in Victoria 2023
The objective of this policy is to provide a framework for the leasing of Crown land by formalising ‘Crown Land Leasing Principles’ at a state-wide level.
Land Act 1958 (Vic)
The Land Act 1958 involves the sale, grant and occupation of unreserved Crown land, Crown water frontages and government roads in Victoria.
Planning and Environment Act 1987 (Vic)
The Planning and Environment Act 1987 applies to both Crown land and freehold land. This Act outlines the planning use, development and protection of land in Victoria.
Occupants need to comply with the Moyne Shire Planning Scheme and obtain any required planning permits associated with the use and development of leased premises.
Retail Leases Act 2003 (Vic)
The Retail Leases Act 2003 governs the way in which retail and commercial premises are leased and will apply to some council leases.
Marine and Coastal Act 2018 (Vic)
The Marine and Coastal Act 2018 binds the Crown and provides an integrated and coordinated approach to planning and managing the marine and coastal environment by:
- enabling protection of the coastline and the ability to address the long-term challenges of climate change, population growth and ageing coastal structures; and
- ensuring that partners work together to achieve the best outcomes for Victoria’s marine and coastal environment.
Gender Equality Act 2020
Council has obligations under the Gender Equality Act 2020. A Gender Impact Assessment may be required when leasing decisions could have a direct and significant impact on the community.
Council’s Community Engagement Policy
As required under the Local Government Act 2020 council adopted a Community Engagement Policy in 2021. Community engagement for general council business and services will align to the Community Engagement Policy and its objectives. Consultation and notifications required under other legislation will remain in place, but Policy engagement principles will be applied where appropriate. Proposed leasing changes that could have a direct and significant impact on the community must include a fit for purpose engagement process that seeks direct input from affected parties.
Evaluation process
In assessing a leasing applicant’s proposal, council will use the following evaluation criteria (not listed in any particular order of importance):
The applicant’s ability to meet the terms of the lease (or licence);
- the applicant’s ability to meet council’s corporate and strategic objectives;
- the applicant’s ability to demonstrate relevant community, economic and environmental benefit of the proposed use of the facility;
- the applicant’s ability to demonstrate that the facility will be developed, managed and maintained in accordance with council’s best practice for facility and asset management;
- proposed uses have the potential to maximise facility use through increased community participation or combined services co-location where appropriate; and
- the applicant’s preferred terms (duration and financial return to the council).
Council reserves the right to assess the merits of each proposal by taking into account any matter, fact or circumstance, which council may deem appropriate, in its absolute discretion.
Council will not approve of any proposal, applicant or review that does not conform to the requirements set out in the documentation, relevant legislation and/or leasing policy or which represent unacceptable reputational, legal, financial or other risks to council or the community.
Each proposal, applicant or review will be required to acknowledge that council is not obliged or required to accept any proposal submitted. The submission of a proposal, applicant or review will not give rise to any contract governing, or in any way concerning, the leasing process, or any aspect of the leasing process.
Notice of intention
Prior to the assessment of any lease, or any notice of intent to lease, a valuer may be required to undertake a rental valuation of a lease. A formal valuation may not be required if the DCG determines that the annual estimated rental is less than $2,000 and comparable current rental information is available.
Rental charges
Unless a lease is determined through a competitive process, the rental charges will be in accordance with the “tenant type” and the “activity” being carried out, all in accordance with council's – Property Management Policy 2024-2028.
All rental income will be paid to council’s general income account and not directly to any specific person, group, committee, manager or asset. Council may determine that all or a proportion of the rental income received may be reserved for future renewal or upgrade investment for that specific land or property.
Leases must include a rental review clause and adjusted using the consumer price index, a set percentage, and/or a market valuation review.
Legal costs and operating costs
Commercial lessees that seek exclusive use rights over council property on a commercial basis are responsible for all legal costs and outgoings such as municipal rates and charges, electricity, water, telephone, internet, sewerage and insurance as examples.
Commercial lessees that accept council’s offer to lease will meet their own legal and administrative costs associated with a new lease. Council in this circumstance will meet their own legal and administrative costs.
Council will pay all legal and administrative costs for establishing a lease where the premises are leased wholly or predominantly by a group or committee that exists for the purposes of providing or promoting community, cultural, sporting or recreational or similar facilities or objectives.
Substantial variations to the standard lease may incur increased legal costs to be passed on to the lessee and will be judged on a case-by-case basis.
Council may also claim from the tenant its reasonable legal costs incurred in connection with an assignment of lease or sub-lease of the premises or variation to a lease as a result of a lessee’s request.
Assignment and sub-letting
Leases may only be assigned or sub-let with council and or where applicable, with consent from the DEECA to approved organisations for approved purposes and will be subject to approved terms and conditions. Generally, council will use the same criteria to assess the sub-lease as the head lease.
Council reserves the right to request further information based on the information provided.
It is essential that council and the DEECA / minister have all the information required in order to consider consent to the proposed arrangement.
Licence / hire and / or occupation agreement
A licence or hire, or an occupation agreement may be appropriate than a lease agreement when individual circumstances surrounding the land or property and the needs of the users are considered. These factors will guide council decision making on the appropriate type of tenure agreement.
Maintenance responsibilities
Each tenant is required to maintain the facility in accordance with a maintenance schedule attached to an agreement, using the services of registered and qualified tradespeople to undertake works that require a ‘certificate of compliance’. Works requiring other approvals including planning or building permits, environmental health permits and building certificates must also be provided to council as required.
Schedules will specify responsibilities of council and tenant including responsibility for maintaining the structure including the building shell; fit out including fixtures and fittings; and grounds including ground surface. All tenants signing leases following commencement of this policy will be required to contribute towards maintenance of their facility.
Council will assess its maintenance responsibility in line with the terms and conditions agreed to with the tenant, the rental category they fall within and those buildings and/ or structures, which are council assets (council owned). Council reserves the right to schedule maintenance or replacement of items in accordance with budget considerations.
Renewal and end of lease arrangements
A report to council may be submitted prior to any extension or amendment to an existing lease, or a new lease, and may be subject to review of all tenure terms and conditions.
The renewal process may begin between three (3) to six (6) months before the end of the current lease to ensure the best outcome for council is achieved.
In most cases, where the lease terms state when to exercise a further option, the tenant must:
- Be in no breach of any lease term; - Not be in breach of any terms of the lease
- Give notice to council within three (3) and six (6) months before the end of the lease – notice given before or after the time period may not be considered a valid notice;
- Where the option is exercised, the same lease terms apply for the new lease, unless other negotiated and formally agreed, and may be subject to the rent being adjusted;
- Whilst there is no requirement for council and the tenant to vary any of the other lease terms, there is nothing to prevent the terms being varied where both parties agree.
A tenancy condition report may be prepared by council at the beginning of each lease renewal subject to prior assessment.
At the termination of an agreement, an inspection of the premises and/or land will take place to ensure vacant possession and the condition of the premises and/or land is that of the terms and conditions of the agreement.
Terms and conditions
The terms and conditions of all council leases will be assessed on the nature of the agreement. Additional provisions will be included when necessary to meet specific requirements of council or the other party involved.
Disclosure of interest
Councillors and council staff will at all times avoid situations that give rise to an actual or perceived conflict of interest. Councillors and council staff involved in the leasing process must avoid conflicts whether actual or perceived and declare that there is no conflict of interest or specify any conflict by completing the disclosure of interest form.
Training requirements
Service managers should complete a property lease training course. Refresher training maybe required if significant changes in legislation, policy or procedures occur.
6. Relevant legislation / references
External references
Local Government Act 2020 (Vic)
Local Government (General) Regulations 2015 and/or future regulations
Land Acquisition and Compensation Act 1986 (Vic)
Subdivision Act 1988 (Vic)
Land Act 1958 (Vic)
Crown Land (Reserves) Act 1978 (Vic)
Leasing Policy for Crown Land in Victoria 2018
Land Act 1958 (Vic)
Planning and Environment Act 1987 (Vic)
Retail Leases Act 2003 (Vic)
Road Management Act 2004 (Vic)
Marine and Coastal Act 2018 (Vic)
Gender Equality Act (Vic) 2020
Related policies
IE-04 Property Management Policy 2024
Lease Operational Procedure 2024
Asset Policy 2022
Community Engagement Policy 2021
Property Framework Strategy 2024
7. Gender impact assessment
A gender impact assessment was not undertaken for this policy
8. Human rights commitment
It is considered that this policy does not impact negatively on any rights identified in the Charter of Human Rights and Responsibilities Act 2006.
9. Policy owner
Manager Finance and Property
10. Document history
Version 001
Policy developed
Version 002
Date endorsed – January 2020
Reason for change – council review period
Version 003
Date Endorsed – January 2024
Reason for change - council review period