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Media Release -  State Government of Victoria - 22 August 2017

Lily D'Ambrosio

Minister for Energy, Environment and Climate Change

Minister for Suburban Development

Media Release New-Body-To-Oversee-Caulfield-Racecourse.pdf


The purpose of this Statement is to set out the current position in relation to negotiations between the Caulfield Racecourse Reserve Trustee (CRRT) and the Melbourne Racing Club (MRC).

Background

The MRC held a lease over parts of the course including the Grandstand complex, including the Administration office site, Tabaret building site, Eastern car park site for a period of 21years concluding on 22 October 2012. 



In addition, the MRC have a lease for the Neerim Road & Western stables for a 21 year period concluding on 15 March 2019 & 27 April 2029 respectively.



The rental received by the Trust under these previously agreed leases (Grandstand and Stables) amounts to $83,946[1] per annum. Additionally, there is a ‘Deed of Maintenance and Development’ between the Trust and the MRC which commits the MRC to do maintenance work on behalf of the Trust to the value of $280,000[2] in the 2012/13 year. The Deed of Maintenance and Development was agreed to in February 1997 and concludes on 16 February 2018.



In late 2011, the Trustee established a ‘Working Group’ to put together a proposal for the Trust in relation to the renegotiation of leases at Caulfield. The ‘Working Group’ comprised three members, one from each of the Trusts constituent parts: MRC, Glen Eira Council and Government appointments.



The starting point for the working group was to establish an understanding of the requirements of Government Policy, and the view of the Department of Environment and Primary Industries. We also sought guidance from the Victorian Government Solicitor’s Office [VGSO] and the Valuer General – Victoria [VG-V]. 



Advice received from the Victorian Government Solicitor’s Office, recommended the Trustee seek a restructure of the existing arrangements. The Trustee came to the view that all leases should be brought into line and that there needed to be a Licence agreed between the Trustee and the MRC in respect of the use of Crown Land, by MRC, not covered under the Lease.



In February 2012 the Trustee also commissioned Charter Keck Cramer [CKC] to prepare a preliminary valuation that was consistent with current government policy. That is, where crown land was being used for commercial activity, a retail rental was to be applied and where there was non-exclusive use, a community rate should apply. This estimated ground rental valuation put the rental (Grandstand and Stables) at $822,000 per annum.



In late 2012, the Trustee and the MRC came to the view that negotiations could not be concluded in time to arrange a new lease prior to the expiration of the existing lease. Agreement was reached, with the Minister’s approval, to put in place a 12 month interim lease on existing conditions to give additional time for negotiations.



Accordingly, an interim lease of 12 months was granted on 23 January 2013 concluding on 22 January 2014



On 4 April 2013 a comprehensive proposal setting out the terms the Trustee sought from the MRC for a new lease was put to a meeting of the Trustee for approval. The meeting voted by majority to endorse the proposal.



On 7 May 2013 a letter from the Chairman was sent to the MRC setting out the Trust’s proposal for the renewal of the lease.

The club did not respond formally, but in meetings between the Chairman of the Trust and the MRC Chairman, the Club advised that it would not agree to the proposal; that this would be a significant and deleterious precedent for all racecourses in Victoria and that this was a matter the Government needed to resolve. 



On 19 June 2013 the Trust by majority resolution commissioned CKC to complete a full valuation on the same basis, that is, to be consistent with Government policy on the lease of Crown Land and to include these terms in the valuation.



The final valuation put the rental at $1,054,000 per annum. In September 2013 the Trustee wrote to the MRC advising the valuation and providing the MRC with a copy of the CKC final valuation.



The MRC responded to Trustees on 23 December 2013. At the same time they commissioned their own document prepared by m3property strategists that put the market ground rental at $100 per annum.



Current position

On 17 December 2013 the Trustee proposed to the MRC the matter be settled by arbitration through the Valuer General – Victoria. 



As the current lease was about to expire (22 April 2014) and the Trustee was concerned at the possible impacts, the trustee wrote to the Minister & the MRC on 25 March 2014 proposing the following course:



That the Minister approve the Trust entering into a short term lease (6 months) on condition that if agreement is not reached, the matter be determined by the VG -V and both parties will be bound by the VG- V determination. 



The MRC responded on 28 March 2014 declining to go to arbitration, but indicated it would be prepared to have the matter determined by the Minister for Environment & Climate Change on advice from the Valuer General - Victoria. 



The Chairman responded on 31 March 2014 indicating that there may be some governance issues with this approach, but if the VG-V determination was made available to both the Trust and the MRC prior to the Minister making a final determination, the Trust would take advice from the Minister and the Department of Primary Industries [DEPI] on this matter.



The Trustee separately wrote to the VG- V requesting an independent review of the CKC valuation.



Representatives had a meeting with the Minister for Environment & Climate Change senior adviser Mr Matthew Berry on 8 April 2014. At that meeting the Trust was advised the Minister’s view was to approve a 3 month lease on existing conditions in order to provide a further opportunity for the Trust and MRC to continue discussions, but that both parties were to make a submission to the VG-V to enable the VG -V to make a determination.



The Trust subsequently received a letter from the Minister for Environment & Climate Change on 14 April 2014 setting out the Minister’s position.



The Chairman responded to the Minister by letter on 29 April 2014.



Currently, the Trust is now working with the Valuer- General Victoria towards a Determination and there are meetings arranged with the MRC to discuss the overall governance arrangements and the conditions under which the MRC will have access to Crown Land that is not covered under the proposed leased areas.





Greg Sword

Chairman

Caulfield Racecourse Reserve Trust






[1] Annual rental in 2013

[2] Amount of $183,000 in 1996 indexed annually by CPI