Utopia burns dollars

A new animal pound could end up costing Baw Baw Shire close to $2 million as costs associated with the facility continue to soar.

And, councillors have been told the pet boarding facility purchased by council to offset the costs of an animal pound is running at a loss.

A report to be presented to council tomorrow indicates a new pound will cost about $741,500 – significantly more than the $150,000 estimated by officers just 10 months ago.

Only last week, council confirmed “$500,000 has been set aside” in the draft 2017/18 budget for a new pound. There is no indication in the report how the additional $241,000 will be funded.

Costs of the new pound are on top of the $1.2 million council paid for the privately owned two hectare site, which includes Utopia Pet Lodge.

Council’s intention was to colocate its animal pound on the Utopia site and generate income to offset the pound service.

Tomorrow’s council report reveals Utopia is “operating at a loss for the year to date.”

As the vision for a combined pet lodge and animal pound continues to burn ratepayers’ dollars, officers also recommend council implements a business model to combine the two operations.

The business model was not done earlier, or part of due diligence during purchase of Utopia, because mayor Joe Gauci said council was on a tight timeframe before caretaker mode ahead of last year’s election.

Council, under the leadership of former chief executive officer Helen Anstis, made the in-committee decision on August 10 to purchase Utopia for $1.2 million and spend an estimated additional $150,000 to “upgrade facilities” for a pound.

Settlement occurred three weeks later on August 31 and three weeks after that council entered into caretaker mode on September 20.

Both the shire’s planning and economic development director Matthew Cripps and Cr Gauci (who also was mayor at the time of purchase) have told The Gazette that “appropriate due diligence” was undertaken prior to purchase.

The Gazette has made several requests for the business plan on which council based its decision to buy the commercial facility. These requests have been denied. No details of the business plan or due diligence supporting the purchase have been made public.

In December, Mr Cripps said “financials of the business are commercial in confidence” but were made available to council at the time of purchase and the new councillors.

Three weeks ago, The Gazette asked Cr Gauci what the due diligence process involved and why a business model and proper costings for a new pound were not investigated at the time.

The mayor said due diligence was based on the Utopia business and potential to incorporate an animal pound on the site.

“There was no business case done on designs, it was the potential of the site, licensing and do all the benefits weigh up,” he said.

Since the purchase, council officers have investigated various business model options.

The report to council says co-locating the pound with Utopia was the “most cost effective option” and recommends retaining the operations internally, with both facilities being run by the same staff.

“This option provides an opportunity to generate income through the Utopia Pet Lodge business which would assist in offsetting the unavoidable cost of the animal pound service.

Officers indicated the pet lodge was running at a loss after many expenses being incurred for

this year include once-off maintenance and equipment costs, and salaries which are currently “being paid at a premium.”

“Business improvements have been implemented at Utopia Pet Lodge to produce a more favourable financial outcome, including increased marketing, a pricing review in accordance with a market anaylsis and amending operating hours,” the report says.