Using assets to generate income

Shrinking funding sources in the late 1980s and community demand to deliver quality services and facilities were the catalyst for Sutherland Shire Council to develop an innovative funding source to secure its financial future.

In 1990 a Property Investment Fund was established to manage council’s property assets and long term investments.

The fund has progressively grown and today it is valued at between $55-$60 million and yields $5 milllion in revenue annually.

Twenty one years later this innovative financial strategy, which includes an internal loans system, continues to enable council to fund some of its spending through investment income.

The property investment fund holds money from the sale of properties until suitable long term investments are identified.

While money is in the fund it is invested and the interest becomes part of the annual income return.

The majority of the annual income from the fund is from property leases.

Under the internal loans system, council borrows money from the property investment fund and repays the principal and interest at a local government borrowing rate. Loans are amortised over periods appropriate to the length of the projects.

This allows council to fund further community infrastructure projects that may not otherwise have been possible.

Since 1988, among the projects made possible by the investment fund are:

• Hazelhurst Regional Gallery and Arts Centre
• SSHED Business Accelerator (Sutherland Shire Hub for Economic Development)
• Menai Indoor Sports Centre
• an energy co-generation plant at Sutherland Shire Leisure Centre
• upgrades to Cronulla Bicentennial Plaza
• funding toward the Cronulla Central community facilities, library, retail space and free public parking.

The property portfolio established over the past two decades will enable council to continue to provide the community with the services and facilities it needs to grow and develop as well as underpinning council’s financial stability.