Councillors will vote on whether to progress to the next stage of the lease process for Coffs airport. Photo: Trevor Veale
Councillors will vote on whether to progress to the next stage of the lease process for Coffs airport. Photo: Trevor Veale

Crunch time for Coffs Airport lease

IT'S crunch time for the proposed lease of the airport and Enterprise Park development, with Coffs Harbour City Councillors to make a crucial decision on the matter on Thursday.

Councillors will vote whether to officially enter into negotiations that would ultimately see the management of the council-owned assets handed to a private company under a long-term lease.

According to the report being put before councillors, although it is not recommended, this would essentially be the last opportunity to pull out of the lease process without facing significant reputational risk.

The recommendation in the report is that councillors should vote in favour of progressing the lease to the next stage, and begin negotiations with the binding bidders.

Many details including just who these bidders are, and how long the lease will be for, remains confidential at this stage.

The report states that if councillors do vote to enter into the negotiations, a further report on the outcome will be brought back for consideration in 4-6 weeks.

 

A report being put before councillors recommends that the council should enter into negotiations with the binding bidders for the lease.
A report being put before councillors recommends that the council should enter into negotiations with the binding bidders for the lease.

 

However the report warns that it would be unreasonable for the council not to finalise the lease agreement after this point, not only for the council's reputation but also because of the financial risks.

The council has so far spent about $1.6 million on the lease process, including on advisory and services, market forecasts and environmental investigations. After the negotiation stage, this is expected to rise to $2 million.

The council had first voted in favour of exploring the potential of a long-term lease with an expression of interest process back in December 2018.

Then in May 2019, independent expert advisers KPMG Australia were brought on board to assist council with establishing a lease.

 

READ MORE:

Coffs Airport lease delayed by Covid-19

Peak body praises 'smart' decision to privatise airport

Construction begins on $25m Enterprise Park

Major decision to dictate future of Coffs Airport

 

In November 2019, councillors voted to put the call out for bindings bids.

However the tender was delayed for some months due to the impact of Covid-19 and other complicating factors including Tigerair withdrawing its services, and Virgin Australia entering into voluntary administration.

The tender was released this year on June 12, and closed on July 17.

It was determined that in light of these issues, the potential lessee would hold a long-term view of the lease beyond the immediate impacts, and the lease value identified prior to Covid-19 would be preserved as part of the tender.

If the lease process runs smoothly, it would be executed by October 20 according to the indicative timing established by KPMG.

The full report can be viewed in the council agenda here.