Tuesday, March 28, 2023

NSW council to offload ‘Rolls-Royce’ retirement home to avoid insolvency

Kiama council has agreed to sell its Blue Haven aged care business after a financial audit revealed its operating costs threaten to plunge the council into insolvency.

A forensic review of Kiama Municipal Council’s finances dating back to 2016 was tabled at a confidential extraordinary council meeting on Thursday.

An earlier review of council finances urgently called for it to increase its cash flow by $20 million a year.

The audit revealed the cash flow issues posed an immediate threat to the council’s viability.

Council was proposing a deficit in its 2022-23 budget and the report noted a “continued trajectory of financial loss”.

Blue Haven chief executive Jane Stroud said the council continuing to run the business threatened its ability to continue to deliver services to ratepayers.

,[It] is negatively affecting all aspects of the council, and the Blue Haven businesses, and cannot continue to be supported financially without significant risk to our liquidity and solvency.

“When I carefully consider all the facts available, I can no longer see a financial solution that allows council to continue to keep owning and operating Blue Haven, without risking the business of local government.”

Council moved a motion to allow Ms Stroud to begin the process of selling Blue Haven’s properties through a public tender process.

The council began running the Blue Haven business in 1979, and in 2019 it opened the $109 million 134-bed Bonaira retirement village.

‘Rolls Royce of aged care facilities’

Kiama Mayor Neil Reilly said as the business grew so did the costs.

“The residential aged care facility is very expensive, and for council considering the scale is against us we cannot continue to run it without making cuts elsewhere,” he said.

A Man Sits On A Bench Seat In The Main Street Of Kiama
Mayor Neil Reilly hopes the sale of Blue Haven can get Kiama council back in the black.,ABC Illawarra: Ainslie Drewitt Smith,

“But you have a look at the servicing of that and it meant that you have to cut things out of your budget to be able to continue servicing that Rolls Royce.”

Mr Reilly said the sale of Blue Haven would be an important step in getting the council’s finances back on track.

“This is the sale of council assets that we have bought for investment and now is the time to sell them,” he said.

“We are not going to sell everything. We are going to retain what we can where it is possible for that to provide us with an income stream.

“Blue Haven is a very, very large part of Kiama council getting back on track.”

Councillors agreed to include conditions in the contract of sale to ensure the continued high quality of care for residents and that current staff conditions be maintained.


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