Willoughby City Council has decided to lease Chatswood’s Devonshire Street child care centre to a highly-regarded provider, in a move which will guarantee ongoing quality care to families and assist Council’s financial sustainability.
On Monday night, the Council voted to lease the centre, which currently cares for 72 children. In return, Council will receive an annual license fee (plus annual CPI escalations) in an agreement worth more than $3 million.
Additionally, the agreement will result in a goodwill payment to Council and funding of building upgrades.
Since the late 1980s, Council’s total losses while operating the centre have ballooned to $3.9 million, including a $364,000 loss in 2021/22, putting the centre’s viability in doubt.
Childcare services will now be able to continue with the community benefiting from the turn-around of a loss making service previously requiring subsidies from ratepayers.
The incoming operator has been in place since 2015 and currently has ten centres across Sydney, including one in Chatswood, which meet or exceed national care quality benchmarks.
Willoughby Mayor Tanya Taylor said the leasing decision would help ensure the centre stayed in place and was a win for families, staff, residents and ratepayers.
“I respect the views of the many parents and indeed children who spoke at Council meetings and wrote and spoke to Councillors and staff ahead of this decision,” Mayor Taylor said.
“It’s understandable that we received this feedback, given that for most parents, the selection of a child care centre is a highly considered, emotional and important decision.
“However, the Council took the view that this decision was the right one, given it will ensure the delivery of quality care for Willoughby families, ongoing employment by staff and an important new revenue stream for the Council.
“Under this agreement, the centre’s current philosophy of care, along with its curriculum, cultural education programs and fee schedule will all be maintained.
“In addition, the centre’s current staffing model will remain in place with staff offered continued employment with the new provider.”
Mayor Taylor said that, like many councils, Willoughby was under significant financial pressure as a result of high inflation, cost-shifting from the NSW Government, severe rate capping and COVID-19 era losses.
“Our Long Term Financial Plan, also adopted on Monday night, highlighted serious concerns about Council’s financial situation in the coming decade,” Mayor Taylor said.
“All Councillors have an important responsibility to make sensible financial decisions. Monday night’s resolution was one of those decisions.
“Given the Council’s future financial scenario, the centre’s losses could have forced the Council to close the centre if it remained a Council-owned business.
“In addition, by continuing to operate the centre, the Council was retaining a high legal risk profile. This problem comes about from the difficulties of the Council trying to meet changing and complex regulatory requirements, licensing standards and child care regulations while being the operator of just a single centre.
“In comparison, we now have a positive outcome where the centre’s future has been guaranteed and an important new source of funds has been created to help the Council continue to deliver important services and projects to the community.
“It is important to note that, as part of this decision, the Devonshire Street centre site will be retained in Council ownership, as the location for a child care centre.”
Council is currently in the process of finalising the agreement with the selected tenderer and working to ensure that all the necessary terms and conditions are formalised and internal processes are in order before publicly naming the tenderer.
Additionally, the council is also in the process of notifying its staff about the upcoming change of provider to ensure that all relevant personnel are aware of the transition and can prepare accordingly.
