Property Board. The Property Board has had another extremely heavy workload with a number of additional meetings being required.

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1 Property Board Key points in this report: Uniting our future (refer also to separate report to Synod) Mission Enabling Policy Trusts and bequests Enhanced Project Governance structure, process and forms Continued risk management initiatives Planning has commenced on the implementation of the Records and Archives Strategy Collating Synod-wide financial information for the Major Strategic Review Wesley Upper Lonsdale 1 INTRODUCTION The Property Board has had another extremely heavy workload with a number of additional meetings being required. As well as its routine tasks, it has undertaken several major projects, in particular, the Uniting our future project. As well as these, a number of unexpected events, such as overruns of projects which commenced prior to the introduction of the Enhanced Project Governance process, have imposed considerable strain on the Board, and particularly staff, over the period under review. 2 UNITING OUR FUTURE In summary, the Synod Meeting in May 2013 declared Special Circumstances in order to extinguish debt, replenish funds and to create a liquidity fund while preserving commitments to the Uniting Aboriginal and Islander Christian Congress (UAICC) Victoria and UAICC Tasmania. The Uniting our future program implemented the Synod s resolutions with the result that all debts have been repaid, funds have been distributed to UAICC Victoria and UAICC Tasmania, the reserve has been replenished and the Ministry Liquidity Fund will reach its target by 30 September The Uniting our future Project Control Group will complete its work on 30 September. From 1 October, the remaining relocation works projects will be managed by Property Services. A separate detailed Uniting our future report will be presented to Synod MANAGEMENT Sebert Ruddock retired from the role of Executive Director: Administration & Finance in February The Property Board recorded, with deep gratitude, the contribution of Sebert over the past ten years to the Board, the Property Trusts, the Synod operations and the wider church. Pauline McGillivray commenced in the role of Executive Director: Administration & Finance in April 2014 and brought with her considerable experience in finance, administration and property in large and complex organisations. Property Board report to September 2014 Synod Section B4 B4.1

2 4 PROPERTY SERVICES In addition to the extensive day to day work of the staff of the Property Services Unit, the Board has continued to focus on and advance the key areas that were identified as important in the last Synod report: An Enhanced Project Governance structure, process and forms for projects over $1 million Mission Enabling Policy Property Board membership Current snapshot of projects 4.1 Enhanced Project Governance Structure, Processes and Forms Last year, the Property Board implemented the Enhanced Project Governance structure and processes across the Synod, for projects in excess of $1 million in total project cost, in response to the independent review of the Acacia College project identifying the need for a single point of ownership/accountability. This was in response to issues ranging from project financial challenges, shortfall in funding issues, construction timing and cost issues, a lack of appropriate governance of large projects, project management issues (especially a lack of resources) and associated legal/risk issues. This structure and its associated processes are working well in most cases and have produced benefits such as reducing overall costs, increasing value of finished projects (refer to Current Snapshot of Projects below) and a substantial increase in requests from congregations and presbyteries seeking advice on missional and property enhancing options. 4.2 Mission Enabling Policy The Property Board continued a strong focus on mission motivated development as a foundation for its work. The Mission Enabling Policy (MEP) was developed in response to learnings from the Uniting our future program. Initially titled the Mission Motivated Development Enhancement Framework, the paper was recommended by the February 2014 meeting of the Property Board for consultation with various synod committees and presbyteries. Following these consultations, editing, then presentation to the Synod Standing Committee, the policy received further amendments, resulting in the Mission Enabling Policy proposed to the August 2014 meeting of the Synod Standing Committee. The primary purpose of the Mission Enabling Policy is to sponsor and support mission initiatives and commitments by value-enhancing some selected church properties, subject to the principles of mission motivated development. The Mission Enabling Policy will: fulfil the Synod s request to the Property Board to consider property as a significant contributor to sponsoring and supporting mission purposes, both directly and indirectly; enhance policies, processes and guidelines in respect to governance and property matters, including property development, value enhancing strategies; maintain the polity of the Church in respect to the roles and functions of the various councils and institutions of the Church, and their mission purposes and objectives. The Mission Enabling Policy also adds an operational and project governance framework to the mission motivated development policy not previously stated or included. These additions are further Property Board report to September 2014 Synod Section B4 B4.2

3 explained for any council or institution of the Church seeking to undertake any property works in a new resource titled Property Services Information Guide. The operational and project governance framework identifies protocols and practices for project management of any value enhancement project agreed to and adopted by the Board. The project governance framework can be applied to any property project. 4.3 Property Board Membership A skills matrix was prepared which identified a strong need to add skills in the areas of risk management, engineering, project management and insurance. Individuals with these skills were sought with the result that Russ Rechner and Peter Hunter were appointed to the Board. Russ is Chair of the Synod Risk Management Committee and has substantial experience in board and strategic/financial management in both commercial and not for profit. Russ is a member of Toorak Uniting Church. Peter is a Civil Engineer and has a qualification in organisation change & development. He has significant experience in senior management. Peter is a member of Southern Mornington Peninsula Uniting Church. The Standing Committee at its meeting in October 2013 resolved that the Property Board and Finance Committee include in their by-laws that one member of the Finance Committee be nominated to the Property Board and one member of the Property Board, with financial skills and experience, be appointed to the Finance Committee. The Finance Committee nominated Rev Julie Ross as a member of the Board. Julie is a Chartered Accountant with significant experience in governance in the not for profit sector and in academic research. She is also the Minister at High Street Road Uniting Church, Mt Waverley. The Property Board nominated Rob Costa as its representative on the Finance Committee. 4.4 Current Snapshot of Projects (as at June 2014) Approved property projects can be grouped into two distinct categories: Projects managed by a Project Control Group (PCG) which are generally in excess of $1 million; and Projects less than $1 million As at June 2014, there was a total of 52 approved projects managed by a Project Control Group (PCG) which have a current value across the Synod of over $960 million. These include projects which have commenced planning, are under construction or nearing completion. The Enhanced Project Governance structure has minimised the risk to the applicants in order to deliver the anticipated objectives, in particular missional objectives. Further, the number of approved projects less than $1 million is in excess of 40 individual projects with a value of circa $7.4 million. These consist of manse builds, smaller renovations, extensions, etc. Property Board report to September 2014 Synod Section B4 B4.3

4 Property Services staff, where appropriate, are supplemented in expertise by external industry project personnel, which also allows distribution of the enormous workload, and also for arm s length evaluation. Projects by Stage ($ million) 31 ($889.5) 3 ($2.2) 4 ($6.6) 10 ($25.1) 8 ($48.0) Projects by Presbytery ($million) $666.6 $163.5 $3.8 $0.0 $1.9 $16.7 $6.6 $11.9 $94.0 Property Board report to September 2014 Synod Section B4 B4.4

5 Total Projects 16% 9% 74% Project on track Project concerns being managed Project change requiring approval 4.5 Property Application Review Team (PART) The Property Application Review Team services both the Board of Mission and Resources (BOMAR) and the Property Board. This sub-committee handles large volumes of detailed applications including: Applications to Sell Applications to Lease Application to Build < $1m Applications for Project Approval >$1m BOMAR Emergency Grants Disability Access Fund Grants Allocation of Property Sale Proceeds Development Fund Loans up to $1m Insurance Premium Subsidy Reviews The number of applications going through this sub-committee annually continues to be in excess of RISK MANAGEMENT AND INSURANCE SERVICES 5.1 Insurance Major Insurance Policies Insurance Services manages the insurance program for congregations, schools, camps, Uniting Agewell, UnitingCare and other agencies and programs of the Uniting Church. Property Board report to September 2014 Synod Section B4 B4.5

6 Insurance Services also manages all claims and negotiates all settlements to the best advantage of all participants in the insurance program. Significant policies managed are: ISR (Property) Fidelity Guarantee Public and Products Liability Professional Indemnity Directors and Officers Liability Employment Practices Liability and Motor Vehicle ( Opt In basis) Insurance Services also manages some minor insurance policies, one being Volunteers Personal Accident that provides a range of benefits payable to Uniting Church volunteers Insurance Strategies Maintain broad coverage Present risk profile to the market to best advantage Maintain long-term relationships with insurers and insurance brokers but foster alternatives Benchmark liability limits against similar organisations Review Standard and Poor s security rating for current and potential insurers Professional valuation of UCA buildings Insurance Reserve Fund The Insurance Reserve Fund continues to be carefully managed to ensure long-term strategy to prudently accept more risk and purchase less insurance. The Board continues to self-insure at significant levels for major insurance policies. 5.2 Risk Management The Risk Management Unit consists of the following functions; Insurance Internal Audit Occupational Health and Safety Any other risk management initiatives The unit is the primary resource for the Risk Management Committee, to assist it in carrying out its oversight of the strategic risks across the Church. In 2013 the Risk Management Unit completed fraud awareness training, fidelity questionnaire audits, and policy frameworks, specifically targeting UnitingCare agencies. Additional fraud awareness training is also commencing with the presbyteries. The unit will continue to develop and capture risks within the Synod through a rolling program. A further work plan for 2014 has been developed to cover schools and this process will commence in May Property Board report to September 2014 Synod Section B4 B4.6

7 Refer to the Risk Management Committee report to Synod for an overview of the top strategic risks facing the Synod. 5.3 Occupational Health and Safety An Occupational Health and Safety (OH&S) and Risk Management manual for UnitingCare agencies was produced and delivered during In addition rolling OH&S site audits continued throughout the congregational network. A total of 558 OH&S audits have been performed since the program was introduced in Driver training and targeted workshops have occurred during 2013 and will continue for the time being for participants under the Synod-arranged motor vehicle policy. 5.4 Internal Audit Internal Audit supports the Audit Committee and provides risk based assurance reviews on the Synod s financial risk, internal controls and compliance framework with a focus on visiting and supporting presbyteries, congregations and UnitingCare agencies. 5.5 Property Trust Financial Accounts Further analysis and updating of Property Trust aggregated financial accounts will occur during 2014 to further enhance and understand the financial landscape in the Synod as part of the Major Strategic Review. 6 RECORDS MANAGEMENT AND ARCHIVES Records Management seeks to ensure the corporate memory of the Church is captured and retained, and that records are retained for as long as they are required according to business use, legal requirements and stakeholder expectations. 6.1 Future Housing of Archives Property Services is in the process of developing a program, scope and budget to deliver an electronic business records system and a physical records storage arrangement for the Synod. When fully implemented, this project will secure the longevity of the collection and provide researchers and the Synod with the benefits associated with online access and records digitisation. 7 TRUSTS AND BEQUESTS In October 2012, the Standing Committee at its meeting resolved (SC ): (d) To request the Property Board to oversee the immediate implementation of and audit and governance protocols for the UCA Property Trust (Victoria) and UCA Property Trust (Tas.) in respect of the management and oversight of all bequests and trust funds of which the Trusts are responsible. Sandra Bethell was engaged as Bequests Manager on a twelve month contract to report and begin implementation. She completed an initial review and an opinion was sought from Senior Counsel to clarify a number of questions relating to the Church, the incorporated property trusts and Church charitable trusts generally. Property Board report to September 2014 Synod Section B4 B4.7

8 Much foundation work has been completed: A Trusts Lawyer, a Trusts Officer Compliance and a part-time Law Student have been appointed. Document collection has commenced with documents scanned as received. A manual has been prepared, including draft policies, and a website is nearing completion. Template documents for cy près schemes, for Church trust records and for gift agreements have been prepared as have suggested wills clauses. 8 WESLEY UPPER LONSDALE In June 2013, Wesley Mission Victoria, Wesley Church Congregation and the Uniting Church in Australia Property Trust (Victoria) signed a tripartite agreement embarking on a partnership aimed at enhancing the vibrant role the Wesley Church plays in Melbourne's religious, social and political history. The Synod Standing Committee has approved final negotiations with Leighton Properties as the preferred developer to restore and redevelop the Wesley Upper Lonsdale Street site. The main mission objectives of the redevelopment are threefold: Firstly, to provide a place of worship, through the restoration of the heritage-listed neo-gothic church, with provisions for its ongoing maintenance; Secondly, to provide a place of service, as Wesley Mission Victoria, synod operations and other commercial businesses operate from the site; and Thirdly, to create new opportunities for the Church to engage city life, through the interaction of meeting places, residential spaces, and arts and educational venues. The tender document made clear that any development on the site needed to place a high emphasis on building relationships between people and to foster community relationships. It also outlined the need to restore and, where possible enhance, the historic buildings while respecting the original custodians. Following the authorisation of the Standing Committee, the non-binding terms sheet with preferred developer Leighton Properties was executed in May. The project is now undergoing a process of documentation and approval with final execution expected in September. A further advantage of this project is that Church land is not being sold. Instead the Church will enter into a 125 year ground lease, ensuring that this prime asset, bequeathed to the Church at the beginning of the 19th century, remains a part of the Uniting Church's vision for mission and worship into the future. The project has undergone both an external independent financial review and an independent ethical review of the preferred developer, as well as scrutiny by the Church's risk, audit and finance committees. A single point of accountability has been developed, and its Project Control Group has been meeting regularly for the last twelve months and will monitor the project to its conclusion. 9 EXPRESSION OF APPRECIATION In conclusion, we place on record the thanks of the members of the Property Board to the management and staff of the Property Services Unit and the Risk Management & Insurance Services Property Board report to September 2014 Synod Section B4 B4.8

9 Unit for their dedication, diligence and incredible commitment to the work of the church through what has been a very demanding period in the management and governance of our very large and diverse property portfolio and operational activities of the Church. We acknowledge with thanks the commitment of Jeffrey Hase who stepped down from the Property Board and Property Trusts at the 2013 Synod meeting. We are blessed to have such committed people working for the Church. DAVID PARKER Chairperson PAUL WALEC Director JIM MILNE Synod Property Officer SAM NICHOLAS Assistant Executive Director Administration & Finance Property Board report to September 2014 Synod Section B4 B4.9