The City of Yarra’s inability to collect millions of dollars in parking revenue during lockdown has contributed to an anticipated operating deficit of more than $12 million, which could spell the premature end of outdoor dining in the inner-north.
According to information presented to councillors and council officers this week, the authority has no “potential” to fund any additional projects until at least the end of June.
Parklets have proved popular in Gertrude Street, Fitzroy.Credit:Joe Armao
Since late last year the City of Yarra has been running an outdoor dining trial in popular dining and drinking hubs including Fitzroy and Collingwood. But the experiment has been costing the council more than $172,000 a month in labour costs and foregone parking revenue.
The council has been hit by more than $18 million in unexpected costs due to the effects of the pandemic, including $8.5 million in lower-than-expected parking income. It is now expecting to end the 2020-21 financial year with an operating deficit of $12.4 million – $8.4 million worse than budget forecasts.
In the briefing, councillors were warned: “Based on the forecast financial position, council does not have any potential to fund additional projects in 2020-21.”
The losses were offset by $9.3 million in unbudgeted windfalls, with $4.4 million in state government grants including Working for Victoria and for outdoor dining costs. It also saved $2 million it expected to lose on bad and doubtful debts from parking tickets (because the tickets were not issued) and saved $2.9 million on infrastructure costs, including the unplanned sale of discontinued roads.
Ratepayers experiencing hardship were given the option of deferring payments interest free, though council did increase rates to the state cap of 2 per cent.
The council scaled back its capital works projects this budget as a result of the pandemic, and has delayed rolling out a fourth bin for food waste.
The grim financial situation comes as the council launches a round of community consultation over pop-up dining “parklets” – constructed in reclaimed parking spaces – to explore making outdoor dining permanent or recurrent.
A spokeswoman said the future of outdoor dining would be considered on its merits.
The council had been expecting a deficit of $3.94 million in the 2020-21 financial year.
Yarra mayor Gabrielle de Vietri said: “Like all councils in Victoria, Yarra City Council has sustained significant financial losses as a direct result of the global pandemic.
“Last year we made difficult but necessary financial choices to support our community, both during COVID-19 and in the post pandemic recovery. We are only in the very early stages of the 2021-22 budget process. Further discussions will be had in the coming months.”
The City of Melbourne is also investigating the future of outdoor dining while it undertakes economic analysis of the benefits and long-term funding options.
Councillors will consider whether to extend the scheme, which has so far led to more than 1300 outdoor dining permits, before it expires on March 31. The City of Melbourne has also installed outdoor dining parklets in 200 car parking spaces across 100 locations.
Restaurateurs have credited the experiment with keeping them afloat, with 81 per cent saying parklets helped them reopen, according to a survey of participating businesses.
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