The municipal monitor installed to oversee Yarra City Council will continue in the role for another three months after his report on the initial six-month appointment identified serious financial and ongoing governance issues and recommended an extension.
Victorian Local Government Minister Shaun Leane announced the extension last week.
"Key decisions to improve council's governance and financial sustainability have yet to be made," the monitor, Yehudi Blacher, wrote in the June report.
"This is due to a combination of past administrative inertia, the lengthy processes of council decision-making and the fact that the new chief executive officer has not yet commenced."
In his report, the monitor described the council's current financial position as "unsustainable", partly due to revenue reduction as a result of COVID-19 but also because of "structural budgetary problems which have built up over a number of years".
"Issues needing to be addressed include a historical reliance on government grants and borrowings to balance the budget, high levels of staffing and overheads compared with similar inner urban councils, particularly in relation to corporate services, under-investment in business improvement, IT systems and historical reluctance to increase charges in line with costs increases for council provided services."
The monitor described the council's 2022-23 budget as taking "the first small steps to addressing its revenue problems" and said more decisions would need to be made following the result of a strategic review of the council's finances.
The review was initiated by Cr Herschel Landes during last year's budget deliberations but was slow to be undertaken and is due to be completed later this year.
At last week's Yarra Council meeting, where the annual budget was adopted, Mayor Sophie Wade acknowledged Blacher's report and said the council was "pleased to continue working with him for another three months" on the issues outlined in it.
Wade and Landes attributed the "dire" situation of council finances to debt accrued from previous councils' interest-only loans, cost-shifting by other levels of government and the financial impacts of the pandemic.
Both struck an optimistic note on councillors' determination to "address the legacy challenges" the council faced and be transparent with the community in doing so.
The monitor's report said some governance issues arose from the fact that six of the current councillors were newly elected in 2020 and had to "deal with the challenge of understanding their roles" as well as with the challenges of the pandemic.
It was "evident that a number of them struggled to distinguish their role as councillors from their party-political allegiances".
Social media posts and relations between councillors had at times not met the standards expected of councillors and the fact that Cr Anab Mohamud had been charged with assault had led to "some ugly interactions during council meetings."
The monitor's report referred to problems being exacerbated by their being exaggerated in media reports.
"[There are] a number of highly articulate community groups and individuals with strong connections to mainstream media outlets and active use of social media which amplify normal differences of views between councillors. Some councillors actively encourage and indeed use these outlets to create a false impression of controversy, and indeed crisis, in relation to certain matters."
Blacher believed councillor interactions and the language of social media posts had improved but said the council needed to complete its governance framework, ensure councillors consistently complied with Yarra's new code of conduct and social media policy and should further revise these to specifically proscribe councillors denigrating their colleagues.
Councillors' attendance at councillor briefings should also be mandated.
"Many of the matters considered by council are technically complex and/or ones on which there are a variety of views in the community. With the best will in the world, without discussions between councillors themselves and with officers it is unlikely that the best decisions are made in the interest of the community," he wrote.
"I suspect the community would be surprised that councillors are not required to attend council briefings."
A "charter of mutual respect" between councillors, staff and the community which staff are currently developing was necessary "because those interactions have been inappropriate to the proper conduct of council business," he wrote.
The monitor also identified a "cultural problem" in the planning department, which "appears to feel under siege with a high workload and insufficient staffing resources."
Despite the department's difficulties, which included experiencing abuse, it had an obligation "to better engage with those individuals and organisations seeking to be heard in ways that go beyond the strict requirements of the Planning and Environment Act, particularly in relation to large scale commercial developments."
Yarra City Council said it was currently reviewing the Municipal Monitor's report.
"Council is committed to continuous improvement and looks forward to continuing to work in partnership with Mr Blacher over the next three months," a statement on its website said.