Morrison Low has examined Lismore City Council's capacity to handle the flood recovery on behalf of the Office of Local Government (OLG)

The review was carried out by Morrison Low on behalf of the Office of Local Government (OLG).

The OLG commissioned the report as part of its discussions with Lismore council regarding a $20 million funding agreement.

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It provides an operational needs analysis of the council, to be viewed through the lens of the flood recovery. The report does not focus on the governing role of the councillors.

"The $20 million in funding is conditional on the delivery of agreed milestones and a program of works under the funding agreement," an OLG spokesperson said.

"Lismore City Council will manage and control this process, with the Office of Local Government having a limited oversight role.

"Once Lismore council has confirmed its acceptance of the funding agreement it will be finalised by the Office of Local Government."

The Morrison Low report found the council had financial sustainability, capability and capacity issues before the floods and the events of February and March had only "compounded the existing difficulties".

The report stated that council was not well placed strategically or organisationally to fulfil this role without other key activities suffering.

It has recommended the council will need a short-term injection of resources including contract employees, contractors and consultants to provide capacity to handle the flood recovery.

It has recommended the council recruit and appoint a strategic lead for recovery and restoration reporting directly to the general manager.

It also suggests the establishment of a project office to co-ordinate and deliver council's activities and capability to engage and influence restoration planning.

The NSW Government would need to provide support council over the next three years to re-establish the community of Lismore and catch up on the backlog of essential work and transition the organisation to a more financially sustainable local government.

The report stated that following the latest floods, council faced a "more complex organisational journey".

"Prior to the floods it was clear that council needed to commence a transformation process that included sustainable decision making, a new organisational structure, capability, performance and accountability, addressed key strategy and planning gaps, and undertake a reform process aimed at achieving financial sustainability," the report stated

"Now council is faced with making some key strategic and long-lasting decisions on the future of Lismore's low lying residential and central business district area and the restoration of community assets.

"Coupled with this, it needs to re-establish Lismore's community and vibrancy, re-establish community confidence and support economic recovery.

"While the burden will not fall on council alone, it has a key leadership, planning and delivery role in both the recovery and redevelopment solution."

The report pointed out a shortfall in leadership and changing priorities with different councils.

The council is currently on its third general manger in the past 18 months.

"Previous council priorities were different. Council favoured different discretionary projects over ensuring core assets were maintained and that council would be financially sustainable in the longer term," the report stated.

"Changing leadership at council and management levels has not helped provide a focus on planning with financial sustainability goals at the forefront."