When it comes to development it appears everyone is a climate change denyer. I am surprised that no one has asked if the huge 110 hectare Cockburn Coast development between Fremantle’s South Beach and Port Coogee, that will incorporate the former Rob Jetty and South Fremantle Power Station sites, is appropriate so close to the ocean and if that is a good long-term investment with the predicted rise in sea levels.
Some 12,000 people will live there, so why is no one concerned they would be building on a future flood plain where beach erosion and storms inevitably will start impacting on the new coastal suburb. Are insurers still happy to cover coastal development or does it come at a premium price, and is buying into any development along the coast close to the Indian Ocean a good investment?
On the up side of it the development will be good for Fremantle even if the Mayor of Cockburn wants to make a bit of a Gold Coast theme park out of it. So many people living close to Fremantle will be good for our retailers and hospitality industry and no doubt the location of the development would make it ideal for coastal light rail.
I question if it is sensible to do it though and if State Government has done a predicted sea level rise study for the area. It might be good if real estate agents offered the properties with free snorkels, wetsuits and diving lessons.
Local Governments will be punished for the W.A. State Government messing up its own local government reform process and the community will be paying for it by losing more planning control over what can be built in their cities.
Planning Minister John Day has announced the State has lowered the threshold for builders so they can go to the Development Assessment Panel and bypass local councils if the development is $ 2 million plus. Previously that had to be a $ 3 million dollar project.
This severely limits the input the community can have on what they like or dislike as far as new development is concerned because there are only 2 members representing local council on the six member panel, so they are outnumbered by state bureaucrats.
Local Government Minister Tony Simpson is quoted in the POST newspaper as having said at a Bunbury Chamber of Commerce and Industry lunch that “If you don’t go on the journey with us…..you’ll wake up one day and you’ll be putting a smiley face on every application to say you have looked at it but have no power to deal with it”
It was very disappointing that the Town of East Fremantle residents did not want to go on the amalgamation journey with the City of Fremantle, but at the end State Government created the shambles, but now punishes all local governments for the disaster they should blame themselves for. Sour grapes is not good governance Premier Colin Barnett!
On the surface Subiaco is just about perfect for a thriving retail economy, but business owners are not at all happy and there are a large number of vacant shops along Rokeby Road and Hay Street.
Why is that when all the experts have been asking for exactly what Subiaco has been doing? This is a city at a busy railway station that has been highly-developed over the last ten years and added massive commercial office and residential space around the CBD, but businesses have been struggling and closing down for years. But all those city planners, placemakers and transformational movers keep telling us that all we need to do to have a great retail economy is to get more residents and office accommodation and magic will happen. Not so, it appears, if we take Subi as an example of where reality does not support the theory.
My question then is what went wrong in Subiaco and what the City of Fremantle wants to do differently so that we can avoid getting the same unsatisfactory outcome as Subi? At the moment our Freo CBD plans are much like those of Subi; build more office space, get more residents living in the inner city and boost the retail economy that way, and like Subi we are also getting a hotel or two.
It is not working for Subi retailers, who were holding an emergency meeting with their Council last week, so what can we in Fremantle learn from it and do better? It is better to have that debate now when there is still time to change some of the development plans, in case there are better alternatives.
Fremantle will have three new large mural public artworks by the end of next week. Two artists are working on two paintings on the MANY 6160 (former Meyer) building and another one is painting a big octopus on the Naval Stores at Cantonment Hill.
It is all part of the FORM organised PUBLIC 2015 symposium.
In the interest of fairness and balance I am publishing the letter the City of Fremantle sent on December 11 last year to Martin Lee about his concerns about the Kings Square development. There has been quite a bit of debate on this blog and in the media about it, so it is important to get as many facts as possible so we can all make up our own minds about this issue.
December 11, 2014
Dear Mr Lee,
I refer to your various, recent e-mails to myself, the Chief Executive Officer of the City, the Mayor and several elected members.
You have asked a number of questions regarding the content of the business plan prepared by the City in relation to the King’s Square project and the resolution by the Council of the City to proceed with the King’s Square project following the advertising of that business plan and the consideration of submissions received during the advertising.
There are a number of matters to be clarified by way of response.
Local Government Act 1995
First, Local Governments in Western Australia are not operated on a purely commercial basis. Under section 3.1(1) of the Act, the general function of a local government is “to provide for the good government of persons within its district” (the scope of which is be constructed “liberally”, as provided for in section 3.1(3)). Further, under section 1.3 of the Local Government Act, in carrying out its general functions under the Act “a local government is to use its best endeavours to meet the needs of current and future generations through an integration of environmental protection, social advancement and economic prosperity”.
Second, under section 3.59 of the Act, before entering into a major land transaction, Local Governments are required to prepare a business plan, go through a process of advertising of that business plan, and consider any submissions made during that advertising period, before resolving (by an absolute majority) to either proceed or not proceed with the major land transaction. This business planning process fulfils a number of functions or purposes. It has a statutory role, which is not the same as that for a business case or business plan in the private sector.
For example, under section 3.59(3) of the Act, the business plan “is to include an overall assessment of the … major land transaction and is to include details of …” various matters set out in paragraphs (a) to (f) of that section. One of those matters is “its expected financial effect on the local government”, but of equal importance in the section are other matters such as “its expected effect on the provision of facilities and services by the local government”.
The City appointed Leedwell Strategic to undertake and develop a financial business case of the project in 2012. This analysis was considered over a 20 year timeframe with a discounted rate of 5.5%. The financial analysis considered the fact the City would incur diminished commercial revenue from years 3 to 12, would gain revenues through new rate income, considered maintenance costs, the need for accommodation costs during the period of redevelopment of the administration building, the urban design plan, also contemplated how the City would finance its portion of the development with the redevelopment of the City Administration and Civic building and the value of balance sheet items.
The business case represents that the City would not start to receive improved revenue returns until after year 12 and that the debt needed to undertake the project could be repaid within 8 years.
The business case is very clear that the income generated from the sale of three council properties could and most likely would be used to finance council’s commitments to the redevelopment project. It highlights a shortfall of $15 million which is proposed to be funded through debt finance.
The business case was considered by council at a special council meeting held on 5 November, 2012. It was the only item of business on this agenda. At this meeting Council resolved to accept the business case and proceed to drafting the Business Plan as required under the Local Government Act 1995. The City understands you may not agree with some of the underlying assumptions of the business case, but does not agree with you that this is purely a financial based decision. These matters reflect elements of the City’s objectives and drivers, in accordance with its general function under the Act, that are not purely financial or economic in nature. The omission of these from your review leads, not surprisingly, to a different outcome.
The business planning process in relation to the King’s Square project was carried out in full compliance with all of the requirements of the Act. The business plan was prepared, with input from a number of departments within the City as well as external consultants, was advertised in accordance with the requirements of the Act, and the Council of the City considered all of the submissions received during the advertising period before resolving, by an absolute majority, to proceed with the King’s Square project.
The Plan was approved by council for public advertising in November, 2012 and advertised for a period of six weeks seeking community comments. Much of the material derived from the business case was included within the Business Plan for public consideration. This information is available for you to review in the plan. A copy of the Business Plan is included with this response for your information.
It is understood that not everyone will agree with the parameters of the assessment and the decision to sell some assets with pre-conditions to reinvest in the civic area to meet economic targets and reinvest in the administration building and public space around Kings Square as part of that consideration. I and others at the City, including the Council at the time, were (and remain) satisfied with the content of the business plan and with the process undertaken by the City under the Act, leading to the resolution to proceed with the King’s Square project. The King’s Square project is a major revitalisation project with benefits not only for the buildings directly involved and the adjoining properties, but for the whole of the commercial area of the City of Fremantle.
The process required by the Act in relation to the King’s Square project was completed in accordance with the Act and open for public scrutiny at the time, with the final decision being to proceed with the project.
Given that the City resolved in February, 2013, to proceed with the King’s Square project and did then enter into contractual arrangements with Sirona Capital as proposed by the business plan, it is not open to the City to simply revisit or reverse that decision. The City is under contractual arrangements with Sirona and Sirona is now under contract for the pre-conditions prior to being able to take up their option to purchase.
While the City appreciates your concerns and you having raised them, the City now considers the matter closed.
Concrete Cancer and Asbestos
The current administration building was built in the late 1960’s. Asbestos was a prevalent building product used in Australia up until the 1980’s and concrete does make up a significant part of this building. The facade of the building is starting to age and the concrete is starting to show signs of fatigue. These issues are part of our building maintenance requirements which the city manages. Whilst these matters exist, it was not the reason for the city to consider the revitalisation of the CBD which lead to the consideration of the Kings Square project. The main consideration is for council to play a proactive role as a major anchor and catalyst through the staged re-investment of its library, civic, tourism and administration facilities (on its Kings Square land holdings) as outlined in the Business Plan.
Investment Committee and Policy SG14
Policy SG14 provides for the consideration of investment in property and other non-current assets. It’s primary focus is to consider the acquisition and disposal of commercial property for commercial returns. Clause 2 (b) of the policy states “Funds are not to be withdrawn from the reserve fund to subsidise operating or recurrent expenditures under any circumstances, nor are funds to be withdrawn for the purposes of providing community facilities that do not provide a commercial rate of return, unless specifically decided otherwise by the council.” As this project is considered a significant inter-generational matter it was more prudent for all of council to consider it.
The consideration of the Kings Square Business Plan was a decision of council, considered by the council. The report to council on 5 November, 2012 highlighted that council may choose other means to fund the City requirements for the project. Part of this was to consider using reserve funds rather than debt. As a consequence of the decision council will use the income generated from sales to support the financial obligations of the City, a decision it is entitled to make under Policy SG14.
The Investment Committee last met in April, 2008. The main purpose of this committee was to consider financial advice in relation to investments in managed funds with the advice coming from an independently appointed advisor. Whilst Policy SG14 is one of the policies delegated to this committee, the committee has never met to discuss property related matters since 2004. Since changes to the Local Government Act precluded local governments investing in Managed Equity Funds there has not been a need to bring this committee together. The last matter considered in relation to this committee was the acknowledgement of change of membership after the 2009 ordinary elections. Since this time the committee has not met as it has not been considered to be needed. Committee appointments have not been considered post subsequent council elections.
It is noted, as mentioned above, that council does not expect everyone to agree entirely or at all with their conclusions or assumptions in making this decision. In fact, having people raise various differences is healthy to debate and decision making. The fact remains that this decision was made under public scrutiny at the time. Council engaged with external consultants to support and inform the process. At this time, the City is not of the opinion that the business case analysis is or was inappropriate in assisting the council with their decision.
Director Corporate Services
I had another read at the City of Fremantle’s Thinking Allowed in the Herald in response to the critique about the financial plan of the Kings Square project by Martin Lee.
As I wrote on Thursday I agree with the City that there is a bigger picture than just finances when it comes to the revitalisation of the CBD, but one has to seriously question why the City of Fremantle does not respond in detail to Martin Lee’s concerns about some of the financial aspects.
The COF writes “…but we also need to make sure you’re getting the full story.” but then don’t give us the story at all. Surely we are right to expect the City to respond to Lee’s concerns with financial details instead of the nonsense they wrote that someone similar to Mr Lee in 1885 would have made a similar case against building the Townhall. That is basically immature school boy argumentation to discredit someone who has genuine concerns and who must have spent a lot of time doing the figures.
What we needed from the City’s Mayor and CEO is pointing out where Mr Lee’s financial observations might be wrong, not a flippant remark to try to discredit him. He does not deserve that and his concerns should have been taken more serious and the response by the City should have been more professional.
Like most people I am not skilled to read financial reports, but it appears Martin Lee has a lot of experience doing just that. Therefor the residents and business people of Fremantle deserve to get a detailed reply to Lee’s concerns, not schoolboy bully arguments.
The THINKING ALLOWED in the Fremantle Herald by Fremantle Mayor Brad Pettitt and CEO Graeme McKenzie, in reply to last week’s Thinking Allowed by Martin Lee, who criticised the Kings Square development, is worth reading because the City of Fremantle is correct that it is very much about perspective.
COF says Kings Square is an investment in Fremantle’s future and can’t simply been judged on the financial return it might or might not get. Pettitt and McKenzie claim it will be the catalyst for future development and investment in Freo and I believe they are right.
When one plans the future of a city one cannot just look at the financial return. If we did that we would never build another playground or skatepark and might as well forget to plants trees, put street furniture out, etc. because the financial benefits to our city when doing those things are close to nil. The tangible and intangible benefits to our community cannot just be measured on the financial return of a project but need to be seen in a much broader light as an investment into the future.
There is no doubt in my mind that if the Kings Square development goes ahead it will have enormous impact on the CBD and more new buildings will be built, more offices occupied and more retailers will have a successful future in Freo. It is good governance for a Council to invest in that, even if there is no direct financial return to the City.
One worry though is that the City of Fremantle admits the future of the KIngs Square development very much relies on a State Government department like Housing moving into the former Myer building, while Sirona Capital claims it is not dependent on that and that it has other options. Sirona has in the past argued that there is no delay, but the City writes that the delay is frustrating. It might just be that those confusing messages from partners in the same development make Fremantle residents skeptical about it all and maybe straight forward and honest communication with the community would be more helpful than clever spin.
Fifty artists, 42 city walls and 18 international ‘change makers” will come to Perth for the PUBLIC 2015 symposium that will transform the city.
Large-scale artworks will be created during PUBLIC 2015 that will run from April 10-19. The International symposium will explore the value of creativity in building dynamic spaces and will have international speakers from the arts, architecture, urban planning, technology and philantropy.
This will be very interesting in the light of the just released UWA-Factbase for the Committee of Perth-Fremantle section by Veronica Hudleston.
Hudleston writes that city planning “needs to be on maintaining a unique set of advantages and attributes that attract and retain population.” She also warns that population growth should not happen at all cost, but that we should be planning and developing a desired demographic structure rather than the simplistic pursuit of growth.
Hudleston also mentions that the City of Fremantle already has a relatively higher level of population density and that East Fremantle is one of the highest population densities in the Perth metro area.
While the Perth metro had an increase of population of 29.3 per cent, Fremantle only managed 8.2 per cent in the period from 2001-2011.
I am looking forward to the PUBLIC 2015 sympsosium!
The unease in the Fremantle community about the Kings Square project, the delays and the financial implications for the City of Fremantle have now reached W.A. Parliament House with MLA Peter Tinley asking a question without notice to Minister for Local Government Tony Simpson:
(1) Is the Minister aware of community concerns over how the City of Fremantle has represented the financial implications of their $45 million investment of ratepayer funds in its Kings Square Business Plan, and if so, what action has the Minister taken to address these concerns?
(2) Has the Minister directed the City of Fremantle to answer legitimate ratepayer questions concerning the Kings Square Business Plan, and if not, why not?
(3) Has the Minister conducted a full and proper investigation into the questions raised with regard to the Kings Square Business Plan:
(a) if so, what were the findings; and
(b) if not, why not?
(4) Is the Minister satisfied that the Kings Square Business Plan:
(a) accurately represents the financial implications that the $45 million project will have on the City of Fremantle’s asset base; and
(b) correctly represents the rate of return and net present value derived from this investment of ratepayer funds?
(5) Is the Minister satisfied that the Kings Square Business Plan contains sufficient detail for ratepayers and Councillors to properly understand whether this project increases or decreases the asset base of the City of Fremantle, and if so, for what reason?
The Fremantle Society applied to see the business plan and contract the City of Fremantle signed with Sirona Capital but CEO Graeme McKenzie responded that legal advise was to not grant permission to do so.
Hiding behind commercial confidentiality won’t give the Freo residents and ratepayers any confidence in the process and integrity of it.
City of Fremantle Councillors will on Wednesday evening consider if it is appropriate and in the best interest of the City to purchase up to five apartments in the Heirloom by Match residential development on Queen Victoria Street. Match want to develop the heritage-listed former Dalgety Woolstores site but the pre-sales have been slow due to an over supply of residential units in the Perth metro area. Match needs pre-sales of 125 units but have only sold 118 so far.
The City is asked to support the development, and a building start by possibly April this year, by investing $ 3 million for five discounted one and two bedroom apartments in the complex.
I believe this is an interesting dilemma as it might set expectations and precedents for other commercial development in Fremantle. The Kings Square development for example is being delayed more and more, so what if Sirona Capital asked the City to help bail them out as well in some way or form? What if the Atwell Arcade developers can’t find someone to lease their ground-level shops? Should the city lease or purchase anything at all they don’t require to run a local government? Instead of purchasing five residential apartments, would it maybe be better for the COF to offer a loan to Match, and would that be appropriate to do?
As the officers point out in the agenda, it is unlikely the City would make a profit on the sale of the units because the residential market is down, there is an over supply of new units on the market, so COF might sit on the units for years and might even have to start renting them out which would incur maintenance and management costs for a long period.
The WA State Government is making a huge loss on apartments they bought in Karratha to support residential development there, so I don’t think the City of Fremantle should risk $ 3 million of ratepayers’ money to help private developers who are set to make millions.
The pressure developers constantly put on local councils that if they don’t do this or that than development will not go ahead is something Councillors need to reject, as it has become a common approach by developers to force Councils into making decisions that are highly unpopular in the community.
We all want Fremantle to move forward, progress and develop and we all want to see more life injected into the East of the city, and I really like the Heirloom development, but private developers take financial risks based on expected large profits and local government should not get sucked into speculative investment, supposedly because otherwise a development is not viable. Let’s not forget that Match also intends to develop the former Energy Museum site into residential and commercial, so why take that on when they can’t even get enough pre-sales for the Heirloom project?