Letter to Mayor and Councillors about King’s Square Business Plan

Dear Councillors,

The Fremantle Society has sought advice from a range of professionals regarding the Business Plan. We commissioned a licensed practising valuer to assess key aspects of the plan. The valuations of the properties are not the key elements of what is important, though one major developer told The Fremantle Society on two occasions that Fremantle Council was selling $50 million worth of assets for $29 million.

Amomg the key issues are the financial assumptions. We sent you our concerns in an article which quotes the licensed valuer, but not one councillor responded. To date, it seems not a single Councillor has sought independent advice to better understand the nature of these concerns. Referring questions about these issues back to the Mayor and City of Fremantle staff does not constitute independent advice.

As councillors you know that you have a fiduciary duty to ensure that you are properly informed to make a decision on this matter. Ignorance is and will be no excuse or defence in the future for the consequences of your decision if we pursue these issues through legal means if necessary.

Ten Things You Need to Know about the King’s Square Business Plan

1) While it is essential to do everything possible to get the 1250 Department of Housing workers to Fremantle, they do not have to be in a civic space like King’s Square. Kings Square should be used predominantly for civic, retail and residential purposes, with some commercial.

2) The financial assumption in the Business Plan that the new $47 million administration building will increase to $97 million in 20 years for the building alone is ‘absurd’ according to the licensed practising valuer commissioned by the Fremantle Society. It is totally illogical to say that the current administration building has zero value but that a new one will more than double in value in just 20 years to $97.7 million because it is promised to be a better built building. It is our understanding that NO single councillor has sought independent expert advice on that issue, and they should before voting.

3) The false assumption for the new building destroys the 6% claimed NPV, making it negative, and therefore NOT allowing council to borrow funds for it.

4) Council is selling the 850 car bay Queensgate for $16 million and then intends spending $15 million building a 400 car bay car park on the ‘sacred’ community site known as the Stan Reilly site. That is an unsustainable use of ratepayer funds.

5) Queensgate was earning $1,471,829 in rent in 2010 despite vacancies and some use of the building by council. The valuation of the building in 2012 was $15.9 and should have been sold then instead of emptying the building of tenants and waiting until Sirona was ready to purchase, meaning that when lost rent is taken into account and deducted from the heavily discounted sale figure of $6.3 million, ratepayers will be getting almost NOTHING for one of their prime assets.

6) Building a new administration building for the mayor, councillors and staff, along with an underground library the staff do not want, destroys half of King’s Square and prevents Fremantle getting a true civic square for the future as recommended by experts such as Ruth Durack and the Urban Design Centre using Geoffrey London, Adrian Fini, Richard Weller, Dominic Snellgrove, Patric de Villiers, and supported by others such as Ian Molyneux, Robert Campbell, Linley Lutton, and the Fremantle Society. If a new administration building is needed it does not have to be in the same location.

7) The designs proposed for Myer and Queensgate, which include building up to 7 storeys on part of the Queensgate site, not 6 as the mayor states, bring a Claremont Quarter style large box development to the heart of Fremantle which is foreign to and damaging of the heritage of the area.

8. The King’s Square Business Plan has so far failed to keep Myer and revitalise the city centre as proposed and the ratepayer is subsidising the developer Sirona, so the plan should not be extended but let lapse so that further negotiations can take place that do not keep having the ratepayer subsidising the developer.

9. There is no urgency to extend the plan yet again, because the extensions are simply more financial loss for the ratepayer and if the refusal to extend by Council triggers the purchase of the property by Sirona at least the $29 million will be available sooner rather than later.

10. If the plan is not extended but let lapse, council is in a position of strength to renegotiate a new deal which might exclude the necessity for example of Sirona building the administration building, a project the ratepayers cannot afford and which will do little to revitalise King’s Square except further damage the value of the civic square. Have the councillors satisfied themselves there are enough funds available to ensure a new administration building of the promised excellence, which has already gone up from $45 million cost to an estimate a couple of years ago of $52 million?

Besides commissioning a licensed practising valuer we commissioned a report on King’s Square which was part of our submission to the Premier when we met with him last week. They are attached.

(copies of those presentations can be obtained by writing to the Fremantle Society. We also presented a 37 page report to the Premier when we met him last week).

John Dowson
President
The Fremantle Society

24 April, 2016

 

ps  The photograph below shows the Claremont Quarter type box that will dominate the heritage civic centre of Fremantle, and the new administration building for the mayor, councillors, and staff to replace their existing one, which will further reduce King’s Square to King’s Triangle.

Real Estate - KS Fund 5

Development at Any Cost?

 

 The Fremantle Society want King’s Square area redeveloped but not at any cost.

REMINDER: IMPORTANT PUBLIC MEETING

Wednesday 20 April, 2016 at 7pm.

Notre Dame Uni cnr Croke and Cliff Street

 ‘$220 million’ King’s Square Business Plan

FREMANTLE COUNCIL REFUSE TO DISCLOSE KEY INFORMATION RELATED TO KING’S SQUARE RE-DEVELOPMENT PLAN

The plan, the largest in the City’s history and already delayed by several years, is due to be extended despite key financial questions from City ratepayers remaining unanswered. 

 Fremantle City Council are withholding financial information which may reveal that the major city centre re-development will result in close to a $50,000,000 erosion of Fremantle’s ratepayers asset base, rather than the gain claimed by Council. Fremantle ratepayers believe they have a right to know how their Council is spending their funds.

The city’s former Mayor, Peter Tagliafferi, has likened council’s actions to a    ‘…return of WA Inc’. He has described the project as “Crazy”, and “a disaster waiting to happen”.

The Fremantle Society (FS), in collaboration with the Fremantle Inner City Residents’ Association (FICRA) and Fremantle Residents and Ratepayers Association (FRRA), are holding a public meeting on Wednesday 20 April at Notre Dame University in Fremantle. At that meeting, presentations including information from a professional review by a licensed valuer of key assumptions, commissioned by the FS, will reveal the King’s Square Business Plan (a joint project by the City and developers Sirona), is not financially viable.

As part of the plan, the City’s Councillors have voted to sell property to co-developers Sirona at well below market prices, which will result in a financial burden that can only be recovered by large rate increases. The council have refused to hand over their financial assessment after many requests and the Fremantle Society and FRRA and FICRA are seeking an investigation into the financial assumptions of the plan.

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Missed Opportunity

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The vast and highly significant Police Precinct of over 7000 square metres at 45 Henderson Street, Fremantle, has been sold.

The asking price of $5.95 million plus GST gives freehold possession of seven buildings of varying age and importance, but includes the former heritage courthouse and heritage barracks, in a prime location near the World Heritage listed Fremantle Prison, King’s Square, and Fremantle Markets.

The sale at such a reasonable price was a missed opportunity, one that Fremantle Council should have grabbed with both arms.

Instead Fremantle Council are stuck in a disastrous business plan with the developer Sirona.

The Fremantle Society wrote to all members last week outlining serious concerns with the King’s Square Business Plan which basically sells $50 million of ratepayer assets to developer Sirona for $29 million. Then, council intends building a $50 million administration centre for the mayor, councillors, and officers in King’s Square, thus destroying King’s Square and turning it into a triangle. After all that, the ratepayers will be left with massive debt for decades.

The Fremantle Society is demanding accountability for such a flawed business plan. The plan was supposed to be the catalyst for revitalisation, but in effect, it has wasted millions of dollars and years of time. The mayor and councillors are directly responsible for the seriously flawed plan.

Under no circumstances should the business plan be extended after the May 10 end of agreement with Sirona.

A new vision is needed for the town centre.

The Fremantle Society is working with prominent architects and planners to present a better vision for King’s Square and the surrounding area, and that will be published in the next couple of weeks.

The vision sees King’s Square becoming a true civic square, better design and use outcomes for council owned Queensgate, and for example, better options for the Spicer site (the car park opposite the Henderson Street warders’ cottages that the council intends selling to Sirona) to give enhanced linkages between the Cappuccino Strip, Markets, Prison, Police Precinct, and King’s Square.

Fremantle deserves a town centre designed for the public good, not for developers’ greed.

Fremantle Society Dinner at the Federal Hotel

Fremantle Thursday March 3, 2016 speech by John Dowson, President

I especially wish to welcome Howard Shepherd and his wife Betty. Howard was on the original steering committee of the Society and helped write our 1972 constitution. Great to have you here 44 years later. We also have Ralph Fardon, who grew up in this hotel and lived here 1932 to 1952. We will get Ralph to answer some questions in between courses.

We chose this venue not just to support two dynamic new owners Marc and Nickola as they go about refurbishing this heritage building- and thank goodness they have already reinstated the original name of the hotel (they are offering to show you around the hotel before your first course, in groups of around 20). No, we chose this building because at 129 years of age it is a brilliant example of the sustainability possible from high quality architecture. Just across the road sits the Queensgate centre that council built only 27 years ago and intend demolishing. What does that say about council’s sustainability credentials and their management of our assets?

Worse still, they intend using the small amount ($6m) they are selling it for to Sirona to put towards a $50 million new building in Kings Square for offices for the mayor, councillors, and staff, along with an underground library the staff don’t want, turning the square into a triangle instead, and leaving us, the ratepayers, with massive debts and increased rates.

Also across the road sits our town hall, built the same year as the Federal (1887), but unlike the Federal, looking tatty, unloved and without a cent spent on it since the mayor came to office. It is so dangerous now the Australian flag cannot be flown from the building.

The Fremantle Society wants a complete rethink of the current priorities and plans for this area, to get better quality outcomes and ones that build on the heritage values of the area rather than destroying or undermining them. Ironically the Federal Hotel is listed on the Australian Federal Government’s Heritage Database: “….. of greater significance is the contribution the building makes to the Victorian streetscape of the west end of the city and, in particular, in relation to the Town Hall opposite and to the commercial premises which extend around the corner and into High Street. A building whose presence reinforces the surviving Victorian character of the very centre of the city where Town Hall, Church and commercial premises combine to produce a significant and cohesive townscape.”

King’s Square used to be in the West End Conservation Area, but it has been removed by the current council to allow developers more freedom.

Only ten years ago council spent $50,000 examining through Ruth Durack and the Urban Design Centre the best outcomes for King’s Square. The outcome favoured by the experts was to demolish the current council building in the square and relocate the staff elsewhere to the Queensgate site. They wrote that Fremantle deserved “a true urban square- of appropriate size and dignity to anchor the heart of Fremantle …. this is the concept that speaks to the City’s confidence in its future….and refuses to bow to the short term exigencies of a conservative marketplace. It celebrates the original structure of the space.”

Council’s changes to the town planning scheme to allow high rise buildings at Queensgate and elsewhere was done to kick start a revitalisation program. But years later there have been no kicks and no starts in this area. Six years wasted!

To achieve better urban design outcomes, and protection for the heritage of the city centre, and to avoid the financial black hole of the Kings Square Business Plan, we need to support the termination of the council’s agreement with Sirona on May 10th, an agreement which has already cost us millions of dollars. We need to support the Urban Design Centre recommendations for an expanded and improved King’s Square, and to focus more on revitalising existing buildings.

Let’s do this and let’s make the Fremantle Society once again a positive voice and a strong pulse of the community.

Federal Hotel c1898 (postcard sold at auction $496)
Federal Hotel c1898 (postcard sold at auction $496)

FREMANTLE KINGS SQUARE – A HOME FOR HOUSING

Colin Nichol attempts to trace the history of official announcements on a move to Kings Square of the State Housing Department.

IF you thought Fremantle Mayor Brad Pettitt was chasing a rainbow in his campaign to have the state Department of Housing headquarters relocated to Fremantle, government media releases and Hansard tell the story:
Beginning after the beginning with the Government Office Master Plan 2012-2018, which was approved earlier in March 2010 when cases were being prepared for decentralisation of government offices to various metropolitan centres including, “Department of Housing moving to Fremantle. There will be opportunities for other agencies to decentralise to Stirling and Fremantle, with the Department of Housing and Department of Commerce being the core occupants of multi-agency buildings.”

Not a definite undertaking, but indicative.

Then on 27 June 2012 Finance Minister Simon O’Brien announced plans to relocate 80,000sqm of government office space from the CBD to Stirling, Fremantle and Murdoch in the second stage of the State Government’s office accommodation reforms. Head office functions of the departments of Commerce and Housing would relocate to Stirling and Fremantle respectively, as anchor tenants for Government office centres in these areas. “Perth’s CBD remains the tightest – and most expensive – office market in the nation, a situation that shows no signs of easing any time soon,” Mr O’Brien said. The exact location of each site will be determined in business cases to be compiled over the next 12 months (by mid-2013?). These will canvass a range of options, from fully government-owned to commercially leased buildings.

He would now be seen as wrong about the office market, it is more competitive now, unfortunately for Fremantle – and still no published business case. In July 2012, the Minister’s office announced: “A large component of the 2012–18 Master Planning process aims to take advantage of the historically lower rental costs outside the Perth CBD. To do this, the Department of Finance’s Building Management and Works are working with agencies to develop business cases for the decentralisation of the head office functions of the Department of Commerce to the City of Stirling, the head office functions of Department of Housing to the City of Fremantle .. (etc)”

Looking better, but conditional.And later, on 25 July 2012 the Minister stated the Government Office Accommodation Master Plan metropolitan component was set to move staff from Perth’s CBD to metropolitan centres at Murdoch, Stirling and Fremantle.

More encouraging.
Then he said it again on 23 November 2012: “The Government is actively advancing its plan to decentralise office accommodation from the Perth central business district. Metropolitan locations announced in June by the Minister are Stirling, Murdoch and Fremantle. Perth’s CBD office market remains extremely tight, and there is an opportunity for Government to achieve significant savings through the decentralisation and consolidation of office accommodation.”
Beginning to seem more hopeful than helpful and achieving savings the motivator.

Responding to a question on this on 6 May 2015 from Member for Fremantle Simone McGurk, the present Finance Minster Minister Bill Marmion said: “We are looking for value-for-money options. In recent times, the property market in Fremantle has gone down. The actual number of value-for-money options being looked at, which will be delivered to me, are looking more favourable. My department is looking at re-evaluating three options for the possibility of some departments. The one that has been in the media is obviously the Department of Housing.” And, “We are looking at the options. Obviously, it has to be a value-for-money proposition. The taxpayers of Western Australia’s money has to be considered in the equation. However, I will say to the house that we are in support of decentralisation, and Fremantle is one area we are looking at seriously.” That theme of “value for money” is now cropping up frequently and significantly, the Kings Square site is one where the owners will need to recoup high costs.

Fremantle is looking less competitive.
It gets stickier. Parliament’s Hansard 24 June 2015, Premier Barnett responding to Simone McGurk: “As I said, that was happening over the last couple of years (since 2010), and it is now 2015”. It is not an easy project to put together. It is very marginal—in fact, it may even be negative. However, in good faith, the state has worked on the proposal of moving state housing from East Perth to Fremantle. The Minister for Finance has carriage of that, and negotiations have taken place with a prospective developer. Indeed, we may well go out to tender, and may well move some other government employees to Fremantle. It is not an obvious win for state government. To justify that project depends on, I guess, the goodwill and the revitalisation of Fremantle as being worth a price, because it will come at a price. The member for Fremantle should support that because her constituency is dying at its heart.

Not looking good from a cost-effective and competitive point of view and a different government department may be allocated to Fremantle, if any. There could be an announcement in the latter part of this year, possibly.

Now comes a twist: “We’ll withdraw from any proposal to put state housing into Fremantle, we’ll withdraw right now.” Not only did the Premier in Parliament on 24 June introduce a late new element of threat into Fremantle’s part in the Office Master Plan, during what suddenly became an argument over an un-associated matter, he used the ambivalent “proposal” word. Housing may not find a home in Fremantle after all. A business case had been prepared by the Department of Finance to assess the costs and benefits of the move and the Premier told Parliament the numbers showed marginal benefit. Then a glimmer of hope again: “The State Government is doing all it can to make that happen, but it may well come at a cost to the state,” he said. “We’re trying to get it to be at least break even. Fremantle has been talking about that for several years. I have been listening, and we hope we can do it.”

They’re trying, it seems. Very trying, since it has taken five years since the commencement of this process and the latter three to arrive at a position of continued uncertainty. With the government giving itself until 2018 to complete decentralisation, there is no clarity of either “if” or “when”, only “maybe” and no confirmation of “where”.

Colin Nichol