THIS is Fremantle city council’s $2.35 million park bench.
According to its own rules for the Kings Square business plan, that’s the value Fremantle council seems to have assigned this humble pew.
A fortnight ago CEO Graeme Mackenzie released a statement countering claims the council had inflated the value of its redeveloped administration building in order to imply the project would have a net positive return to ratepayers.
“The value of the City’s buildings at completion (without land value) was estimated at $44.75m,” Mr Mackenzie wrote. “The value in 20 years was assessed at $97.23m, calculated by applying a 3.5 per cent indexation rate each year.”
But when the Chook checked those figures on the back of an envelope, they didn’t pan out. Instead, it turned out to be a shade over $89 million.
We asked the council about the discrepancy and corporate services chief Glen Dougall replied the council had actually based the figure on a retained asset value of $48.8m, not the figure quoted by the CEO (which is the figure laid out in the business plan).
The council’s retained asset value represents the combined value of the civic space ($18m) and council office ($30m) elements of the redevelopment, including current value and building costs.
Mr Dougall’s breakdown of those figures put the current value of the civic space at $2.35 million.
But according to the business plan, that relates to lots 1 and 2 of Newman Court—both vacant except for the lonely park bench. If the CEO’s “without land value” is right, that puts this seat up there with Fremantle’s most expensive homes.
Similarly, Mr Dougall’s valuation of the admin building at $5.9m seems generous given the council describes it as a relic riddled with asbestos and concrete cancer.
We flashed off another email seeking clarification: so far no response.
We also asked whether the council’s independent financial advisers Leedwell Strategic had seen or approved the $97m valuation, which had been critical to the council achieving a net benefit from the redevelopment for ratepayers.
Similarly, we received no bites on why the council hadn’t applied indexation to the three properties it’s selling to redevelopment partner Sirona in order to give a true comparison of what its asset base would be in 20 years.
Local commercial adviser Martin Lee says it’s further evidence councillors were not given a true picture of the project’s finances before voting on it.
Mr Lee—who estimates the real outcome will be a $30m hit to the city’s investment base—says trying to get to the bottom of the council/Sirona deal has just about worn him out, and this sort of stuff is his bread and butter.
He was devastated when his concerns were dismissed by WA local government minister Tony Simpson, who later admitted to not even having read the Kings Square business plan.
His concerns were raised in state parliament by the Labor opposition via the Fremantle Residents and Ratepayers Group, whose chair Mark Woodcock says he’s flabbergasted the Barnett government isn’t interested.
He says the government should urgently take up a recommendation of the Corruption and Crime Commission and extend the powers of the auditor-general to investigate local government.
“This is a perfect example of something he could look into,” Mr Woodcock says.
by STEVE GRANT