JOHN DOWSON is president of the Fremantle Society. In this week’s THINKING ALLOWED he takes aim at the council’s business plan for King’s Square, saying it could financially cripple the city for years to come.
RATEPAYER assets built up over generations are in grave danger of being squandered by the Kings Square business plan. If it proceeds it will erode ratepayers’ asset base by close to $50 million.
The Fremantle Society, the Fremantle Inner City Residents’ Association and the Fremantle Ratepayers and Residents’ Association all have long-held serious concerns about the financial validity of the plan but have been refused access to key documents since October 2014.
In 2012 the City of Fremantle signed the King’s Square business plan with developer Sirona Capital to revitalise Fremantle and keep Myer in town. The plan has done neither.
The plan was promoted in council ads as “the most anticipated urban renewal program in Fremantle’s history” (Herald November 20, 2012). Three weeks later former mayor Peter Tagliaferri warned, ‘this would be financial suicide if the city embarked down this path” (Herald December 15, 2012).
The agreement between the City of Fremantle and Sirona expires on May 10, 2016. The agreement has already been extended once at the CEO’s discretion, and it is likely it will be extended again at this month’s council meeting on April 27. It should not be.
The Fremantle Society has secured independent advice regarding the assumptions the City of Fremantle has hidden behind to fabricate its artificial positive net present value (NPV) for this project. Amongst other things, the advice confirms, “it is unbelievable to think that someone could or would state that a building (not building and land) would appreciate over a 20 year period”.
The independent advice obtained from the licensed practising valuer states:
“1) The residual valuation of the buildings in year 20 can not be reasonable and is not a sound assumption for this Kings Square Project (KSP). 2) The 20 year future estimate at $97.5 million for buildings which cost $47.44 million today is absurd.”
Without this assumption, the Kings Square business plan financial analysis collapses from a slightly positive NPV to a $30 million loss to ratepayers.
To fund this project, the council is intending to sell approximately $50 million of property to Sirona for just $29 million. The losses on the sale of valuable City of Fremantle property assets are not factored into the council’s analysis. Combine the two, and this project creates a black hole that erodes close to $50 million of ratepayer value.
The business plan misleads ratepayers, and those responsible must be held to account.
Peter Tagliaferri again broke cover last year (Herald, May 29, 2015) to warn that the council’s plans for King’s Square were: “crazy, seriously,” and a “disaster waiting to happen”.
While it is an exciting prospect that the Department of Housing may finally be making a decision to come to Fremantle, the project should not destroy ratepayer assets in the process nor damage Kings Square by building a new administrative building there and turning the square into a claustrophobic triangle surrounded by large buildings. There are other locations for the mayor, councillors, and staff.
Only 10 years ago the council spent $50,000 examining, through the Urban Design Centre, the best outcomes for King’s Square.
True urban square
Its report concluded 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.”
The Fremantle Society’s vision emphasises the prime importance of Kings Square — opening it up by removing the aged administration building, relocating staff into a refurbished Queensgate centre, and avoiding the unacceptable risk to ratepayer assets.
We need to learn from previous council projects at the Queensgate centre and Westgate Mall, which were financial disasters. The Kings Square business plan is much larger and financially riskier, and it is time for Fremantle’s elected members to listen to the people they represent.