SEAN HEFFERON is a South Fremantle resident. Concerned about the decision-making behind Fremantle council’s $7.8m purchase of an O’Connor industrial site, he sent in an FOI request to see what he could find out. This is part 1 – part 2 next week
HOW did we get HERE?
By HERE I mean the cash-strapped situation the City of Fremantle is in (Covid-19 has hit Fremantle hard – however, certain decisions have contributed to depleted council coffers).
Case in point, the 2014 $7.8m purchase of 2 Jones Street, O’Connor – the site intended to replace the depot on Knutsford St – and never used. I estimate to date, 2 Jones St has cost at least $9m in direct costs (including purchase). Factor in the opportunity cost of lost rates and rental income (for the full site) perhaps another $2.5 – $4m. That’s a lot of CAT buses. Or roof repairs to the Art Centre. Or even pavement repairs.
Fremantle council started planning to relocate the Knutsford depot in 2004.
By 2021 we have a functional (and downsized) depot, and a “stranded asset” on Jones St.
A key driver for the Jones St purchase was the expected sale of the Knutsford depot – integral to meeting the One Planet framework.
“The One Planet Fremantle Strategy 2014/15 – 2019/20 highlighted the Knutsford depot site redevelopment as one of the City’s top five corporate actions: Investigation of sustainable development potential for the Knutsford St, City Works Depot site with a view to negotiating positive sustainability outcomes for any development on the site” (Minutes – Ordinary Meeting of Council – March 23, 2016).
Long story short, Landcorp and the council couldn’t come to agreement – and developers didn’t meet requirements. Was the council overly rigid in not budging on the project’s sustainability requirements?
A timeline of the Jones St journey gives an overall view: 2004 – Start planning for a new depot 2008 – Adopt the Knutsford St East Structure Plan – identifying the depot for redevelopment. 2010 – The city commissions a report to “identify requirements for a new depot to replace the existing depot in Knutsford St”. 2011
– Landcorp expresses interest in investigating options to purchase the Knutsford site. 2014 – The city makes an unsuccessful offer ($14m) on a potential new depot site at 144 Carrington St. The site at 4.4 hectares was “larger than the area needed for relocation and the plan was to subdivide the unused area for resale to support the cost of the purchase” (EM ref: 068/030).
A question here may be – is it council’s role to be a property developer noting also subdivision costs would have been in the millions of dollars?
2014 – The city purchases 2 Jones St for $7.8m in July (above the valuation of $7.15m).
2014 – The original tenant at 2 Jones St paying $640,000p/a moves out in October. Current rent is $11,994 p/a.
2016 – Council adopts a business case to enter negotiations with Landcorp to jointly develop and sell the Knutford site. Depot expected to move to Jones St early 2017.
2017 – Valuation for Knutsford site is$11m.
2018 – Council suspends negotiations with Landcorp and authorises a tender for purchase and redevelopment of the Knutsford site. All tenderers unsuccessful.
To be continued