Same as it ever was, same as it ever was (Part 2)

HERE’S part 2 of South Fremantle resident Sean Hefferon’s delving into the controversial purchase, then almost sale, of 2 Jones Street, once slated to be the council’s new depot, now a loss-making and crumbling assett. He says the council’s handling of the property raises the question of whether it should be acting like a property developer at all.

2018 – Council decides to retain the Knutsford site, “in a new facility accommodating restructured operations, using 20-30 per cent of the existing site area”. In effect, a “depot lite” plan. 

2018 – The city unsuccessfully proposes 

that neighbouring councils and the Southern Metropolitan Regional Council use the Jones St site as a shared recycling centre. 

2018 – Council decides 2 Jones St is “surplus to the city’s future operational requirements” – and “officers are to prepare a report for council’s consideration identifying options for future disposal of the property”. That is, to sell 2 Jones St. 

2020 – The city proposes 2 Jones St as a film hub site. 

2021 – The 2018 report concerning the sale of 2 Jones St is still not to hand.  

2021 – Councillors are asked to consider a ratepayer motion (mine) at the AGM of Electors asking for an external and independent review of the purchase of 2 Jones St. This motion was rejected (councillors involved in the original 2014 decision relating to the purchase, did not recuse themselves from the voting – this is disappointing as they became judge and jury – in my view a clear conflict presented). An amendment was passed requesting “the CEO prepare a report on potential medium and longer-term options for the Jones Street site”. Yet in 2018 a decision was made to sell the site.

Some speculative questions:

• What were the planning and decision-making processes that led to what in any reasonable estimation is a substandard outcome? 

• Was there pressure to obtain a One Planet objective? 

• Was the City of Fremantle lucky that the $14m purchase of the Carrington site fell through given what the depot outcome has been?

Some publicly available comments:

• 28/5/2014 – “the size of this property is suitable to the future needs of the City” (C1405-4)

• 23/3/2016 – “Operations are expected to be transferred to the new site in early 2017” (OMC)

 • 13/10/2017 – “the site’s bigger than what the council needs (Fremantle Herald, mayor Brad Pettitt)

The 2 Jones St site is riddled with asbestos – a fact not stated in the advertised Business Plan – nor publicly available council documents. 

Why put a document out for public comment when a key risk factor is not documented for comment? 

Due diligence

That said, the plan did include indicative costs for that site’s redevelopment to “cater for site operations” in the order of $5.5 to $5.8m – depending on which council document one reads. Doubtless a provision was included in those costs for asbestos removal – however, that is not specifically stated in the plan.

The pre-purchase valuation (redacted in parts) states:

“We note the extensive use of fibre cement/asbestos cladding in the construction of the warehouse/workshop and specifically, the cladding to the walls and roof, guttering and downpipes.”

Further: “A copy of a current asbestos register has not been provided” (at time of valuation).

The valuation made recommendations – it is unclear whether these were addressed as part of the due diligence. These recommendations included:

• an environment audit be done on the site;

• a qualified expert would need to be engaged to undertake an analysis of fibre cement contamination from building products which may have been used on the site; and,

• that an appropriate engineer’s report be obtained to assess the structural soundness of the warehouse/workshop building.

Asbestos

Recent photographs of the site show a battered building with missing cladding, damaged roller doors, graffiti, asbestos cladding showing signs of wear and tear – in effect, a rundown asset.

The site was valued at $7.15m in 2014 – and purchased by the city in 2014 for $7.8m. The most recent site valuation was $3.7m.

As stated above the site has never been fully utilised since 2014. The hardstand has been leased from time to time, but not the building and one surmises that is due to the asbestos contamination. 

The city has recently advised that asbestos removal would cost $140,000. Assuming the original rent of $640,000 was still attainable – then the cost of asbestos removal would be recouped in a matter of months. Yet the site has remained underused for years.

On review could the due diligence of not just the property but the risk management aspects of the entire 2 Jones St “journey” have been done differently?

I understand a sitting councillor recently stated words to the effect on social media:

“I lament the slowness of the redevelopment of key sites around Freo. The council and the state need to work together and with more urgency to get these areas developed and contributing to the local economy.”

To an extent I accept the above. However, such lamentation will come to nought I fear if council fails to learn key lessons from the past.

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