Opinion/Comment

Roll up for the ‘Sale of the Century’

An amazing opportunity exists for a developer bang in the centre of the Coffs Harbour Central Business District.  Coffs Harbour City Council’s (CHCC) largesse with ratepayer’s money and assets, will see properties sold to help ‘revitalise’ the struggling precinct.

By Rob Steuermann

Two ‘highly sought after’ lots with an unverified valuation of $20 million will be subject to a ‘fire sale’. 

The reason for this urgency has not been adequately explained but to ensure a quick sale the CHCC passed a motion on 11 July to discount the price by up to 10%.

There seems to be some confusion surrounding this decision.  We have been told that properties of this calibre will attract the interest of many and are going to be snapped up given the prominent location. But to help matters along apparently a discount is needed!

Part of a ‘fire sale’?

So, a potential developer can acquire

  • The Rigby House property 27-29 Duke St (lot 2 Sec DP 777398) or
  • The Administration Building, 2 Castle St (lot 1 Sec DP 566885, Lot 2 Sec DP 566885, Lot 8 Sec DP 758258)  or
  • Buy both properties.

For the sake of convenience the proposed sale is examined here in totality – one buyer of both properties.  Figures are indicative given the lack of detail available to residents but separate sales will not change the position in any significant way.

The net result so far has assets valued at $20M potentially sold for $18M.  The developer/purchasor benefits by $2M.

Rigby House

As if this is not enough incentive a long term tenant will be thrown in for a minimum period of three years. 

This tenant will be the CHCC, as representative of the Art Gallery, the Library and the Administration. 

The lease arrangement provides for a possible further three year extension. Under normal conditions an owner seeks to recover 10% per annum on their investment and there is no reason to think otherwise in this scenario.

So if the buyer is to tie up their property for a six year period their return will be $10.8M (6 x $1.8M).  A prudent investor is also likely to insert some type clause for an additional payment should the lease back not go the full six year term.  

But, given the apparent urgency for funds to be available, and other actions current in the Chamber, a three year period seems unlikely.  Residents should expect there will be the usual delays in a project of this magnitude. 

In short the developer spends     $18M.

They get back rents (6 years)      $10.8M

It leaves them out of pocket by     $7.2M.

This is a very reasonable return on investment and it ignores any capital gain arising on the improving valuation of the lot.

The published accounts for 2017-2018 year show the cultural services division ran at a loss of $2.4M and in the previous year it was $2.5M.  With a potential 6 year lease residents will support this function to the tune of $14.4M (6 x $2.4M). 

So the net result for residents is a potential cost of $27.2M (10.8 + 2 + 14.4).

This figure also does not include any commission the selling agent might claim.  This could sting residents by a further $1m plus should current real estate practices be followed. But could the Council intend to go ahead with the sale without a real estate agent acting for them?

But rest assured the rates are not going to go up as we have the Mayor’s word on this. 

Will the broader community suffer when funds are redirected away from roads, footpaths etc.? As the new Council Administration building rises, will crowds flock to the rejuvenated CBD, and will there be countless new jobs created as has been claimed? 

What a prospect! What a sale.  All of this is for the benefit of the residents.   Potentially it will cost the residents $27.2M and this does not include the cost of the building. 

From the community’s perspective it is very hard to see how the ratepayer wins out of all this. In fact ratepayers seem to be subsidising the developer/purchaser.

Roll up roll up – the magic of the CHCC is on display.  Stand in awe and admire this innovative approach then wonder if your money is being spent wisely.

Sale of the Century? Or is there another way to do this?

Rob Steuermann is a retired forensic auditor for the Federal and State Governments. He has published previously on Outlook, see; https://coffscoastoutlook.com.au/coastal-works-returns-not-enough-to-cover-gms-office/


A previous story here at Outlook on this can be found here; https://coffscoastoutlook.com.au/chcc-puts-four-properties-linked-to-gordon-street-up-for-sale-tender/

14 Comments

  1. Great article, from a well qualified and experienced man. And frightening. BUT….there is a cohesive group that is helping provide a focus and a means for our LGA’s residents to remain informed and updated, and most importantly …. “be heard” – something that certain cohorts within the Council and within the senior council management staff refuse to do. (But that’s another aspect altogether…..).

    What we need to do next, to oppose and overturn such madness, and preserve OUR ….”the people’s” assets and future financial viability, etc. ….. is for as many people as possible to prepare a letter of OBJECTION to the DA for the demolition of the contentious Gordon Street site, and in SUPPORT for Councillor Rhodes’ carried motion for a Matter of an Urgent Nature – MUN 19/05.

    And to do so by the start of business on this coming Thursday! At least 25 are needed to validate Cr Rhodes carried motion. BUT the more the better, for further evidence of the overwhelming majority of voters’ – 80%, (as shown via three documented means), outrage and disagreement with the Gordon Street proposal to be provided to the Minister for Local Government and the Office of Local Government.

    NB: Cr Rhodes’ carried motion calls for the demolition DA to have to go before Council, rather than rubber stamped and approved by council staff, as would be the norm for such a DA in “normal” circumstances ….which what has been going on in regard to us getting appropriate cultural facilities most certainly are not. The circumstances the residents of our area are exposed to are significant, complicated and have far reaching consequences.

    So….people reading this: please consider joining a Facebook group called Citizens’ Voice and you will be able to stay informed, and make use of a template letter that has all the addresses, reference details, etc, ready for you to just type in your submission. That template will be uploaded later today….

    https://www.facebook.com/groups/480074602544980/ Don’t think “someone else will do it” – People power necessitates as many individuals as possible taking action.

  2. Also…. to contact the Office of Local Government and the Minister for Local Government so that Contracts for Sale are stopped from being signed and losing our CBD council owned …..ie all the ratepayers’ ….. properties.

    More to come on that soon…… consider requesting to join the Citizens’ Voice public group:
    https://www.facebook.com/groups/480074602544980/

  3. Reckless in the EXTREME. Councillors take an Oath to act “in the best interests of the people” and the General Manager and Executive have a statutory obligation to ensure that the Councillors not only have sufficient information before them to make “informed decisions that are in the best interests of the people” but they “understand” the information that is being provided to them. No options were put. Purely and simply a “fait accompli” in the absence of public consultation “in the normal course”. When I spoke in favour of the rescission motion, Councillor Adendorff asked me how I reached the conclusion that the Gordon Street proposals would shackle rate payers and residents with crippling debt. I turned the question back on to the Councillor and he was unable to provide any detail of the funding for this project yet, under Section 10.9 Coffs Harbour Code of Meeting Practise the General Manager is obliged to provide a detailed report before decisions are taken on matters considered to be “outside the normal realm of operations”. Subsequently, Councillor Townley brought a motion that clearly demonstrated that she was ill-informed. Yet she had voted in favour of these proposals! At that same meeting Councillor Arkan did not appear to know that authority to sell properties and execute contracts had been “delegated by the Councillors to the Executive”. With rapidity, the General Manager acted by lodging a DA for demolition of the buildings on the Gordon Street site and calling for commercial agents to step up to the mark and tender for the sale of the four publicly-owned assets. Thankfully, Councillor Rhoades brought a motion at the last meeting calling for a HALT on the demolition of buildings on the Gordon Street site pending the hearing of the Peoples’ Petition. So, what is “in the best interests of the People of Coffs Harbour?” Well, in my opinion, redeveloping the existing Council Chambers which is a landmark at the entrance to the CBD, in accord with the NSW Government Architect’s original plans, would seem to be “logical” and “sensible” and far less costly. Would it be “logical” and “sensible” to proceed with an un-costed $76.5M project which will not generate revenue or create employment? Simple answer, NO. Would it be “logical” and “sensible” to retain existing assets rather than sell them at up to 10% below the valuation? YES. Should Council make available to the public NOW the valuation and quantity surveyor’s costings and assumptions. YES. Why haven’t they done so? Lack of transparency on the whole affair, SPEAKS FOR ITSELF as does the conduct of a Councillor who voted through the Gordon Street proposals when clearly in a conflict; being the proprietor of significant pecuniary interests in the CBD and the secretary and public officer of the Chamber of Commerce. In my view, at the very least, this Councillor should have erred on the side of caution and refrained from voting and the General Manager should have advised this Councillor to refrain from voting.. Of course, the General Manager may not have been aware that Councillor Adendorff was the secretary and public officer of the Chamber of Commerce as Councillor Adendorff failed to make disclosure of that fact on his Annual Return nor did the Councillor disclose membership to the Law Society of NSW. Janne C Lindrum

  4. 25 ratepayers need to lodge an objection to the demolition of the buildings at least until after the NSW Government has debated the petition.
    THIS IS YOUR CHANCE TO HELP STOP THE UGLY EXPENSIVE ” EGO ” BARN.
    “Now” you have a chance to send your personal message to each of the Councillors .

    For those who may be a little shy to write these letters you are welcome to use the following =
    To make sure you comply with council’s policy on submission letters you should print and sign the letter before scanning to send as an attachment to your email. Just one letter needs doing. ( can also be Snail Mail )

    I would include the general council email address as well – so it and the gm, councillor email addresses go in “To” line and the two state office email addresses go in “CC” line. Subject line can be – Letter of support for MUN Cr motion re DA 19920DA

    Your email can simply say –

    Dear Coffs Harbour City Council General Manager and Councillors

    Please find attached my letter for support for Councillor Rhoades’ motion regarding DA 199/20DA.

    Kind regards
    ( sign )
    ( phone Number )

    Now your attachment letter

    Xx September 2019

    To Coffs Harbour City Council General Manager (name) and Councillors (names)

    cc NSW Minister for Local Government
    cc NSW Auditor General

    Re: MUN19/05 DEVELOPMENT APPLICATION – DEMOLITION 27-31 GORDON STREET, COFFS HARBOUR DA 199/20DA

    As a ratepayer of Coffs Harbour I wish to lodge my objection to the above DA and I write in support of Councillor Rhoades’ motion to halt the demolition of buildings on the Gordon Street site pending the hearing of the community’s petition in relation to this matter.

    I wholeheartedly agree with Councillor Rhoades’ position that this matter be brought to Council for determination and not approved under delegated authority by staff. I believe the views of residents and ratepayers can be more accurately represented by the full Council. The number of signatures already achieved for this petition demonstrate the community’s concerns regarding this issue and it would not be appropriate to progress the matter any further until this petition is addressed.

    Yours sincerely
    ( sign plus your address phone and date )

    Editors note. Great work there Bill. Just a point though, writers do need to individualise their letters somewhat and not totally copy a pro forma otherwise they will be counted jointly as ‘one letter’.

  5. Very briefly nothing more necessary:

    It’s nothing more than a damned dogs breakfast

  6. Sorry ED ? I did say =
    “Now” you have a chance to send your personal message to each of the Councillors
    and , Your Email can simply say

    I didn’t say Copy & Paste ,maybe you are selling your readers short .

    • Oh don’t get me wrong Bill, as I said you have done a great service.

      I just wanted to highlight to people not to do a straight out copy and paste. By all means they can use what you have provided but I was pointing out they should adjust as needed.

      That was what I was really getting at. 🙂

  7. Thanks ED ,no problem with me.
    Back to our local Council ( Government )
    Lang Hancock made the statement . No government can make the community prosperous. … to its capacity to waste money;

  8. Gurmesh Singh MP has allegedly stated that, “From a legal perspective, the [Peoples’] Petition won’t change anything.” Well, I would argue that it will certainly change things at the next Council elections which are just around the corner. I would further argue that, as long as we permit people in public office or those who hold Senior Executorial roles to “work outside proper legal frameworks” we will continue to have a society in chaos. What does it mean to work outside proper legal frameworks? It means (a) failing to be transparent; (b) failing to act in the best interests of the people; (c) stating one’s interests as “minor” when they are “significant”; (d) holding inappropriate discussions with unnamed persons about the sale of publicly-owned assets; (e) failing to disclose one’s position on a Chamber of Commerce that, through its President (a member of Prosper Coffs Harbour), has come out in support of the Gordon Street proposals and who has, through the Chamber, caused to be published “unsubstantiated visitation numbers” which simply cannot be “substantiated”.

    From a “legal” perspective, the BIG QUESTIONS are (i) whether the General Manager breached Section 10.9 of the Coffs Harbour Council Code of Meeting Practise; whether, when the Councillors went to a vote on the proposed civic & cultural centre on 11 July last, they were “fully informed” and understood what they were doing when they delegated authority to the Executive to sell publicly-owned assets and execute contracts of sale of their behalf without first seeking their consent to the sale to a prospective purchaser and the execution of a contract to that purchaser; (At meeting 25/07/2019 Councillor Adendorff did have the faintest clue as to quantum of borrowings, interest rate etc and Councillor Sally Townley’s motion of 08/08/2019 would suggest that the Councillors were not fully informed on critical financial matters and Councillor Arkan did not know that the motion of 11/07/2019 delegated authority to the Executive to sell the properties and execute the contracts for sale without coming back to the Councillors); (ii) whether the General Manager should have recommended to Councillor Adendorff that he “abstain” from voting on the matter given his “significant pecuniary interest in the core CBD” and given his positions on the Chamber of Commerce (undisclosed on his Annual Return); (iii) whether Councillor Adendorff should, at the very least, have erred on the side of caution and not voted in favour of the motion (as recommended under the Act); (iv) whether committing to an un-costed schematic design touted at $76.5M which excludes the cost of land, fit-out, IT etc etc. is in the best interests of the people? (v) whether committing to a project that will not create employment nor generate revenue is in the best interests of the people? (vi) whether committing to a project that requires the sale of four irreplaceable publicly-owned assets is in the interests of the people when the existing council chambers can be redeveloped in accord with the NSW Government Architect’s original plans at far less cost to the people? (vii) whether committing to a project that will shackle a relative small community of ratepayers and residents (76,000) with crippling debt when an alternative presents for a public/private partnership on CITY HILL is in the best interests of the people? (viii) whether Councillors and Executive can be held accountable for not acting in the best interests of the people under the Local Government Act? These are very serious legal questions and, with all due respect, I submit the Mayor should be very concerned on the present state of affairs as her Council is in chaos and large numbers of her people are very unhappy. Janne C Lindrum

  9. robert yandell

    Janne Lindrum observes that “large numbers of her [the Mayor’s] people are very unhappy”. My observation by taking signatures in the Plaza is that they are more than unhappy rather they are very angry not just about Gordon Street but about many things especially the manner in which the CHCC conducts business. There appears to be a lot of smoke so the fire cannot be far behind.
    The Mayor brags about how good community is at achieving things especially the By Pass. Yes the community was fantastic and those in charge seem to have listened. The community in that instance numbered in their hundreds and according to the Mayor were worthy of being heard YET she ignores the 13,000 voices raised in anger at her and the CHCC’s conduct and behaviour.

  10. To quote from today’s on-line The Coffs Coast Advocate: “Parking concerns linger as development takes off. With more developments being approved parking has been highlighted as a growing concern.” That being the case, why propose a major development in a cramped and congested location when a site presents that is easily accessible from all directions, visual from the air, offers plenty of space of at-grade parking for cars and tourist buses? The logic alludes me. Great cities have defined thresholds. Janne C Lindrum

  11. Parking concerns , do the public know the Council has approx 50 (gated) car parking spaces under the existing Council Chambers which is just for executive council staff – this includes the Mayor and the General Manager.
    Now when they sell the Chambers “and move” those 50 car spaces will be lost , where are they going to find 50 such car parking spaces to replace the ones they sold off???

  12. There is a vacant block next to the Roads and Maritime Services ( RTA ) in Gordon street which was sold by the council only 3 or 4 years ago .
    At the time Council admitted PARKING ON-SITE AND IN THE STREET NEARBY WAS ALREADY INADEQUATE .

  13. What is it with people with power who think nothing of wasting money all for their own whim.
    Example , in the late sixty’s during the Poseiden bubble my wife and i were working at the mining town of Kambalda ( a satellite town ) the then area Manager of Western Mining he was basically the GM of the Town , came to his office one morning called in all his staff and told them each day on his drive from home to his office he sees “Green” Trees etc but all the Lamp posts are an ugly colour , so he told them to have them all painted Green .
    I’m not kidding this actually happened , all the Lamp Posts in the town were painted Green.
    He felt good about it , thats all that matters apparently

Leave a Comment

Your email address will not be published. Required fields are marked *

*