City of Fremantle’s $3,000,000.00 Shopping Day

pile of money

C1503-4 HEIRLOOM DEVELOPMENT such a simple innocent heading, could be anything but open the agenda and this simple 2 word heading is worth $3,000,000.00 of rate payers money, no special projects meeting, no SGS meeting just straight to full council we need 3 mill, simple?

So this Wednesday we have a quick to council decision on whether to buy 3 million dollar worth of apartments to help a company get its project off the ground if not what’s the rush?

I see on Roels blog (FREMANTLE CITY TO BAIL OUT HEIRLOOM PROJECT) a good series of questions and comments raised by the community, it looks to counter that, on Mayor Brad Pettitt blog he has put up his own questions and conveniently answered his own questions for us to better understand the situations, convenient?

A few questions or queries I have,

  • No community consultation?
  • How much due diligence has been put into this decision?
  • Very simple mention in agenda the heading gives no hint to a 3,000,000.00 shopping decision, why?
  • It’s this in the best interest of rate payer’s funds or is it the best interest of councillors ideology?
  • Could this decision unduly influence other investors i.e. 1st home buyers thinking that if the city thinks it’s a good investment they should get in, what happens if it all goes south?
  • What happens if other investors look at poor pre-sales as a bad investment signal and start pulling out?
  • What’s to stop the Kings Sq development laying the same sort of request to the COF?
  • Will the city need to invest in their other projects to get them off the ground is a new precedent being set?
  • Is this in the best interest of the rate payers of Fremantle or does it best serve Councillors ideology of density at all cost?
  • Is public funds the best way for COF to encourage development surely if the development was a great deal wouldn’t investors be buying in?
  • With the glut of apartments coming on line is this a good financial investment, job growth slowing, state population slowing, wasn’t this all the news in late 2014?
  • Does council have any independent advice on this purchase, $3,000,000.00 it’s not pocket change?
  • It seems we have a lack of funds for city maintenance but no issues spending to help developer’s profit margins?
  • How many apartments projects can the COF afford to buy into, will it be renting office space next, or retail shopping to drive that, where will it end?
  • As I have read on Roel’s blog if the project will go ahead anyway, why does the city need to get involved, or is it becoming a house of cards?
  • Does the ability of the project to sell its self and the council rush to prop it up send any messages to other investors?
  • After what we saw what was reported on what this group delivered in the South Coogee and the reported issues of quality does this not make COF speculative investment even more questionable?
  • If Match couldn’t get it to work then had to get Sirona in to drive it and it still doesn’t work, maybe the property is just overpriced, the best judge of value is the market, perhaps their model is just wrong if they can’t get enough sales after 3 years?
  • If the properties are overpriced just drop the price to get the market interested, development is a risk no different than the stock market if you get it wrong you lose money, isn’t that how the free market works?
  • If Councillors believe it is such a good investment why don’t they just buy the apartments themselves, put their money where they believes are?
  • What other costs will the city occur if the apartments are built and not able to be rented, will they rent it out below market cost, what other strata fees or management fees/costs will the city have as an ongoing expense further increasing risk or loss?

To be clear it is not worded as the city looking for a good investment it is the developers coming to ask for the money to get their venture off the ground?

Some quote from the Ordinary_Council_meeting/2015/25_March_2015?agenda or read the whole item yourself

“EXECUTIVE SUMMARY To consider a request from Match Property Group to purchase up to five (5) apartments in their Heirloom Development at 36 Queen Victoria Street, Fremantle (Fort Knox). It is recommended that Council consider entering into an agreement with Match for the purchase of three single bedroom units and two of the two bedroom units to assist with the development achieving the required sales target to begin development.

Financial It is anticipated that the City will fund this agreement using unallocated funds in the Investment Reserve. The reserve currently holds $12 million in unallocated funds. The amount needed to execute the agreement if all five (5) units are purchased is $3 million.”

Could this be the new standard for Fremantle council, investing in every venture to get things kick started, I saw and heard in town the massive criticism of the Barnett government investing in apartments in mining towns, the opposition attacked the government, see linked story.

Opposition attacks WA Government after buying Karratha units it now can not sell in flat property market

So it seems the council will also vote on delegated authority for the CEO to act on the cities behalf, the project hits a few benchmarks and he can just sign up?

I’m sure it will be anyone asking questions or having an opinion will called Freo haters, Freo bashers or of running down our city, it’s interesting when you have an opinion that differs from some of the left-wing ideologists, they first attack is with claims of hate speech and shoot the messenger or in this case the questioner its almost how dare anyone have an opinion different to theirs?

Lastly I thought the idea of council meetings where to have an open discussion on the facts provide at the meeting and listening to all the councillors points of view, questions, concerns, support, etc, then to make up your mind, from what I’m reading online it seems some have already made up their mind is it a done deal already?

 

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One comment

  1. Dick Baynham says:

    If that is the amount the City and the Council are paying I would be stunned. My first impression is that 5 x 1 to 2 bed tiny apartments in this development could not possibly be sold for $3 million in this marketplace. I need an expert opinion on the real value of these properties and I’ll get that now.

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