Parallels are being voiced today around the acquisition of the Batemans Bay Bowling Club site and the findings of the NSW Auditor-General in regards to the NSW State government buying contaminated land at Camellia without a valuation.
The ABC today reported:
A scathing report by the NSW auditor-general has refused to rule out "misconduct or corruption" after the state government bought land in Sydney's west for three times its value.
The NSW auditor-general's report found the government didn't organise a formal valuation before paying more than $50 million for 6 hectares of land at Camellia.
The controversial sale was first reported on the ABC's 7.30 program, which revealed the price was triple the NSW valuer-general's previous valuation.
Transport for NSW (TfNSW) bought the land in 2016 for the Parramatta light rail project, and paid $53.5 million to developer Billbergia.
Billbergia had bought the land the previous year for $38 million.
Auditor-general Margaret Crawford found the department's decisions were "rushed and poorly-informed", and poor documentation meant "we are unable to exclude the possibility that the transaction was affected by misconduct or corruption".
The Eurobodalla Council paid $2.7 million dollars for the old Bowling Club only to condemn the building soon after due to it having asbestos. The cost of demolition was absorbed by the RMS who have leased the site for their Bridge construction administration buildings. The valuation of $1.55 million Unimproved Value is dated September 2016. Council paid $2.7m in July 2016.
Council were asked in May 2016 "Were market valuations for the site obtained from suitably qualified, independent property valuers? If an independent valuation was obtained, was the price payed greater or less than the opinion of the valuer/s? If an independent valuation was not obtained, how did Council determine what price to pay for the site?"
Council's Response: Valuations were obtained from registered valuers and the purchase is being undertaken in accordance with Council's Land Acquisition and Disposal Policy.
At the time Councillors Pollock and Leslight believed the property was worth $1.2 to $1.5 million (a NSW valuation later that year indicated UV of $1.5 million) The property was however purchased for $2.7m.
Above: this valuation, for Unimproved Land Value (equivalent to a cleared block) was made in September 2016 five months after council's purchase.
Council advised they had secured valuations saying "these are commercial in confidence and cannot be released".
The Beagle has not found one councillor who has sighted these claimed valuations.
Clr Pollock made comment of the time saying "we had no choice" even though he did not vote to buy it (he was absent). The vote to buy the property was done in secret during a Council meeting on the 26th of April 2016. It is understood (though no minutes exist) that Clrs Brown, Innes, Swartz, Burnside voted for the purchase and voting against were Clrs Harding, Brice and Leslight. Mayor Brown used his casting vote.
More reading: Much still remains unknown around the Council purchase of the BBay Bowling Club
To pay for the purchase Council took out a $2 million loan with TCorp with an estimated interest of $80,000 per year.
The news of the purchase of the Bowling Club site from the Catalina Country Club came as good news to the club, as reflected in their 2015 -2016 Catalina Golf Club report:
"The high point is our continued financial performance culminating in the sale of the bowling club.From October last year there was a steady flow of interest in this sale with one company provided exclusive rights for 120 days to investigate whether the site was suited to their purpose. During these negotiations a riparian corridor was highlighted as a contract killer. This corridor restricts development within 40 metres of the high water line and resulted in a 30 percent reduction in available land. The deal fell through. There were other offers and each was carefully considered but in the end the board was very pleased the successful bidder was the Eurobodalla Shire Council and this strategically placed asset would remain within our community’s portfolio."
In 2009, the Batemans Bay Bowling Club amalgamated with Club Catalina, in a bid to ensure its survival. By March 2013 the Batemans Bay Bowling Club were forced to close their doors following a review in early 2013 the Catalina Country Club executive identified an unsustainable decrease in the bowling club’s turnover. The three years had seen the club devalued by an estimated $6 million in greens buildings, poker machine licences and assets.
Eurobodalla Council determined to lease the former Batemans Bay bowling club site to Roads and Maritime Services (RMS) for its use during construction of the new Batemans Bay Bridge with councillors agreeing to grant the lease to commence 1 July 2018 for a three-year term with a one-year extension option.
Demolition of the former bowling club building was permitted as part of the lease and was the preferred option for RMS to allow more efficient use of the site.
Council advised in June 2019 that a valuation they had on the site revealed the site was worth more with the building demolished, and the report presented to Council noted it was more cost effective for ratepayers if RMS demolished the building, rather than Council demolishing it at the end of the lease. When asked "In light of the stated long period of Council's interest, why was there not a definite plan in place for specific development/s envisaged for this site before its purchase?" Council responded:
"Council has been considering the type of uses that may be suitable for the site for some time. A definite plan for a specific development has deliberately not been prepared. This has been a deliberate strategy to enable the community to submit to Council what should be developed on the site, and to also hear from the private sector as to what they may be interested in developing.
"Preparing a definite plan for a specific development would pre-empt community consultation and may unnecessarily restrict private sector interest in the site. Specifying the broad types of development Council envisages for the site will guide private sector interest without curtailing it. The strategy avoided costs for a site that was not in Council ownership and that having a well defined public plan may have created unreal expectation within the community."
Was the purchase a poor risk?
- in light of the Batemans Bay CBD as a whole being subject to sea level rise it might not be the best decision as the possible change of use proposed by Council for the site will require a DA that MUST consider sea level rise.
- in light of the known construction difficulties of the plaza opposite, specifically in regards to footings and water basins councillors would be aware that there are potential construction difficulties that may see redevelopment costs soar.
- in having no plans or purpose at the time while taking out a $2 million loan for an indefinite time many feel that the decision to purchase was ill advised at that the councilors were not sufficiently informed of Council's own procurement processes and the need to consider the "investment" as being responsible use of ratepayers money.
- in being advised that the building was in very poor repair one year before purchase and the value of the land was at best $1.4 million
- in coming directly after a widely objected to Special Rate Variation was voted in irrespective of 11,000 disapproving signatures indicates an audacity and an extravagance and a Council quite removed from a majority of its residents and ratepayers living in a regulated income economy.
It was noted in the Operational Plan & Budget 2016-2017, that the BBBC acquisition was described in the capital program as “real estate development” and this description is also used for an expenditure item for $106,295 on the same line as the capital expenditure.
Given that it states “real estate development” it is clear that Council had no intention of buying the old club house for the community facilities it offered as justification of the purchase.
