The Kings Square Contract Extension. A Response to the Questions Raised
April 21, 2016 30 Comments
I normally choose not to respond to the Fremantle Society’s recent tendency to launch unconstructive attacks rather than engage in a civil and constructive dialogue. But the latest email and ad in the Fremantle Herald promoting their public forum on the Kings Square project makes some serious and inaccurate accusations that do need to be corrected and responded to. This is especially, given Councillors and I could not be at their forum due to a Fremantle Council committee meeting at the same time last night. I will restate some background on the Kings Square project before responding directly to the main issues raised by the Fremantle Society.
First some background:
What is the Kings Square Project? – it is an integrated development of the centre of Fremantle that aims to revitalise the tired civic precinct with the new library, tourist info centre and civic building as well as see the Sirona-owned former Myer building redeveloped for office along with new building on the Queensgate cinema site and Spicers site (see below for map). In doing so it also aims to attract a State Government department to the centre of Fremantle. The final stage in getting a Government Department to Fremantle was reached last week with a detailed proposal submitted to the Dept. of Finance. Pleasingly and after many delays we are told a decision on the final location for a new Government Department in Fremantle will be made in the early part of the second half of this year. This will bring over two thousand new jobs to Fremantle.
The Fremantle Society’s concerns
As you may have seen their recent ads, public forums, and emails the Fremantle Society are arguing against the Kings Square redevelopment. While some correspondence indicates that underlying this objection is an objection to higher (4-6 storey) buildings in the precinct, the explicitly stated reasons are an attack on the validity of the business plan and financial assumptions the City of Fremantle has made in pulling the project together. So I will address these directly which focus on two main areas.
The first is on the valuations of Fremantle Council properties. The Fremantle Society state that “Council is intending to sell approximately $50 million of property to Sirona for just $29 million”. To be frank I am not sure how they arrived at these numbers or whether they are backed up by a professional valuation. What I do know is the City of Fremantle has had independent valuations by CBRE & M3 Property that have BOTH come back with similar sub-$30 million valuations on the City of Fremantle assets that are sold as part of the Kings Square project (Queensgate office and car park and Spicers site car park). Actually less than Sirona has agreed to pay us.
To clarify this difference we have asked the Fremantle Society for either the valuations or the name of the company that did their valuation at $50 million but this information has not been forthcoming so far. As I have said to them, the Fremantle Council bases its decisions on the advice of experts in this complex area and they will need to provide this information if their view is to be credible.
- Future value of City of Fremantle Civic Building
The second disagreement with the Fremantle Society in terms of the business plan is the future value of the City of Fremantle’s new civic building. Our business plan states (again on expert advice) that if built to a civic standard and properly maintained as per the business plan that it will on a “20 year future estimate at $97.5 Million for buildings which cost $47.44 Million today”. The Fremantle Society believe it would instead decrease in value. While this increase in value may not hold true for a standard commercial building, it often does for a civic building designed to last far longer. This is especially the case for a civic building that is a winner of an international design competition and will set a new bar for sustainability in Fremantle. As an example of a civic building that has held its value, take the Fremantle Town Hall which cost around 19,000 pounds in 1886. The replacement cost estimate for this today would be many tens of millions of dollars I would assume. It has not depreciated to nothing as the Fremantle Society’s logic assumes but instead increased in value. Similarly the Fremantle Literary Institute (now Dome etc) built in 1899 by architects Wilkinson, Smith and Wilson after they won a design competition was built for a total cost of 1528 pounds. Obviously today it is also worth millions of dollars. The Fremantle Council in a similar manner is intending on building a building that will be the heritage of the future and designed to last the next 100 plus years.
In conclusion, beyond these two issues there is a philosophical debate about use of council assets and development of the Square. The Fremantle Society are arguing the freehold asset the ratepayers own in the civic triangle should be turned into a park and that as a result we should not attract State Government departments to the centre of Fremantle. I do not agree with this as that really would be a lost opportunity for Fremantle that would be both a poor use of the ratepayers assets and would fail to bring much needed professional jobs to Fremantle, the first real jobs growth in almost three decades.
Instead I am strongly supportive of unparalleled economic benefits that flow from a $220 million investment by Sirona and the Fremantle Council in our City’s CBD. Investment that will mean over, 1,100 construction jobs, new revenue to the City, major public art installations, a new library and civic facilities, new exciting retailers coming to town, an estimated $100 million plus increase in retail spend from this project alone plus other industry benefits resulting in other retailers and businesses wanting to call Fremantle their home. Seen holistically, the business case for transforming Kings Square is compelling.