Civic Hall is a stark illustration of a Council gone off track. Prime Minister Julia Gillard and the Labor Government admitted after replacing Kevin Rudd as leader and Prime Minister that they had "lost their way". Ballarat City Council has done the same and needs to acknowledge as much and change tack quickly.
What's wrong with the proposal?
Flaws with the proposal are quickly mounting up, but I'll be focusing on five problem areas. So here's the third of five 'C' problems with the Civic Hall demolition and redevelopment proposal:
Commercial and financial viability
While there are at least a couple of dissenting councillors, the main financial justification from Ballarat City Council for their Civic Hall proposal is that satisfactory economic studies have been completed. The $40 million is a sound investment that will fit within Council's financial plan to keep rate rises to a minimum and continue to repay existing debt.
Without releasing any detailed economic study or an updated financial plan, Council expects us to trust that they have everything under control and their advice is sound. However, even a cursory look at the plan must call into question the apparent community benefit and economic case for the Civic Hall redevelopment.
Firstly, for an apparently conservative council, the Civic Hall demolish and develop proposal is old-school left-wing economics. Government has the vision, government builds infrastructure and government can turn a profit on their investment utilising cheap access to funds as public debt usually attracts lower interest rates than private corporations can get.
Perhaps Council does have economic projections that tell them the $40 million investment will eventually turn a profit by commercialising public space, developing it and leasing or selling it to the private sector. It's quite a gamble to take with a large sum of public funds and debt however and a very uncommon, largely unprecedented, foray from a Council into commercial office space development.
This is also where the old left-wing economics ends and the neo-liberal conservative ideals are revealed. The actual end result of the deal, which sells a public asset in the Phoenix Building and commercialises and privatises a community asset in the Civic Hall site is a loss of public and community space and assets. What Council's real motivations are is unclear, but on both counts it is at best a gamble and an attack on community space and at worst a financial and public disaster.
Like most people, I see the old tags of 'left' and 'right wing' when it comes to economics and politics tired, old and fairly meaningless these days. However in one disastrous proposal Ballarat City Council has brought them both back to life in what seems to be a very confused proposal.
At the very least Council should make public the economic studies they are relying on. They should also be far more upfront about two things: the fact that their plan includes a sell-off of large parts of the Civic Hall site for private development and the impact on rates.
The Civic Hall plans now revealed and approved by Council show an 'orchard' covering a large space along Doveton Street, including the corner of Mair Street. Nice green open space for the community, perhaps even fruit trees as 'orchard' suggests. Actually, they won't be fruit trees, in fact they're unlikely to even mature because it's simply land that Council plans to sell off to private developers and the entire site, with the exception of a square and footpath, will be developed into office blocks and car parks.
Council's stance on the impact of the proposal on rates is also highly deceptive. They claim there will be no impact on rates and rate increases will continue to be capped at 4 percent per year. Sure, but there's a few problems with that. This Council's term expires towards the end of 2012 so they cannot guarantee anything past 2012 because it will be for a new Council to decide what happens with rates.
The new Council elected in 2012 will find themselves burdened with a huge debt from the Civic Hall project. Continuing to cap rates at 4 percent, having paid $40 million for this questionable project and with a large debt to pay off, would require cutting services or infrastructure investment that would otherwise be affordable. Amongst the scant financial details provided by Council is that the loan taken out for the project will be paid over a 20 year period. That's five different Councils and 20 years of money servicing a debt that could have been directed towards other community services and infrastructure.
Talking about maintaining rate rises at 4 percent as if there is no financial impact from the project is deceptive and can only be rectified with a far higher degree of financial disclosure. Council needs to open the books. The one advantage of Council being the developer of the project is that there should be a greater degree of transparency without 'commercial-in-confidence' concerns. We are, however, yet to see any signs of this.
It's certainly credible that Council have outgrown their existing space, but it's a big jump from needing some extra space to spending $40 million demolishing a community asset, selling off a big chuck of it and redeveloping the space for offices. All that is required is a small development on a corner of the site or the consideration of other options such as purchasing or leasing existing or proposed office space. A little creativity could surely find the Council some suitable space and even integrate them into the community.
Certainly the $40 million spend and consequent debt along with the overall loss of public assets and community space is a big cost to the community as a whole, but there's another major economic implication that is hard to miss. The impact on the private commercial property sector will be profound and entirely negative. There is already an abundance of vacant buildings and sites in central Ballarat in need of restoration, retrofitting or development. There are also two major office building developments that have been approved by Council for the CBD.
Construction of the approved office buildings has not yet begun and you could forgive the developers for reconsidering the developments altogether in light of the Civic Hall site proposal. How viable will new commercial office space be for developers and investors when Council is planning to construct and put on the market a substantial amount of office space themselves?
Council not only needs to find occupants for their Civic Hall development while they grow big enough to fill it, but by vacating and selling the Phoenix Building even more vacant office space will be put on the market. Their financial plan also requires selling the remainder of the Civic Hall site for, you guessed it, the development of more office space.
Again, it is entirely possible that Council has considered these issues and have advice that the demand for all this new office space, private developments included, will be there. At the very least Council's development strategy is confusing as most new commercial space and other office development has until now been directed to the Mt Helen Technology Park and commercial site. None of which of course have been developments undertaken by Council.
As well as a questionable economic prospect, the proposal for Council to demolish and develop the Civic Hall site presents a conflict in Council's roles, becoming not just the responsible planning authority but the developer, investor and regulator of the development. That's another article, check back on Friday.Previous Civic Hall articles:
Civic Hall: Council's got it wrong - consultation
Getting Civic Hall wrong - Culture and Heritage