Playford Council pulls plug on $40m ice arena at Elizabeth

Playford Council has secretly shelved a $40 million ice arena at Elizabeth after being warned it exposed ratepayers to huge financial risks.

Artist impressions of the Playford Arena iceskating venue. Artwork: Supplied

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Playford Council has secretly shelved a $40 million ice arena at Elizabeth after being warned it exposed ratepayers to huge financial risks.

Councillors received a financial report on Tuesday which raised serious questions about a deal negotiated between former chief executive Mal Hemmerling and a private developer to build the arena on publicly-owned land adjacent to Main North Rd.

The project was a key plank of Mr Hemmerling’s vision to transform the northern suburbs through an ambitious program of capital investment and major projects, including a $50 million luxury hotel in the Elizabeth CBD.

The report, by chartered accountants BRM Holditch, said the council had failed to consult the public about whether they wanted the ice arena before it sought State Government approval to reclassify the land to enable its sale.

BRM Holditch said under the deal, the council would lend the developer $10 million it had borrowed from the previous Labor government.

An artist’s impression of the Playford Arena iceskating venue from the outside. Artwork: Supplied

It also would pay for the land to be cleared of powerlines and trees at the cost of $365,000 and install all of the required infrastructure.

THE developer would then not start paying for the land, expected to sell for between $1.6 million and $2 million, until three years after the stadium was built and operating.

The developer also would be given rate relief for six years totalling $2 million before having annual rate increases fixed for 10 years at a maximum of 2 per cent.

If the developer encountered financial problems, the council was legally obligated to buy the arena for $15 million and undertake a retrofit at the cost of $2 million.

BRM Holditch said the total potential financial risk for the council could be $40 million.

Its report said the public should have been consulted about the project before the council embarked on negotiations with the developer.

“Consultation had occurred on the revocation of the community-owned land but it did not involve the ice arena,” it said.

“Consultation had occurred on the (Playford Alive) masterplan but did not include the ice arena.

“There was no direct consultation by council on the cost (of the arena) or in regard to financial requirements.

“Given the scope of the Playford Arena financial support, council should seek the views of the community.”

Playford’s 15 councillors – who include nine new members elected last November – voted 14-1 to get acting chief executive Sam Green to tell the developer the ice arena would not be proceeding under the existing agreement.

However, they said the developer should be told the council was still interested in the project if the financial risk to ratepayers was removed.

Playford Council currently has a debt of $137.7 million, comprising fixed rate bank loans of $84.4 million and variable loans of $53.3 million.

Councillors were recently briefed on the $40 million ice arena project at a workshop held by the acting CEO, Mr Green.

He has been running the council since the councillors voted to terminate Mr Hemmerling’s $372,978 a year contract in December.

Playford mayor Glenn Docherty said he was hopeful the Playford Arena could still proceed if a new deal could be negotiated with the developer.

Council executives had told the developer, Ice Rinks Adelaide, about the elected members’ decision to shelve the project until the financial risks could be reduced.

“Playford Arena is complex and negotiations to date haven’t been able to navigate some of those complexities and risk to council, associated with the developer’s current proposal,” Mr Docherty said.

“Council’s administration are meeting with the developer (this week) for further discussion. We’d love to have this facility here and continue trying to make it succeed.”