Consortium behind failed old RAH development likely to demand $10 million compensation
DUMPED developers of the old RAH site will demand a multimillion-dollar payout after the State Government scuttled their deal, putting in doubt a major project intended to revitalise the city’s East End.
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DUMPED developers of the old Royal Adelaide Hospital site will demand a multimillion-dollar payout after the State Government on Tuesday scuttled their deal, putting in doubt a major project intended to revitalise the city’s East End.
The consortium is likely to demand $10 million in compensation from taxpayers.
It had drawn up plans for a $1 billion project after being named as preferred developer to revitalise the site, as the city’s medical precinct moved westwards.
But the consortium of Adelaide-based Commercial & General and Chinese government-backed John Holland is leaving open the prospect of a much larger legal claim if its settlement demand is not met.
As revealed by Advertiser.com.au on Tuesday, the Government will manage the old RAH’s development itself after failing to reach agreement with the consortium, modelling the project on other state-run ventures at Bowden and Tonsley.
It is understood the Government was unhappy with a $160 million payment from the developers for the site — equating to about $100 million in real terms once the 20-year project was complete.
The axing comes a fortnight after the $2.3 billion new RAH opened in the CBD’s northwest and almost a year after Premier Jay Weatherill revealed flashy artist’s impressions of the old RAH rebuild, which was to include 1200 new private apartments and an expanded Botanic Garden.
It also featured a new hotel and potentially a new contemporary art gallery.
Consortium spokesman Trevor Cooke saidthe partners were “deeply disappointed with what can only be characterised as a change of mind by the Government” and rejected suggestions the offer was not value for money.
“In terms of the amount paid, the timing of those payments and the security offered, our financial offer set new records for pricing in South Australia and is backed by strong guarantees,” Mr Cooke said, in a written statement.
“As the Minister (Urban Development Minister Stephen Mullighan) said himself, our offer was head and shoulders above anyone else’s.”
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Mr Cooke rejected suggestions that talks broke down, saying at no time during almost two years of negotiations did the Government suggest the consortium’s financial offer was inadequate.
He said the consortium, which was told of the rejection at 9.15am on Tuesday, had yet to fully consider its position. “Our primary aim will be to protect the interests of our investors and other stakeholders who invested countless hours and expertise to our collective vision for the site,” Mr Cooke said.
Premier Jay Weatherill said the Government was “taking control of the redevelopment”, and denied that a year had been wasted while examining the failed private overhaul offer.
He said the return to taxpayers would be less than the costs of demolishing the site to make way for new structures and in the end, it simply did not stack up as a private project.
The government now plans a development including returning more than 2ha to the Botanic Garden, educational and research facilities and attracting commercial tenancies.
Steps will be taken to procure a landscape architect to design the integration of the extra Botanic Garden and make market calls to develop a minimum five-star hotel, as well as find new uses for a range of heritage buildings which must remain on the site. A search for a world-class team to design the proposed Adelaide Contemporary Gallery project will also begin, with the size and scale of the project still undecided.
Art Gallery of SA director Nick Mitzevich said the competition to find a design team, announced in June, would now begin in October with a shortlist to be delivered in December and the winning team named by May next year.
Under the new plans for the site, private apartments have been axed and there will instead be a focus on student accommodation, aged care living and short-term stays.
The government says a “residential component” will maintain activity on the site, replacing people lost by the relocation of the hospital.
Mr Weatherill said the old RAH was a “once-in-a-lifetime opportunity in the heart of one of the world’s most liveable cities” and must deliver “a first-class result for all South Australians”.
“We don’t want to see this vital piece of our city fenced off for years to come and left to the market to dictate what happens and when,” Mr Weatherill said.
The Government hopes to buy intellectual property from Commercial and General that was gained in advancing its plans.
It also expects to have new contracts to develop the site in place before the state election in March, making it difficult for the Liberals to reverse any decisions if they win.
Opposition Leader Steven Marshall said collapse of the deal was “a major embarrassment for a government who has had this project on the drawing board for more than a decade”.