Full cost of City Hall revealed as CBD deal details emerge

More details are emerging about a major deal council has struck with a Sydney-based developer to deliver the Maroochydore CBD.

More details are emerging about a major deal council has struck with a Sydney-based developer to deliver the rest of the new Maroochydore CBD.

Under the development agreement announced late last week, Walker Corporation has exclusive rights to market and develop most of the remaining land consistent with the delivery of the city centre vision.

The agreement was spruiked as a deal which would trigger $2.5 billion worth of investment into the new city centre project.

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The Daily put a series of questions to Sunshine Coast Council about the deal announced by Mayor Mark Jamieson on Thursday, November 19.

Responses provided confirmed council had spent $176.2 million as of June 30 on the new CBD project.

City Hall:

The full cost of the new city hall project was also revealed, with the total forecast budget $80 million including fit-out.

"Whether the full budget is required or not will not be known until the contract for the fit-out and commissioning of the building is awarded," a council spokesman advised.

The new city hall's design and construction tender was announced in December last year, with McNab winning the contract to develop the $59.9 million building in the new CBD.

The deal with Walker Corporation was heralded as a win for the region with a Tier 1 development company on board.

The council expects to break even 10 years earlier than projected and ultimately achieve an overall profit of about $41 million.

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But the costs associated with city hall were not included in council's spend to-date on the CBD project, and was not part of the Expression of Interest process for the balance of land.

"The Sunshine Coast City Hall project is not - and never has been - part of the Maroochydore City Centre project," a council spokesman said.

 

 

Sales so far:

In the answers provided to the Daily on Friday, council confirmed sales revenue of $11.5 million had been recouped to-date from sales which had settled within the new CBD.

Industry sources indicated they expected land sales to-date would have totalled about $30 million.

They estimated the balance of land to have a maximum value of about $100 million.

Council was unable to directly answer how much value remained in future land sales for the balance lot which Walker Corporation has secured options on.

DRONE: New development of Maroochydore CBD. Picture: Patrick Woods

"The former land delivery model forecast a cost of $495 million over the life of the project, with corresponding revenues to offset the expense," the council's response stated.

"Under that model, it was forecast council would achieve a cost neutral position by 2045 at the earliest.

"Under the development agreement with the Walker Corporation, it is forecast that Council will achieve a break even position by 2035."

Deal structure:

Council was unable to confirm details of the deal including what cut of Walker Corporation profits it may receive, or what commission Walker Corporation may take on future sales of developed sites.

The council said the terms of the development agreement were "commercial in confidence".

Council did confirm it would retain ownership of the land until infrastructure and buildings were delivered and sold and no land was gifted to Walker Corporation.

"Walker Corporation is not providing any upfront payment as it is not acquiring any assets at this time," the spokesman said.

"As stated above, council retains ownership of the land until it is built on and sold.

"Walker Corporation is responsible for funding the delivery of the majority of future civil works, commercial and retail buildings, residential apartments and the majority of the remaining infrastructure on the site, including roads and parks.

"Precinct 2 (the precinct reserved for a premium hotel and convention and exhibition centre) is not part of the development agreement."

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A council fact sheet confirmed the organisation had not waived infrastructure charges, as under the terms of the agreement, Walker Corporation "must pay all infrastructure charges associated with the obligations in the Maroochydore City Centre infrastructure agreements".

The profit:

Council explained the $41 million profit touted in last week's announcement was a "potential $41 million surplus" for the life of the project, which would be realised "at the completion of the build out by Walker Corporation".

When asked whether council's expenditure, now revealed to be up to $80 million, on the new city hall would negate the forecast $41 million profit, a council spokesman said the city hall project "is not - and never has been - part of the Maroochydore City Centre project".

Council was also quizzed on if the $41 million profit included ongoing costs associated with its automated vacuum waste management system, construction and maintenance of carparks, and ongoing maintenance of civil assets it would acquire from Walker Corporation, including parks and waterways, and how much it anticipated would be spent on those items.

"Council will receive rates revenue as buildings are developed and sold," the council spokesman advised.

"Rates revenue is then available to cater for maintenance and operations of the community infrastructure within the Maroochydore City Centre.

"This is no different from any other development."

The council estimates future rates revenue from the area could total $45 million.

Benefits:

Under the deal council will maintain ownership of the land and built form until the execution of contracts for sale or lease.

A council spokesman said if council continued with the previous land delivery model, it would have been responsible for funding and delivering parks, roads, waterways and other civic infrastructure.

"Under the new development agreement, Walker Corporation is responsible for funding and delivering the majority of the civic infrastructure, relieving council of this estimated $300 million infrastructure obligation," the spokesman said.

Council was unable to say due to commercial in confidence reasons whether Walker Corporation or council could exit the deal if targets weren't met.

On Thursday Cr Jamieson told the Daily that eight or nine companies expressed interest in developing the balance of the land.

"Some were ruled out early on," he said.

"This included some who wanted to position themselves around a particular piece of land, whereas we wanted a partner for this development."

He said there was a short-listing process which involved the board of council's development subsidiary SunCentral, legal advisers and a probity adviser .

The council spokesman was unable to confirm if Queensland-based developers had been in the running.

"Following a rigorous assessment and interview process, the SunCentral Board recommended to council that Walker Corporation had the requisite capabilities to partner with council on the delivery of the Maroochydore City Centre project," the spokesman said.

"This recommendation was supported by council.

"Following this decision, a due diligence review was undertaken, resulting in the development agreement, which was executed on 18 November 2020."

Future of SunCentral:

Council was unable to say what would happen to SunCentral and its board following the deal being negotiated.

It was unknown whether the council-owned development company would remain the same size or be scaled down, who would remain and what payouts, if any, council expected it would have to make.

"The implementation of the development agreement inevitably results in Walker Corporation taking a key role as a project delivery partner," the spokesman said.

"Over the coming months, council will review its own role in the project and that of SunCentral, so that the parties are best placed to fulfil their responsibilities under the development agreement."

As part of the agreement, there would be opportunities to review the development scheme over the life of the project as circumstances change and to "improve the infrastructure and buildings delivered on the site" a council fact sheet stated.

"Under the terms of the development agreement, council retains responsibility for approving any changes proposed by Walker Corporation to the Maroochydore City Centre Development Scheme prior to their lodgement with Economic Development Queensland," the fact sheet read.

When asked whether council would consider taking the lead on a large-scale, or smaller scale development again, the spokesman said the question was "nonsensical".

"There is only one Principal Regional Activity Centre designated in the SEQ Regional Plan," the spokesman said.

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