A good deal?: Real value of airport lease revealed

A councillor has questioned the publicly touted $500m value of the airport lease – with new figures suggesting it may not be worth all it’s cracked up to be.

Cr Paul Amos has suggested that the publicly touted figure of $500m is not an accurate representation of just how much the airport lease is actually worth.

One councillor's crusade for transparency on the long-term lease of Coffs Harbour Airport and the Enterprise Park development has revealed new figures, suggesting the deal may not be worth all it's cracked up to be.

After more than two years of confidential discussions, Coffs Harbour City Council announced in December that it had struck a $500m deal with investment firm Palisade Investment Partners to lease the assets over a potential 99-year period.

However Cr Paul Amos has suggested that this publicly touted figure of $500m is not an accurate representation of just how much the deal is actually worth.

READ MORE: 'Let's get on with it': Council votes to privatise airport

Cr Amos questioned senior council staff about the real value of the lease, considering the lease is structured so that the council's income would be received at varying times over the 99 year period as opposed to an upfront payment.

In the council agenda for this week, Cr Amos received a written response to his question of just how much the real value of the lease is in today's dollars, which takes into account factors such as inflation.

Coffs Harbour airport. Photo by Trevor Veale.

 

The Director of Business Services Andrew Beswick replied that the real value of the lease is between $127.5m and $132.3m in today's dollars.

Cr Amos explained to The Advocate that this means the community could be looking at an income of up to $1.3m a year from the deal.

Cr Amos has repeatedly expressed his concerns on handing over the Enterprise Park - the "golden goose" - saying it would be a missed opportunity for council to develop the precinct itself and reap the revenue.

"Remember - this is not just for the airport, but also the 99 industrial lots that go with it," he said.

"I was worried about the income stream, because if you've got something going over a 100 years … it's going to skew the value of that deal.

"I'm totally satisfied my question has been answered. The real figure in today's dollar terms is $130m for 99 years."

According to Palisade Investment Partners, the terms of the lease include an upfront payment of $25m to council, additional payments totalling $56.5m over seven years (including contributions to the development of the Airport Enterprise Park) and a share of revenue from both the airport and Enterprise Park operations.

Deputy PM Michael McCormack, Cowper MP Pat Conaghan and Mayor Cr Denise Knight turned the first sod of the Enterprise Park development in January 2020.

 

With the lease being touted to the community as a "landmark deal" of $500m when it was executed late last year, Mr Amos declined to comment when asked whether he felt there was an issue of transparency regarding this publicly released value.

"All I'll say is the most accurate figure to assess the value as presented by the council's consultants is $130m."

Despite this, the Director of Business Services stated in his response that the real value of between $127.5m and $132.3m was higher than two independent valuations, the net asset value recorded in the Coffs Harbour Airport's balance sheet, and also higher than the bindings bids received in October 2019 before the COVID-19 pandemic.

The lease has not yet commenced.