‘Crisis point’: North Sydney Council rates could double to fund pool

North Sydney residents’ rates could double as the estimated cost to rebuild their storied Olympic pool soars past $100 million, prompting the NSW local government minister to urge a rethink on whether councils should take on such large infrastructure projects.

Weeks after North Sydney Council said it would need to make “critical decisions” to salvage its finances, councillors will consider four options that would result in rate hikes of at least 65 per cent and possibly up to 111 per cent over three years.

The project was recently delayed due to problems with the steel roof framing over the 25-metre indoor pool. The structure has since been reassembled.Credit: Dion Georgopoulos

Mayor Zoe Baker said the rising cost to redevelop the ageing pool, which opened in 1936, was a “crisis point” for the council’s finances. She said the organisation was considering “every option”, including cutting costs and selling council assets, before it resorted to lifting levies for landowners.

“We’re now facing a reckoning as a council and a community, and we need to address the long-term financial sustainability of the council. We’re looking everywhere first before we come to residents.”

The revamp of Milsons Point pool has been characterised by cascading controversies, including cost blowouts, delays, heritage concerns, legal fights and doubts over its scale and design.

A November project update said the value of the construction contract was $91.47 million, but the council would need to find an additional $17 million as the forecast cost had risen to $122 million.

The council, which has an annual operating budget of more than $130 million, borrowed $34 million from its cash reserves to fund the pool redevelopment, in addition to $51 million in external loans.

A council report, prepared by staff before a meeting of councillors on Monday, said the organisation was in a “very weak” financial position and its long-term financial outlook was “unsustainable”.

“[The] council’s financial performance has led to increased infrastructure renewal backlogs which cannot be addressed through existing levels of revenue,” the report said.

“The increased capital costs will have ongoing operational cost impacts, with a $4.7 million deficit.”

The pool closed in February 2021, and construction began the following month.Credit: Dean Sewell

Baker said the former council’s “terrible” decision to sign the contract for the redevelopment before the designs were finalised had caused many of the cost blowouts and delays. A loss of revenue from parking tickets and fines during the pandemic had also left a $9.9 million hole in the council coffers.

On Monday, councillors will debate various suggestions for increasing revenue from rates to help repair the council’s finances.

The council is proposing to increase its minimum residential rate – which is paid by 77 per cent of landowners – of $715 to $1300, and its minimum rate for businesses from $715 to $1400 next year.

It also plans to consult the public on the four options for increasing rates above the 5 per cent rate peg for 2025-26 before the council applies to the Independent Pricing and Regulatory Tribunal for a so-called “special rates variation” early next year. Any changes would come into effect in July.

The redevelopment includes upgrades to the 50-metre and 25-metre pools, a children’s water play area, an expanded gym, a cafe and a gelato bar.Credit: North Sydney Council

“North Sydney has the lowest residential rates in our regional organisation of councils and among the lowest in metropolitan Sydney,” said Baker, noting at least three of the options would take its rates up to or just above the average for Greater Sydney.

“It’s no comfort to North Sydney residents and ratepayers that we’re having to do this.”

Asked whether it was fair that costs largely linked to the pool redevelopment were passed onto ratepayers, Local Government Minister Ron Hoenig said it was “positive that the council is tackling this head-on and looking at options it can bring forward for discussion with the community”.

However, stressing he was “not being critical of the current council”, Hoenig said the pool was “an example where councils need to think about the potential consequences of their decisions and whether major projects like this are in the best interests of their communities if they carry so much risk”.

Baker said the council was updating Hoenig and the NSW Office of Local Government on the redevelopment. The council report said it had also prepared a draft governance strategy designed to “guide decision-making processes and mitigate the risks associated with major infrastructure projects and investments” to prevent similar “financial missteps” in the future.

Baker said: “I’m hoping the lessons of North Sydney Olympic Pool, and particularly the decisions made about it from the get-go, will help other councils so they don’t walk the path North Sydney has.”

The council said the pool would cost $58 million when plans were approved in 2020. The site closed in February 2021, construction began in March, and it was supposed to reopen in late 2022.

Construction is forecast to be completed in May.

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