‘Shocking’: North Sydney Council to vote on 111 per cent rate hikes to pay for botched pool redevelopment
Sydney residents are facing an “appalling” rate rise of 111 per cent to help pay off $51 million for a botched project.
Sydney residents are facing an “appalling” rate rise of more than 100 per cent to help pay off $51 million in loans taken out by their council for a botched pool redevelopment.
The affluent North Sydney Council says it is facing a financial “crisis” after the shambolic redevelopment of the iconic North Sydney Olympic Pool blew out by as much as $30 million, to a total estimate of at least $90 million.
The 88-year-old heritage listed pool, in the shadow of Sydney Harbour Bridge, has been closed since early 2021 and the reopening date has been repeatedly pushed back as the project spiralled into disarray.
Council will later this month vote on whether to apply to NSW’s independent regulator to approve steep rate hikes for residents of 65 per cent to 111 per cent over three years as it seeks to clean up the mess and complete the redevelopment.
“This is the fork, this is the crisis, where we have to have a really serious conversation as a community about the financial impacts of the pool,” Mayor Zoë Baker told the ABC in November.
North Sydney Council has sought feedback from residents on four options, the lowest being a 65 per cent cumulative increase over three years.
At its November 25 meeting, council voted 7-2 to proceed with the community consultation, which ran from November 27 to January 10.
The feedback will be considered at a meeting on February 10, when council will vote on whether to apply to the Independent Pricing and Regulatory Tribunal (IPART) in its annual 2025-26 special variations process.
“The application to IPART will be submitted following that meeting if council decides to go ahead with an application,” a spokeswoman said.
Councils in NSW must seek approval from IPART if they want to raise rates above the peg set each year by the body. The deadline is February 3 but North Sydney Council has been granted an extension until February 14.
The November meeting saw heated debate between councillors and feedback from several disgruntled locals.
North Sydney Council, which represents about 69,000 residents of lower north shore suburbs including Cremorne, Kirribilli and Neutral Bay, is ranked as the fifth most advantaged local government area in the country by the Australian Bureau of Statistics (ABS).
Five of the 10 North Sydney councillors are new following last September’s elections, while Cr Baker and Deputy Mayor Godfrey Santer were re-elected.
Speaking at the November meeting, Cr Chris Holding said one of the reasons he ran for election was his “increasing frustration at the near decade of chaos North Sydney endured from 2012 until 2021”.
“Incredibly bad decisions taken by the council during that era have proved catastrophic and costly,” he said.
“I’m pleased to say there are very few of the drivers from that time [remaining] here in the chamber. Unfortunately the madness of that era has provided the financial legacy which drives our current council’s poor fiscal outlook.”
Cr Holding said council financial statements “illustrate clearly that … it was possible for former councillors to foresee the poor position they have placed us in today”.
“If you’re asking yourself how the Olympic Pool redevelopment could quadruple its cost from $30 million to over $120 million, look at who voted for it — the numbers do not lie,” he said.
“Some detail remains legally privileged for now but at the conclusion of everything it will be available for all to see. This is certainly a story worthy of investigation, perhaps even a documentary.”
Cremorne resident George Loiterton, managing director of a data analytics company, spoke at the meeting to offer a detailed rebuttal of the proposed special rate variation (SRV) based on North Sydney Council’s financial statements.
“In plain English, council will still add $67 million to the bank account over the next 10 years,” he said.
“If this is the case, there is no justification for the SRV. Amazingly, the SRV proposes expenses will be $20 million next year, an increase over 14 per cent over the financial year. So hold on — we’re in a financial crisis requiring increasing rates and structural reform, whilst at the same time the SRV proposes spending even more money. This is not structural reform at all. Without any focus on expense structure reform there is no financial justification for the SRV. Costs need to be reviewed urgently.”
Local business owner Kate Branch described the proposed increase as “shocking” and questioned why the council was spending millions on legal disputes, including before the NSW Land and Environment Court.
Resident Davy McDonald said he was “appalled” by the “extraordinary” proposal to raise rates during a cost-of-living crisis.
“If you really are progressive you would oppose this, councillors,” he said.
But Cr Shannon Welch highlighted the “critical importance” of the SRV, saying it would help reduce the loan for the pool which was the “albatross around our neck”.
Cr Santer said he rejected the argument that the previous council was to blame.
“We acted to fix the mismanagement of the pool project as soon as the situation was brought to our attention,” he said.
“We share the concerns at the proposed increases. But as high as the options presented in the report are, they would still only place us at the average of the rates levied by … other councils.”
He warned that if residents “refuse to face up to our financial situation” they might find “rubbish is no longer collected as efficiently”, and other services like libraries, community centres and pothole removal would be reduced.
Cr James Spenceley hit back, saying that was “not true”.
“This is a base level of service,” he said. “The cost is going into all of the larger and less critical projects. Rubbish is never at risk. Don’t fall for that argument.”
He asked why council was not “consulting with our residents on a lower increase”.
“Why are we not looking for consultation with our community rather than force-feeding them outcomes of 65 to 111 per cent?” he said.
In its proposal for the SRV, North Sydney Council warned that its “financial position is very weak and the financial outlook is unsustainable requiring significant structural reform”.
“Existing revenue is insufficient to cover current service levels, loan repayments, asset maintenance backlogs, infrastructure renewals, upgrades, and the development of new assets to meet the demands of a growing and evolving population,” it said.
Council blamed “decisions made in the planning phase” of the pool redevelopment, including the “contract strategy and the decision to proceed prior to designs being complete”.
“Significant risk was taken and has been realised,” it said, adding it was now facing a cashflow crisis.
An independent review of the pool debacle in 2023 noted council had “limited recent experience delivering projects of this type, size and complexity”.
It highlighted a litany of failures, including that access to the tenant’s premise was not available at the time of construction starting, the final design was not available at the time of contract award, most of the changes proposed by the contractor were accepted, wet weather days were not allowed for in the contract, and early works were not adequately planned.
“To date the project has experienced 22 days in delay due to Covid, 88 due to wet weather and 38 days due to the removal of hazardous material,” the report said.
Council has been forced to borrow $34.19 million from internal reserves and an additional $51 million from external lenders for the pool redevelopment.
It also blamed Covid for a $9.9 million loss in revenue.
North Sydney Council generates about $150 million in revenue per year.
Cost savings proposed under its long-term financial plan are expected to save between $2 million and $3 million per year.
Under its highest proposal, minimum residential rates would rise from $715 per quarter to $1300 in 2025-26 and up to $1716 in 2027-28. Business rates would rise from $715 to $1800 next year and $1848 in three years.
“There’ll be some [landowners], maybe most, who’ll be really upset and angry that they’re having to do this work because of a decade of chaos and poor decision making,” Cr Baker told the ABC.
“But our ratepayers highly value the sorts of services that the council provides, and I think, reluctantly … they will help to restore the council to the position it should be in.”
Originally published as ‘Shocking’: North Sydney Council to vote on 111 per cent rate hikes to pay for botched pool redevelopment
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