An independent investigation into Ipswich City Properties Pty Ltd – the Ipswich City Council owned company charged with managing the redevelopment of the city’s centre – has revealed a net loss of more than $78 million.
Ipswich City Council Interim Administrator Greg Chemello promised in November last year that he would ensure the full extent of losses to ratepayers would be investigated.
McGrath Nicol, one of the country’s most respected accounting firms, were given full access to the ICP and council books.
“The results of this investigation don’t make pretty reading,” Mr Chemello said.
“Ipswich City Properties was registered in March 2009, exactly a decade ago. Since that time, the company has incurred net costs totalling more than $121 million.”
“The current value of all assets held as a result of this is about $43 million, leaving the city with a current net loss of over $78 million.”
The report indicates that, at most, council would have saved about $7 million by managing the project itself, rather than putting it in the hands of a registered company.
Mr Chemello said the report showed why it was important to urgently progress the development of Nicholas St as a thriving city heart.
We know the redevelopment of Nicholas St is something the community wants, and we know it must be treated as a priority contributor to the broader growth plans of one of Australia’s fastest-growing cities.
“It’s important to understand that we are currently at the lowest point” Mr Chemello said.
“Buildings are empty which means we’re not receiving rent. In their current state, they aren’t of much value to any would-be investors in the city.
“So we are moving forward with the redevelopment council recently showcased.
“The city will have a large public plaza, administration building, city centre library and a busy entertainment hub which will be open to light vehicle traffic during the day and pedestrians in the evening. These will be valuable assets for Ipswich residents and ratepayers; more than just financial assets but community assets.
The currently empty retail and commercial buildings are being renovated, and will be leased to new businesses to come into the CBD. The buildings will then be sold to private sector investors, recouping as much as possible for ratepayers.
“I can’t do anything about the financials losses to date. It’s the position the city is in.
“I’m also not sure yet whether we’ll be able to recoup the entire $78 million in losses, but I do know that the value of their new major civic assets being developed combined with the future sale of redeveloped retail and commercial buildings will reduce the current net loss considerably.
- Council/ICP has incurred $121.56 million net costs during the life of the city centre redevelopment project.
- For this expenditure, council/ICP owns assets worth $42.82 million – $27.82 million of property, $15 million of work in progress redevelopment works.
- The current loss is $78.74 million.
- ICP spent $84.58 million on property acquisitions and redevelopment costs in the CBD.
- Council’s share from the Icon Building sale was $13.69 million.
- ICP has incurred $11.91 million in operating losses.
- $38.77 million of interest has been incurred on the original borrowings to buy the CBD and notional interest on advances from council to fund ICP.