New report reveals council company's massive loss over CBD
IPSWICH City Properties has lost more than $78 million through its failed attempts to progress the redevelopment of Ipswich's CBD, an audit of the company's books has revealed.
An independent investigation into Ipswich City Properties - the Ipswich City Council-owned company tasked with managing the redevelopment of the city's centre - revealed the significant loss.
McGrath Nicol was given full access to the Ipswich City Properties and council books.
"The results of this investigation don't make pretty reading," Ipswich City Council interim administrator Greg Chemello said.
Ipswich City Properties was registered in March 2009.
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," Mr Chemello said.
The council would have saved about $7 million by managing the project itself, rather than putting it in the hands of a registered company, the report reveals.
Mr Chemello said the McGrath Nicol analysis showed why it was vital to urgently progress the development of Nicholas St into 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," he said.
"It's important to understand that we are currently at the lowest point.
"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."
In July a Queensland Audit Office investigation into Ipswich City Properties revealed the company used private jets to travel the world and spent $83,000 attempting to suppress information about the trip.
The damning report was used by Local Government Minister Stirling Hinchliffe to justify the dismissal of Ipswich City Council.
Mr Chemello said the city would 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," he said.
"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."
Mr Chemello, who has announced he will move to close ICP, was not sure the $78 million in losses could be recouped.
"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," he said.
- The council/ Ipswich City Properties Council 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.