Claims by Newcastle lord mayor Nuatali Nelmes that the move into rented premises in Stewart Avenue is "frugal" (Lord mayor defends cost of Newcastle council move, 5/10) seem not to be based on fact.
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Despite calls from Newcastle's independent councillors, neither the business case nor the full cost have never been publicly released.
Management has cited commercial in confidence, however, this could place the City of Newcastle in breach of the Local Government Act 1993 and the GIPA Act, which require the value of the lease and contracts to be made public.
The one cost which has been released is the $9 million fit-out. This is $2 million more than the cap promised by the CEO in 2017.
It also only tells part of the story. The move will cost millions more in project managers, designers, in-house and external consultants, IT equipment, variations, and early completion bonuses.
Council has been opaque about reporting these costs in one place to avoid pubic scrutiny. The original business case supported by councillors was predicated on the Roundhouse staying in council ownership with rental income offsetting the new building lease.
Councillors were assured that the net annual cost would be a little above $300,000 a year. However, once approved, the scope of the works changed.
A 6th floor 1000 square metre penthouse suite and outdoor area to accommodate the lord mayor and CEO was added. This is how the space was described in tender documents:
"The Lord Mayor and CN Executive office on Level 06 will accommodate approximately 8 people."
"The level of finish for the level 06 office space is a Grade A office level"
"The external landscaped areas are to include featured lighting and signage. The landscaping to external spaces is not to obstruct the views from the spaces."
This is hardly a description of a frugal office fit-out. This penthouse suite seems like an indulgence by the lord mayor at ratepayers' expense.
The lord mayor recently compared the costs of the Newcastle move with Maitland City Council. Those plans will see Maitland City Council spend about $23 million on its administration building, which the people of Maitland will own and which will increase in value over time.
Unlike Newcastle, Maitland is consulting ratepayers before a final decision is made.
City of Newcastle is investing more than $50 million in rent, outgoings and CPI increases over 15 years on a building ratepayers will never own, as well as more than $10 million on a fit-out that will depreciate in book value to zero before the first term of the lease expires.
The money gained from the sale of the Roundhouse will barely make a dent in the cost of the move.
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The unfortunate comparison made by the lord mayor only highlights the ongoing burden this move to Newcastle West puts on the ratepayers for many decades.
As staff begin to move into the new building, some senior managers have conceded they are holding their breath about whether there will be enough desks to accommodate staff.
The council is relying on absenteeism, people working from home and other staff being willing to hot desk in meeting and lunch rooms to make the new and smaller building configuration work.
Millions of dollars have been spent on upgrading the IT platform and giving workers laptops in this experiment.
However, the lord mayor and CEO have tried to distance these IT costs from the move into the new building.
It beggars belief how the lord mayor can claim that the public supports the move.
This will be the largest financial commitment ever made by the council, yet ratepayers found out about it from the media after the decision had been made.
This will be the largest financial commitment ever made by the council, yet ratepayers found out about it from the media after the decision had been made.
Prior to the decision it never appeared in Council's Operational Plans, Long Term Financial Plans, and is contrary to the submission made to IPART to justify Labor's 2015, 46.9 per cent rate rise.
Independent councillors believe it is time to lift the shroud of secrecy and provide ratepayers with a complete account of the move. This is supported by legislation and is the basis of good corporate governance.
It should be the minimum standard for this and other vanity projects pursued by the lord mayor at the expense of addressing the city's large and growing infrastructure backlog.
