The City of Newcastle's decision to relocate its admin office has been regularly attacked in the Herald by conservative councillor Kath Elliott. Her recent effort (Lord mayor's frugal claim doesn't sit well with everyone) is so extraordinary in its misinformation and omissions that it demands a response.
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Missing from Cr Elliott's words is the fact that her colleagues John Church, Allan Robinson and Andrea Rufo all voted in favour of the move, and in favour of the lease being 'commercial in confidence', the normal practice for this style of contract.
Cr Elliott's opinion piece shows again her particular interest in the contract for the fit-out of the new building. What wasn't mentioned was that Cr Elliott never voted on this issue. She didn't vote because she admitted to a significant pecuniary conflict of interest when it was considered by the council. This conflict was so significant that she decided to leave the room while the matter was discussed.
The merits of leasing rather than owning a commercial building are well known to business, and has been adopted by most major corporates in Newcastle.
For City of Newcastle, forecast interest alone from the $16.5 million record sale of the Roundhouse is $22 million over the next 20 years, meaning the benefit to ratepayers is almost $40 million, while also delivering the city's first five-star hotel - a new tourism offering bringing more jobs to our city.
The move ensures that ratepayers avoid continued maintenance costs at our former premises. In the past 15 years, council has spent more than $9 million on these buildings' basic maintenance. The heritage listed Frederick Ash Building is more than 100 years old. It and the Roundhouse need significant work to continue as offices. These buildings will now receive the investment they deserve while saving ratepayers money.
Many of these benefits don't apply to a household budget, so it's easy to see why some don't understand the accounting benefits. But Cr Elliott's decision to apparently deliberately mislead, rather than inform, reveals her political priorities.
The merits of leasing, rather than owning, a commercial building are well known to business.
Without a trace of irony, Cr Elliott was further quoted in Saturday's Herald calling for the engagement of "forensic accountants" (Newcastle council confirms $35m rental bill for new offices, 18/10). Her call came just four days after she, and her 'independent' colleagues John Church and Allan Robinson failed to attend a scheduled briefing with a representative of the NSW Auditor-General, who had just completed and publicly released an unmodified opinion on the council's financials (including the sale of the Roundhouse, and the Stewart Avenue lease). The Audit Office told councillors that the city's finances were in "good nick", and complimented the council for its transparency and preparation.
A few other corrections to Cr Elliott's claims: An independent business case found that ratepayers were at least $13.5 million better off with the move (NH 17/4/19). Councillors had been advised that this document would be released once all final costs were known.
The original fit-out costs were estimated at $7 million. Councillors then resolved to make a number of improvements to the new building, including relocating the Chamber to prevent a disconnect between the elected and administrative arms, bringing the cost to $7.8 million (not $50 million as claimed by Cr Elliott in the media). This information was reported in the Herald in April, and is on the public record.
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The landlord of the new building agreed, following a request from the Lord Mayor, to relinquish his right to the commercial in confidence provisions of the lease - $276/m2 plus outgoings is arguably the lowest rental agreement for A-Grade office accommodation in the city. The lease will only increase annually by CPI or 3 per cent, whichever is lower, for the next 15 years, pegging the lease to the city's rates income.
Cr Elliott has falsely claimed that the sixth-floor addition was made only after the council agreed to the move. This is wrong, as it was included in the original report to councillors. She also misleads readers about how the top floor will operate. As she knows, it includes a kitchen for the city's 450 staff, training space, meeting rooms, and a commercial kitchen for hire. The addition to the project is, in fact, the city's first digital library on the ground floor, plans for which are being finalised. Cr Elliott's suggestion that there aren't enough desks to accommodate staff in the new building is also incorrect.
Has she actually visited the space?
The move of the council's administrative functions has already delivered savings for ratepayers, better work spaces for our staff, reduced maintenance costs, and allowed the first five-star hotel to be delivered in the civic entertainment precinct. This is an excellent result for Novocastrians.
