Way back in 2015, council decided that it would be a terrific deal if it used ratepayers funds to purchase a Merimbula property then known as the Auswide building.
For those with short memories, the building had previously been owned by the registered Training Provider, Auswide Training Solutions, which was headed into receivership after losing government contracts.
Our ever entrepreneurial council was convinced that there was significant latent demand for professional training services in the region, notwithstanding the activities of
Bega TAFE, & decided that investing $1.293M + GST in ratepayers’ funds to purchase the building, while also accepting a trailing $556,250 mortgage to
NSW State Training Services, was too good a deal to miss; in particular as council had obtained a valuation for the building of $2.1M.
Of course, while council thought this was a wonderful opportunity, it was also a godsend for the NSW Government & the local state member, Mr Constance, as everyone was spared the embarrassment of NSW State Training Services having to write-off its substantial mortgage investment.
And while council & the NSW Government had every reason to be chuffed, many residents & ratepayers were not that convinced by council’s business case, understanding as they did from living in the real world, that the real value of a property is what the market will actually pay for it, which was $1.293M + GST & not $2.1M.
Of course, as some will have already guessed, the real price to residents & ratepayers of this amazing real estate deal was significantly more than the $1.419M purchase price, given that council borrowed the funds to make the purchase, with the interest cost amounting to a further $180K per annum or $1.8M over the next ten years (so we’re still paying for it).
With the dust settling, council got on with the business of organising its latest entrepreneurial venture. Looking at the outcome over the past four years (including the forecast for 2019-2020), the Regional Learning Centre has failed to deliver against the stellar predictions used to justify its acquisition, operating at best on a break-even basis every year.
Then, just as this ancient history was disappearing from view, the wall arrived.
Six weeks later, on March 13th, 2019, Cr Allen asked if councillors could receive a copy of the inspection report relating to the original building purchase & the process that staff followed in purchasing the building.
Some might say that the value of the wall in this case is simply $80,000; the cost of constructing a new one.
Some might also say that the $80,000 cost of the wall reminds us of how dangerous it is for councillors to become involved in risky commercial real estate ventures or to place too much confidence in what often appear to be bold, unrealistic assumptions on the part of naïve bureaucrats, more often than not designed to create the impression that they are smarter than they really are.
Indeed, some ratepayers might think that the value of the wall is that it reminds us of the sheer stupidity of allowing unaccountable public servants to play entrepreneur, when they have not the slightest experience to guide them, while also evidencing the fact that had a building inspection report been commissioned, then the poor condition of the retaining wall might have been detected & a lower purchase price negotiated as a result.
The association would also like to think that the $80,000 cost of replacing the retaining wall would serve as a valuable reminder of the importance of councillors & public servants learning from their mistakes & applying those learnings to the benefit of residents & ratepayers: the people they are allegedly paid to serve.
This in particular given that four of the councillors who voted in favour of the questionable purchase back in 2015 are members of the current council & that council’s current general manager was also accountable for managing the acquisition on its behalf.
Having said that, while the DAO’s report acknowledged the fact that there was no evidence that a building report had been commissioned prior to council signing the contract to purchase the building, it seems more concerned with emphasising the numerous processes that council’s management were obliged to observe in compliance with council’s procedure than anything-else.
It should not be lost on residents & ratepayers that the DAO did not think to make the common-sense recommendation in his report that council’s procedure should be amended to make the obtaining of building & pest inspection reports a mandatory pre-condition for any building purchase being contemplated by council.
Nor should it be lost on residents & ratepayers that not one of the elected councillors, including the four who were directly involved in the original decision to purchase the building, or the general manager, thought to suggest that council’s current procedure should be amended to reflect that basic common sense requirement.
John Richardson
Secretary/Treasurer
Bega Valley Shire Residents & Ratepayers Association
Tel: 0264945669
Email: secretary@begavalleyshireratepayers.asn.au
Website: http://www.begavalleyshireratepayers.asn.au