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Government paid top price for Glebe Park land, more than four times one valuation

The ACT government received two wildly different valuations for the Glebe Park land it bought last year, and in the end paid at the top end of the highest valuation – for reasons that remain largely unexplained.

The first valuation put the land at about $1 million, the second at closer to $4 million. The government paid the second amount.

The Land Development Agency has not said whom it bought the land from, naming the seller only as Glebe Park Pty Ltd and refusing to elaborate.

But developer Barry Morris confirmed on Wednesday that he and Graham Potts owned the land now sold to the government, through their firm Amalgamated Property Group.

Mr Morris said the process was managed by Mr Potts, who manages Amalgamated Property's business in Canberra, with Mr Morris focused on the Queensland operation. Mr Morris said there had been "a willing buyer and a willing seller" and the price was fair value. Mr Potts has not returned calls on the subject.

The government paid $4.2 million for the land behind Glebe Park. It plans to build a new stormwater pond there and will sell some of the land to the casino for its redevelopment if the casino gets the green light.

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It bought the land after two valuations. The first, by Opteon in August 2014, valued the 1.2 ha block at between $950,000 and $1.05 million, plus GST.

Opteon said the site lease with Glebe Park Pty Ltd in 2007 allowed only parkland, plus car park, restaurant and bar, with a total floor area of up to 650 sq m. The restaurant has never been built.

Under the lease, Glebe Park Pty Ltd was required to spend at least $1 million building a "parkland", including facilities such as kiosks, car parks, shelters and public toilets, with the work to start within a year and finish within three years.

Opteon said it was not clear whether that lease requirement had been met, with some parkland works apparently done but no available record of spending.

Opteon's detailed valuation was based on a developer using it for a restaurant of up to 650 sq m. It compared the land to other development sales around Canberra to come up with a value of between $900,000 and $1.1 million, and in a separate calculation from the viewpoint of a hypothetical developer, it judged it worth $1 million. Combining the two, it suggested a final market value of $950,000 to $1.05 million.

The Land Development Agency sought a second valuation in May 2015, this time from Colliers. Despite the lease mandating only parkland and a 650 sq m restaurant, Colliers valued it as a potential development site for an eight-storey apartment complex.

The valuation notes the CZ6 zone allows residential use. While it would require a variation to the lease, the proponents wanted to develop an eight-storey, 122-unit residential apartment building. At $85,000 a unit, the site was worth $10.4 million, Colliers said.

Deducting the current $1 million value and $1 million of application and related costs, the land was worth $2.8 million if the developers had to pay a 75 per cent lease variation charge and $4.6 million if they had to pay a 50 per cent lease variation charge, Colliers concluded.

It recommended the government pay the owner between $3.6 million and $3.8 million.

The government paid $3.8 million plus GST, to a total of $4.2 million, in September 2015.

It is unclear why the government accepted a valuation last year that envisaged an apartment complex.

In 2011, minister Simon Corbell said the government "will not consider any change to the territory plan that permits residential development or indeed any other development beyond that which has already been granted under the lease".

Asked why it sought two valuations, one in August 2014 and the other in May 2015, Land Development Agency chief executive David Dawes said it was agency practice to obtain at least two valuations.

Asked why it accepted the high valuation, given it was based on building an apartment complex that was not allowed on the site, Mr Dawes said any purchase considered "highest and best use of the land", including the land use under a changed zoning.

As to the beneficiary of the government's purchase, Mr Dawes would only say the transaction was between the land agency and Glebe Park Pty Ltd.

But Mr Morris confirmed his and Mr Potts' ownership. The pair had bought the land some years back and used part of it to build the 188-unit Glebe Park Residences. The pair had been investigating building more apartments on part of the land, he said. While the lease didn't allow apartments, there was nothing to prevent an application to change the Territory Plan, he said.

Mr Corbell was asked by the Greens in 2011 about the failure of the owner to do the required $1 million of landscaping. Mr Corbell said then that the government had made it "very clear to the leaseholder" that it expected the work to be done.

Separately, Mr Potts developed the 330-apartment Manhattan on the Park apartments on an adjacent piece of land.

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