The Tradies Club may have saved as much as $2.1 million on a pay-out to the ACT government to "deconcessionalise" its main Dickson block, calculated on a comparatively low estimate of the land’s market value.
The club was allowed to pay just $545,625 to deconcessionalise the 10,234 square metre block in 2016, based on a valuation from the club claiming the land was worth only $4 million at the time.
But that figure was as much as $215 a square metre less than what the club agreed to pay the government for the adjoining carpark block that was at the centre of the controversial Dickson land swap in 2014.
When a lease is deconcessionalised, it is changed from a concessional lease for community uses such as clubs to a straight commercial lease, to allow for profitable redevelopment.
Clubs across the ACT were granted concessional leases and have been "deconcessionalising" the leases for redevelopment; but they must pay taxpayers the difference between the original value of the land and the current market value to do so.
The system for deconcessionalising such leases has also faced criticism by the ACT Civil and Administrative Tribunal, which in 2014 characterised it as formulaic, during a controversial case involving the Raiders Club's Braddon site.
Several inner south residents' groups also recently questioned a valuation of a Canberra Services Club-owned block next to Manuka Oval, claiming it has vastly undervalued the potential market price of that block.
While a government spokeswoman said the ACT valuation office’s 2016 review of the Tradies Club’s valuation was “independent and rigorous”, it has refused to detail what factors were included in the review.
The government has also refused to release a copy of the valuation from the club, which claimed the land was worth $4 million, citing a club request at the time that the information was “commercial in confidence”.
The club’s valuation of the main block housing the Dickson club, Block 28, Section 34, also came to the same figure reached by the government at least two years earlier.
While the club had applied in 2013 to deconcessionalise the block, claiming the land was worth $2.75 million, the government review of the land’s value at the time also came to $4 million.
But that application lapsed before the club made the pay out, as the club was in talks with the government to include the deconcessionalisation as part of the wider Dickson land deal.
An ACT Auditor-General’s report into the land swap found the club secured concessions worth at least $2.6 million in that deal, but it also shows the economic development directorate ultimately refused to include the deconcessionalisation in the wider deal.
When the club again applied in 2016 to deconcessionalise its main block, the government’s review of the club’s valuation “confirmed” the land as valued at $4 million.
As the club had already paid some $3.44 million in what the government spokeswoman said were a series of payments for “varied uses over time”, likely to allow the hotel on the block, it only owed the government $545,625.
That figure was the same as the pay out agreed, but not finalised, about two years earlier during the club’s first tilt at deconcessionalising the block.
On the basis of the $4 million valuation, the club’s main block was estimated as worth only $390 per square metre, some $215 a square metre cheaper than the government’s reserve price on the adjacent carpark, at $3.18 million for that block, or $605 a square metre.
That was despite the club’s main block being more than twice the size of the carpark block, with the same zoning and height limits at the time.
Even the $3.18 million reserve price on the carpark was, the audit report found, based on a valuation that itself may have underestimated the value of the carpark block by at least $1.5 million, under the final terms of the deal.
Had the club’s main block been valued at the same per square metre figure as the carpark next door, it would have been worth about $6.19 million, leaving the club facing a potential pay-out of about $2.7 million, some $2.19 million more than what the club ultimately paid in September 2016.
While clubs must submit a valuation of their land when applying to deconcessionalise it, in the 2014 Raiders Club case, the tribunal heard that “no attention seems to be paid to it” by government assessors.
In that case, an appeal against the deconcessionalisation of a Canberra Raiders-owned block in Braddon, the tribunal heard planning authority staff gave little weight to club valuations, as “the authority would seek its own valuation”.
In that case, the tribunal concluded the authority “seems to have adopted a formulaic approach” in assessing 13 such applications, “since all the minister’s reasons are couched in roughly similar terms, based no doubt on drafts provided by the authority”.
Among the successful applications were the Brumbies, which paid $270,000 to deconcessionalise its Griffith site in 2011-12, the Raiders Club in Braddon, which paid out $620,000 in 2014-15 and the Tradies Club, which paid $1.2 million to deconcessionalise the Woden club site, since sold to Geocon for $16 million.
The planning authority spokeswoman said the ACT Valuation Office was a “non-statutory, independent unit” that sat within the Commissioner for Revenue’s office for organisational purposes.
She said the “critical assessment” of applicant’s valuations was “a thorough and robust process that, similar to a valuation, yields a before and after value for the purposes of calculating a payout figure”.
While the planning minister must decide if it is in the public interest to consider a deconcessionalisation application, final approval can be given by the minister or the planning authority.
Comment was sought from the Tradies Club.
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