The Suburban Land Agency requested a $50 million taxpayer-funded lifeline amid concerns a "dire" cash flow situation could delay work on new estates and threaten its viability.
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The ACT government ultimately agreed to provide $30 million after the housing market improved on the back of an easing of coronavirus restrictions.
The agency's fortunes have since rebounded further due to a recent spike in land sales, which has meant it hasn't yet needed to access the emergency funds.
But minutes from Suburban Land Agency board meetings show it was in a precarious financial situation as the COVID-19 pandemic struck Australia earlier year.
The minutes, published on the SLA's website, were altered just hours after The Canberra Times emailed questions to the agency, so that all but a one line description of each agenda item was removed.
Minutes from previous years have been presented in this form, and it was understood the full document was published in error.
After a sluggish year in land sales in 2019, the agency was facing the prospect of having its cash reserves "depleted" by November 2020. That possibility was forecast even before the pandemic hit Australia, the minutes revealed.
In a statement to The Canberra Times, the agency said that as a consequence of the government's land release strategy, which aims to supply land at a level which exceeds market demand, it had accumulated a "substantial" number of unsold blocks leading in to 2020.
That had the effect of "tying up" the agency's working capital - the money used to cover short-term expenses - which impacted cash flow and liquidity.
The situation worsened as the pandemic forced the ACT into partial lockdown in late March, with the agency experiencing a "significant drop" in land sales.
Documents related to decisions of Andrew Barr's cabinet later showed that the government believed the high price of land was a factor in the dwindling number of sales.
Minutes from a May 19 meeting showed that Housing Minister Yvette Berry's office advised the agency that it would be "prudent" for it consider asking the ACT government to allow it defer payment of its annual dividend, or not pay some of it at all.
At the same meeting, the agency's chief financial officer, Joey Lee, said a dividend deferral would be required "at a minimum" to avoid the agency's cash reserves running dry.
According to minutes of a May 29 meeting, Mr Lee said "supplementary financing" was being sought from ACT Treasury to manage the cash shortage and ensure the agency could stay afloat.
Mr Lee's report put forward projections for the agency if it couldn't access financial help amid the slowdown in the housing market.
It was predicted the agency would hold half a billion dollars worth of unsold blocks by 2023-24 if market conditions didn't improve and land continued to be developed in line with the government's schedule.
Any slowdown in land development, building and construction contracts in the ACT could deflect economic investment and growth from the ACT and it may be difficult to attract industry to return.
- ACT cabinet document
Without the extra funds, the agency would have to consider postponing works, the minutes showed. If the agency was forced to hand over its full dividend, Mr Lee advised that it would face a cash shortfall of $160 million in June and $350 million by June 2022.
At that meeting, Ms Berry reassured the agency that, as a government entity, it would be provided with "adequate funding".
On June 29, the board again discussed the predicament facing the agency, and the request for help which it had made to the ACT government.
"The agency is compelled to pay 100 per cent net profit dividend and does not have any borrowing capacity," the minutes stated.
"There is limited opportunity to manage the liquidity of the agency except through sales and expenditure. The board aims to maintain $20 million cash reserves. In view of this situation the board requested from Treasury a loan facility of $50 million."
The minutes stated that a recent improvement in the market had helped to alleviate the "dire cash flow situation".
The agency was yet to receive written approval of the loan as of June 26. But the minutes stated that cabinet had agreed to provide $30 million worth of "supplementary financing", via a Treasurer's advance.
Barr's cabinet considered the agency's request for assistance on June 11, according to summary of cabinet decisions published under the government's open disclosure regime.
The summary does not detail what was requested and approved. However, the agency has confirmed that it sought $50 million, and the government agreed to $30 million.
The ACT government's economic statement in August confirmed that the agency was allowed to defer payment of its dividend in 2019-20 to "support its cash flow during this period".
The August statement revealed the government expected revenue from the agency and City Renewal Authority would be down more than $480 million over four years because of the downturn.
The cabinet summary document set out the threats to the ACT budget and the wider territory economy posed by the Suburban Land Agency's situation.
The so-called "triple bottom line assessment" stated the agency had advised the government that it might struggle to maintain cash to fund its operations if the market didn't improve.
The assessment warned that halting development works at new estates or restricting land supply would "not be well received by industry".
"Any slowdown in land development, building and construction contracts in the ACT could deflect economic investment and growth from the ACT and it may be difficult to attract industry to return," it stated.
The same document cited the high price of land, along with the COVID-19 pandemic, as the "key contributing factors" in the accumulation of unsold blocks, the underlying cause of the agency's financial woes.
The Canberra Times sent a list of detailed questions to the Suburban Land Agency and ACT Treasury regarding the financial support, and the circumstances which necessitated it. The agency responded on behalf of both government entities.
The agency said its board "took a pragmatic approach" of forecasting the potential implications of the pandemic on its financial position, which prompted it to consider "moderating" its land development work.
But after the government stepped in to offer the dividend deferral and $30 million in emergency funds, the agency has been able to continue its development program, and provide ongoing work for staff, suppliers and contractors, the statement said.
The agency said the property market had performed far better than expected amid the continued easing of coraonvirus restrictions and the support of ACT government and Commonwealth stimulus packages. It exchanged on 518 blocks of land between February 1 and September 21, well above the agency's expectations.
As a result, it has not had to access the $30 million in funding, nor does it believe it will need to given the improved market conditions, the agency said.
"However, the funding remains available until 30 June 2022 should the need arise to access it," the statement said.
"It is considered prudent to keep the funding in place given the possibility of market volatility and the ongoing uncertainty around COVID-19."
Dan Jervis-Bardy
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
