Ballina Shire councillors are to debate the future of public lands zoned for residential development in Wollongbar this week, including the potential of selling some or all the assets.
Well known Byron developer The Kollective has secured a staff recommendation to take on the project, with the company already having provided detailed figures on projected costs and returns.
Staff have prepared an equally detailed report on the project, ultimately aimed at workers’ housing, for this week’s commercial services committee (CSC) meeting on Wednesday.
The CSC is one of three Ballina Shire Council standing committees, all of which include all regular councillors as members.
Information on the council’s website says the committees have ‘no delegated authority’ but minutes are confirmed by the council.
Tender withdrawn yet Kollective pulls through
Notes from staff on this week’s CSC agenda item concerning the public land at Wollongbar say the committee considered two applicants for a tender to build housing on the site in November last year.
The Kollective, known for key projects in the Byron Shire, and Bridge 42 were short-listed for the Ballina Shire project but the council ultimately decided to withdraw the tender, saying neither applicant was acceptable.
Concerns over ‘assumptions applied, the financial risk, the value of the contract and the current volatile construction market’ were cited.
The council instead opted to enter into separate negotiations with Kollective Kendall Pty Ltd for an alternative approach to delivering the estate, staff notes say.
The committee made the call late last year with councillors formally adopting the move in their December ordinary meeting.
The council had decided against issuing a fresh tender owing to it being ‘more efficient and timelier to negotiate with preferred proponents than call for new submissions due to complexities of the contract’, staff notes read.
Staff said they’d met with The Kollective since December to discuss requirements ‘regarding the updated feasibility assessments’.
‘A confidential memorandum is included with this report to The Kollective’s fee proposal’, staff notes read.
Staff recommend local builders
Discussion notes on the project proposal from The Kollective outlined a three-stage project.
‘There are many permutations as to how the proposed development could be staged depending on factors such as Council’s risk appetite, the availability of builders, construction prices, supply chain issues etc.’, the notes read.
Stage One could feature five lots with a total of fifteen dwellings, the notes showed, with stages thereafter increasing in lot number, or all three stages could feature twelve lots and 38 dwellings each.
Three bedroom terrace dwellings would feature the most but there was a broad mix of apartment sizes as well, with a total of up to 114 dwellings possible.
The ‘estimated development timeframe’ for building all three stages at once was ‘difficult to determine’, staff said, ‘as different strategies will have varying risk profiles and cost implications’.
Building stage by stage could take more than 30 months, staff said, which in plain speak is more than two and a half years.
Staff then compared and contrasted using local builders with non-local, bigger companies, ultimately saying the preferred option was to use local builders if possible.
Capital investment returns potential to reap council millions
Building and then selling the lots off after twenty years, a plan described as developing and ‘holding’ the land, was predicted to reap the council as much as a 380% return on development, council staff said.
The figure included council equity in the project finances of nearly $10 million and the ‘notional value’ of twelve lots at $5.4 million.
Staff also detailed estimated costs of the project and reported ‘analysis undertaken’ showed the council was ‘capable of funding this project and in doing so is free to manage the asset as it sees fit’.
The comments came in response to a ‘feasability assessment’ of the project based on two scenarios.
One was where the council developed and then sold the project.
The other was where the council developed and held the project.
The Kollective had crunched the numbers, with details provided in the report, showing the council could make up to a 19% return on the project after costs and including lot values and interest if it were built all at once.
The figure was revised and subsequently decreased by five percentage points since an ‘initial’ report, staff said.
The revised figure allowed for an increased value of land lot values from $350,000 each to $450,000, a capital increase figures showed was expected to continue.
Renting the properties out would now return less than six per cent, by contrast to selling, The Kollective consultants reported, regardless of whether the stages were built with twelve lots each or if stage one only had five.
Staff recommend small scale build and auction
Staff then listed three options for the council to consider, all requiring at least a partial sell-off of the land.
The first option was to ignore The Kollective’s new tender and to auction off the land.
The second was to have The Kollective build houses on five lots in Stage One with a view to the council keeping the rest of the land for ‘key worker housing’.
The council would then auction off lots 1 to 18, ‘subject to a further report on the timing of that auction’.
Staff said they recommended the second option.
The third option was to have The Kollective develop all three stages, with the council still auctioning off lots 1 to 18 afterward.
Money raised from the auction would be used to help the key worker housing project and others, staff said.
Councillors were due to meet as part of the CSC Wednesday 4pm.
