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Developer given years to begin Festival Plaza office build

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The State Government has revealed developer Walker Corporation will have six years to begin work on the controversial office tower planned for the Festival Plaza precinct, meaning it could be eight years or more before the building is completed.

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Urban Development Minister Stephen Mullighan revealed the condition in an Estimates Committee hearing last week, and subsequently told InDaily that the condition was included to give Walker time to “market the building and attract a key tenant as part of its agreement with Government”.

Walker is contracted to rebuild the Festival Centre car park as part of a $40 million deal with the Government to revamp the tired Festival Plaza with new landscaping, shops and cafes, and a 24-storey office tower.

While early work has begun on the area, the car park construction won’t begin until February next year, Mullighan revealed. Beginning of the car park work triggers a six-year period during which Walker will be required to “substantially commence” work on the office tower.

“If he does not commence that office building within that period of time, then he is obliged to wear the full cost of the works in kind and the plaza works, and he loses his development approval for the tower,” the minister said.

Under questioning from InDaily, Mullighan said the developer was “obliged to make the area publicly accessible until such time as work starts on the office tower development”.

While the Government insists it hasn’t promised Walker that it will take up a tenancy in the office building, Mullighan did confirm that the Government had two calls for office accommodation in the market, to explore competitive options when two current CBD leases expire in 2019 and 2020.

“… If the building were to progress on the quickest timeframe – and it is indeed a two-year build time – it would be cutting it extremely fine for government office accommodation, through the DPTI tendering process that you referred to, to be able to make it into that building,” Mullighan said.

Opposition frontbencher David Pisoni questioned why the Government would allow the land earmarked for the tower to potentially sit vacant for many years – with echoes of the long-fallow Le Cornu site in North Adelaide.

He said while it was now clear Walker was required to begin substantial works within six years, without seeing the contract there was no way to know whether a completion date was stipulated.

“It could be a new sinkhole in the CBD rather than a vibrant new part of the Riverbank precinct,” Pisoni said.

“I think the six-year timeframe potentially puts this whole project on hold for the best part of 10 years from when it was announced. The fact that the government has locked up prime real estate in the city, which could be empty potentially for six years, requires further investigation.”

However, Mullighan said the Government’s focus was on getting the new carpark, plaza, Festival Theatre upgrade and retail precinct completed “as quickly as possible”.

“The timeframe also reflects a requirement for Walker to attract interstate and global commercial tenants for the economic benefit of the state rather than drawing on the existing local market,” Mullighan told InDaily.

“I’m advised Walker Corporation is already marketing the 40,000sqm of premium office space.”

Last week, Auditor-General Andrew Richardson revealed that his inquiry into the finances of the Festival Plaza deal had been delayed due to questions about the jurisdiction of the ICAC.

Richardson told parliament today he had been unable to continue the investigation last year because negotiations over the plaza contract were still ongoing and “in fact it was possible that there would be no deal”.

“So… we were obliged to stop until the agreement was settled [which] happened in about February of this year [at which point] we recommenced our work,” he said.

“Around about that time, for a range of reasons, I had been going through my statutory obligations and my relationships in particular with the Independent Commissioner Against Corruption, and… we started to be concerned about where the Auditor-General’s powers ended and where the commissioner’s powers begin.”

InDaily revealed last year that the State Government will pay 30 years’ of car park rent to Walker in a lump sum at the beginning of the agreement.

The State Government has always said that it would lease back 400 of the 1460 car parking spaces from Walker Corporation for $30 million (the Adelaide Casino will also lease spaces from Walker). It also stated, as long ago as 2014, that the lease period would be 30 years, but the contract stipulates 70 years.

What it didn’t reveal previously was that the $30 million would be paid in full, upfront. The contract says that “on or before the date of commencement of the Carpark Sublease, the State shall pay Walker Carpark $30 million (GST exclusive)”.

 

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