Treasurer Rob Lucas told Parliament on Tuesday that the SMA had submitted a formal request seeking a reduction in the 4.5 per cent interest rate on the loan, which was granted by the State Government in 2018 despite claims that the deal was anti-competitive and lacked transparency.
The request was one of several SMA calls for government assistance to help claw back losses following the cancellation of AFL games and other revenue-raising operations at the Adelaide Oval due to COVID-19 restrictions.
Lucas said the Government had agreed to defer the interest payable on the Adelaide Oval Hotel loan for six months at a cost of $530,000 and to allow the SMA to not pay its sinking fund contribution next financial year, saving the authority $3 million.
But he said the Government had declined the request to lower the interest rate on the Oval Hotel loan.
InDaily asked Lucas’ office this morning why the Government had declined the request and what changes the SMA had proposed to the 4.5 per cent interest rate.
A spokesperson referred InDaily to a copy of Hansard from May this year, in which Lucas is quoted as saying “there may well have been a submission” to change the terms of the loan, “but the Government has not agreed to anything”.
“I will check to see whether or not there was a formal submission seeking assistance in relation to that, or whether it was just something being talked about, but the Government hasn’t made a decision in relation to providing relief in that particular area,” Lucas said.
Lucas told Parliament on Tuesday that “there was a formal submission from the SMA in relation to the loan arrangements concerning the new stadium hotel seeking a reduction in the 4.5 per cent interest rate”.
“That request was not agreed to by the government,” he said.
Lucas’ office did not provide further clarification about its decision.
In a statement to InDaily, a spokesperson from the SMA said interest rates had fallen “significantly” across the world since 2018 when the hotel loan was formalised.
“Like any borrower, we have a duty of care to seek the best possible terms for our business and we therefore went back to our lender seeking a review of terms,” the spokesperson said.
“We appreciate the Treasurer’s consideration of our request.”
The spokesperson did not say how much the SMA wanted the interest rate to be reduced, or how much total revenue the authority had lost as a result of COVID-19.
However, they said that the build of the Oval Hotel “continues on time and on budget”.
“We are excited about opening in late September.”
The 128-room “boutique” hotel, which will be integrated into the eastern façade of Adelaide Oval, has been widely criticised by hoteliers, the Adelaide City Council, park lands advocates and the State Opposition, who claim the hotel is anti-competitive, infringes on public land and is not transparently-funded.
In September, the SMA was accused of misleading the public over where profits from the hotel would flow, after it was revealed both the SACA and SANFL would end up with the bulk of earnings.
The SMA said at the time that profits from the hotel would first go towards paying back the $42 million taxpayer loan, with a further $600,000 per year poured into the Adelaide Oval and the remaining profits to be split evenly between the SANFL and SACA.
Planning Minister Stephan Knoll has repeatedly defended the government’s decision to grant the loan, arguing the Oval cannot rely solely on record crowds to churn a profit and a hotel at the site would attract more tourists to the city.
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