The council’s newly appointed CEO Michael Sedgman told last night’s meeting that “at the point of transaction, the council were $1.5 million in front”.

“However in progressing council’s obligations around the purchase agreement… there have been costs to date in the order of $1 million so your $1.5 is down to about $0.5 [million],” he said.

“At the end of the obligations around the project, council’s net cost will be in the order of $2.2 million.”

Sedgman presented the numbers in response to Councillor Phillip Martin’s questions on notice about the costings and timeline of the project.

InDaily twice asked the council this morning to confirm whether the figures showed the council had lost $700,000 on the project.

A council spokesperson replied that “as a breakdown in costs, we have established that of $2.25 million – $925,950 is attributed to activation and beautification of the site including the construction of a car park”. 

“The purchase price was $34 million. The total costs associated with the development of the site is $1.34 million -$35.34 million PLUS $10 million grant PLUS $25.5 million.

“The development will also generate $541,000 per annum in rate revenue in perpetuity and the economic uplift with increased residential, commercial, and retail activity,” they said. 

The question about whether the council had lost $700,000 on the development was not answered.

Councillor Martin told InDaily he was prompted to raise the questions given the developments topping out ceremony, to celebrate reaching its full height, is scheduled for Monday, July 29.

He said the development remains a “sore point among ratepayers who were promised a modest development” initially.

The Eighty Eight O’Connell site in May 2024. Photo: Commercial & General

According to the agenda documents, the estimated net costs include holdings costs, legal, environmental and architectural costs associated with land acquisition, beautification of the site and the contribution of a temporary car park and events and activation undertaken from 2017 to 2020. 

This year’s 2024-25 council budget allocates $80,000 to fulfil the council’s remaining obligations for settlement, such as legal and conveyancing costs.

The council remains the landowner until the development is complete, which should be by mid-2025.  

Render of the proposed three towers making up the development. Photo: Adelaide City Council

Eighty Eight O’Connell is built across three towers, with a below-ground car park, a retail strip with cafe and restaurant tenancies on the ground level, commercial suites and amenities on levels one and two and about 160 apartments on levels three and above. 

According to the City of Adelaide, 80 per cent of the apartments have been sold and more than 70 per cent of commercial tenancies are filled.

The flagship tenant is Italian food retailer Mercato, which has a store in Campbelltown. Their restaurant, bar and gourmet marketplace will occupy the entire retail space beneath the Tynte Street tower. 

Mercato will be open seven days a week and have parking for 90 retail customers.

The view of the Eighty-Eight O’Connell development from Tynte Street. Photo: Adelaide City Council

Developer, Commercial & General is anticipated to make a final payment to the council of $18.5 million in mid-2025. 

This $18.5 million is tied up in apartment sales, with the Land Facilitation Agreement showing proceeds from unit sales each month are directed first to the project financier, then the council and then the developer.

In February 2018 the Adelaide City Council purchased the land for $34m – with the help of $10m from the Weatherill Government – which was millions higher than the independent valuations received by the council, which ranged between $20m and $28m.

In 2022, InDaily reported that the Land Facilitation Agreement confirmed the expected return to the council would be more than $8m below the price paid by ratepayers and taxpayers more broadly for the site purchase. 

Adelaide City Council was contacted for official comment.