FOR SALE: SunCentral CEO John Knaggs heads an organisation an audit report has found at high risk of failing to achieve its objectives.
FOR SALE: SunCentral CEO John Knaggs heads an organisation an audit report has found at high risk of failing to achieve its objectives.

Audit finds council's new CBD project at 'high' risk

A LAG in completing forecast sales has caused the Maroochydore Priority Development Area to be rated at a high risk of being unable to deliver a "viable and contemporary city centre" according to a report to be presented to Sunshine Coast Council on Thursday.

SunCentral announced last month it was looking for corporate partners to assist delivery of the balance of the project but denied it was looking at off-loading it despite an information memorandum that suggested that intent.

The assessment of SunCentral's corporate governance, to be tabled on Thursday, found "the strategic risk Priority Development Area - Precincts 1 - 7 inability to deliver a viable and contemporary city centre as per the SunCentral Maroochydore Statement of Corporate Intent 13 May 2015" was assessed and rated as "high" in the council's risk register for the period ended 31 December 2018.

FADING: A new report has questioned whether SunCentral can deliver on the project's vision as slow sales take up creates cause for concern.
FADING: A new report has questioned whether SunCentral can deliver on the project's vision as slow sales take up creates cause for concern. Contributed

The concern was reported to the council audit committee on January 29, SunCentral Maroochydore Shareholder Representative Group on January 30 and a special meeting for region making projects, closed to the public, on February 28.

READ: New 9-storey city hall designs revealed

The major factors contributing to the "high" risk would be identified as project governance, controls and project reporting and a lag in realisation of forecast sales from original projections.

In a March update to Corporate Risk Register risk mitigation, SunCentral was to undertake a governance review, develop a four-year community engagement strategy, undertake a review of the contract of sale timeframe, revise project staging and start an expression of interest process for balance of land and to provide a targeted investment attraction and marketing strategy for the site.

An artist impression of the proposed Corso West precinct.
An artist impression of the proposed Corso West precinct. Contributed

The targeted investment and marketing attraction strategy would be presented to the Audit Committee on September 9.

Earlier this month SunCentral in response to questions from the Sunshine Coast Daily said no decision had been made to sell the balance of the Maroochydore CBD project and that was not the intention of the information memorandum and invitation for expressions of interest released in May.

READ: Key business group wants private sector CBD investment

That document stated "SunCentral Maroochydore Pty Ltd is inviting expressions of interest from experienced development and capital groups, or consortia, interested in undertaking and facilitating the development of all or part of this major urban regeneration opportunity".

It was headed 'Maroochydore City Centre Balance Land Development".

A SunCentral spokesperson said "it is not intended to sell the balance of the project and no such decision has been made. The Invitation for expressions of interest is seeking development partners to fund and build buildings and precincts within the next stages of the project. This is entirely consistent with the delivery model".

The expression of interest offer included 121,590 sq m of pre-approved developable land, made up of 150,000 sq m of commercial floor space, 65,000 sq m of retail floor space and 2000 dwellings across precincts three, four, five, six and seven.

Precinct two was identified as being planned for community facilities, entertainment precinct and hotel which would be part of a separate procurement process.

However, groups or consortia interested in also engaging with the precinct have been encouraged to make that known.

The document said SunCentral envisaged the preferred group or consortia would provide innovative solutions which sought to assist with the planning and development of real estate assets and associated infrastructure while reflecting the project vision and requirements of the development scheme.

READ: Ratepayers face bill for region's growth

"SunCentral is committed to working with organisations and consortia to create a flexible, attractive and mutually beneficial commercial arrangement for progressive delivery of developments within the project," it stated.

"The development opportunity under this Information Memorandum includes the delivery of retail, commercial, residential and complementary uses for the entirety of precincts 4, 5, 6 and 7 and the remaining uncommitted lots within precinct 3.

"Further lots within precinct 3 may be added to the opportunity if anticipated commitments do not crystallise. Full statutory precinct plans associated with the development scheme will be provided on request."

The sale offer comes after SunCentral has struggled to find single-lot buyers through its own marketing efforts.

The spokesperson put total outlays to date at $59m to the end of May, an amount that included neither the $44m plus relocation of Horton Park Golf Club nor property resumptions and new roadworks needed to support the project.

He said nine lots had been sold with a further eight under contract or advanced commercial negotiation.

The spokesperson said the majority of lots in stage 1A were the subject of commercial negotiation "with lots sales occurring when terms are agreed".

 

The information memorandum said some sales in the existing precinct three may not "crystalise" and could be added to the offer.

The spokesperson said the State Government's Maroochydore City Centre Priority Development Area captured the project's design and intent but there would be "some flexibility" offered potential purchasers, "regarding locating various uses and activities within the priority development area, along with some aspects of detailed design, provided such things remain consistent with the scheme's primary objectives".

The Sunshine Coast Business Council in a statement supported what it described as SunCentral's "engagement with the market to seek partners to undertake and facilitate the development of the Maroochydore City Centre Project Balance Land Development".

CBRE Commercial sales agent Tony Justo said with commercial vacancy rates already the highest in the country at 21 per cent, the Evans Long development and the new Sunshine Coast Council tower would add another 9000 sq m to the market as well as vacating "B-grade" buildings the council currently occupies.

He said vacancy rates in Birtinya at 39.55 per cent were higher than at the peak of the Global Financial Crisis (36 per cent) with owners across the region offering prospective tenants incentives (discounts) of up to 50 per cent over five years and 25 per cent over four.

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