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ADELAIDE HILLS COUNCIL MEETING Tuesday 12 November 2013 CONFIDENTIAL AGENDA BUSINESS ITEM

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ADELAIDE HILLS COUNCIL MEETING Tuesday 12 November 2013 CONFIDENTIAL AGENDA BUSINESS ITEM ADELAIDE HILLS COUNCIL MEETING Tuesday 12 November 2013 CONFIDENTIAL AGENDA BUSINESS ITEM Item: 17.1 Originating Officer: Tim Hancock Subject: Sale of Asset – Allotment 202 Deposited Plan 59341 (90A Onkaparinga Valley Road), Balhannah File No: P/502 SMP Goal: 4: Well Managed & Maintained Community Infrastructure SMP Key Issue: 4.1: Infrastructure Planning & Maintenance 1. Sale of Asset – Allotment 202 Deposited Plan 59341 (90A Onkaparinga Valley Road), Balhannah - Exclusion of the Public Moved Cr S/- Cr Pursuant to Section 90(2) and (3)(b) (i) & (ii) of the Local Government Act 1999, an order be made that the public, with the exception of appropriate Council staff: − CEO, Andrew Aitken − Director Engineering & Assets, Tim Hancock − Director Strategy & Development, Marc Salver − Director Corporate Services, Tim Piper − Director Community & Customer Service, David Waters − Minute Secretary, Pam Williams be excluded from attendance at the meeting in order to receive, discuss or consider in confidence any information or matter relating to Section 90(3): (b) Information the disclosure of which – (i) could reasonably be expected to confer a commercial advantage on a person with whom the council is conducting, or proposing to conduct, business, or to prejudice the commercial position of the council; and (ii) would, on balance, be contrary to the public interest; Adelaide Hills Council Meeting 12 November 2013 - CONFIDENTIAL ITEM Sale of Asset 90a Onkaparinga Valley Road Balhannah 2. Sale of Asset – Allotment 202 Deposited Plan 59341 (90A Onkaparinga Valley Road), Balhannah - Confidential Item 2.1 SUMMARY Lot 202 has been excluded from the Community Land classification and is able to be sold under the existing authority provided by Council. Refer Appendix 1 for details of the land. Council originally negotiated the sale of Lot 202 and the adjacent road reserve, known as the “Thoroughfare”, with J & AG Johnston Pty Ltd, the former owners of the adjoining Balhannah Junction Shopping Centre. In April 2008 the Flood Management DPA was issued covering flooding in the Onkaparinga Valley and the property was identified as being impacted by the flooding. Johnston claimed the area capable of being developed was diminished and agreement on the sale price was not reached. The zoning and limited frontage to Onkaparinga Valley Road makes it difficult for any party to make the site a viable investment, other than one with an interest in the shopping centre or adjoining properties. The retention of the land as a land bank asset therefore has limited value. The 27 July 2011 valuation of Lot 202 was $260,000. The Balhannah Junction Shopping Centre was sold in late May this year. It was sold in parcels and separate parties purchased the hotel and the shopping centre. The purchaser of the shopping centre had no interest in 92-94 Onkaparinga Valley Road (Lot 201) on which sits a house and Post Office building. Council’s Lot 202 is at the rear of Lot 201. The proposing purchaser of Lot 201, Andrew Adcock Real Estate made the purchase conditional on the acquisition of Allotment 202. However, when another parcel of vacant land adjoining Lot 202 was sold the new owner of the shopping centre, John Vass, made a counter offer. Lot 202 has been informally used by trucks delivering to the Foodland Supermarket and as car parking. The sale of the lot to any other party would have significant consequences on the supermarket. 2.2 GOVERNANCE Strategic Management Plan SMP Goal 4: Well Managed and Maintained Community Infrastructure SMP Goal 4: Key Issue 4.1: Infrastructure is planned, maintained & managed to meet the community’s social, economic, environmental and financial needs Legislation The Allotment 202 has been excluded from the Community land classification under the Local Government Act. It can be sold by resolution of Council as public consultation has previously occurred. Page 2 Adelaide Hills Council Meeting 12 November 2013 - CONFIDENTIAL ITEM Sale of Asset 90a Onkaparinga Valley Road Balhannah Local Government Act 1999 – 15.11.210, Division 6 – Disposal and alienation of local government land, 201- Sale or disposal of local government land Sustainability Economic Social Environmental Governance Budget Not applicable, sale of this asset is anticipated to generate net income. Consultation No public consultation is required for Council to sell Allotment 202 as this parcel has been excluded from the Community lands classification. 2.3 BACKGROUND Allotment 202, Balhannah is excluded from the Community Lands classification. It has been held as a strategic asset for future economic development in Balhannah. The land is zoned Country Township Policy Area 28 Business Centre. Council determined at its 4 December 2007 meeting to offer Allotment 202, 90A Onkaparinga Valley Road Balhannah and the “Thoroughfare” for sale. The combined market value of the two parcels was determined in November 2007 to be $350,000. A registration of interest process followed and in early 2008 several submissions were received with Johnston’s submission proving to be the best offer, $480k for the land and $20k for the Thoroughfare. The proposed use was for an extension to the existing shopping centre. Other offers received were between $356K and $405K. The Thoroughfare is adjacent to Allotment 202 and the shopping centre and its ownership enabled Johnston to merge this parcel with the shopping centre. It is classed as a public street, not subject to any rights of way, having been created in a deposited plan and must be dealt with under the Roads (Opening and Closing) Act. In April 2008 the Flood Management DPA was issued covering flooding in the Onkaparinga Valley. It mapped the properties that were impacted by flooding and identified Allotment 202 could be impacted by flooding. Johnston claimed the area of Allotment 202 that was capable of being developed had diminished as a result of the flood management DPA. In light of the changed circumstances it revised its purchase price to $320,000. Negotiations continued until September 2011 but without agreement on the sale price. Johnston’s final, but informal and conditional, offer appears to be $325,000 for both Lot 202 and the Thoroughfare. Page 3 Adelaide Hills Council Meeting 12 November 2013 - CONFIDENTIAL ITEM Sale of Asset 90a Onkaparinga Valley Road Balhannah The 27 July 2011 valuation for Allotment 202 from Maloney Field Services was $260,000. It appears that Allotment 202 was withdrawn from sale probably because of the decline in the commercial property market. 2.4 DISCUSSION The land is subject to a substantial drainage easement which impacts upon approximately 27% of the land. This limits the form of development that could occur on the site. The zoning and limited frontage to Onkaparinga Valley Road also prevents any viable development being undertaken. The retention of the land as a land bank asset has limited value to Council. It would require rezoning to make the site viable as a stand-alone parcel for office or accommodation which is contrary to the current plan. Rezoning may meet with objections as Council could be seen as rezoning primarily for commercial gain for itself. The highest and best use for the land is to be part of the shopping centre precinct. The July 2011 market valuation of Allotment 202 was $260,000. The land has been previously offered for sale and lengthy negotiations were held with the previous owner of the shopping centre. In the end no agreement was reached. In late May this year the shopping centre was sold in parcels. The following are, or will be under separate ownership: • The shopping centre • The hotel • 92-94 Onkaparinga Valley Road (PO) • Vacant land behind the shopping centre The separate sale of the hotel and shopping centre resulted in the shopping centre having minimal car parking on its parcel of land. Council was advised that the new owner of the shopping centre was not interested in purchasing Allotment 202. In June this year Jones Lang LaSalle advised that it had a party interested in purchasing Allotment 202. Further that the proposing purchaser, Andrew Adcock Real Estate Pty Ltd, was making the purchase contingent on the purchase of 92-94 Onkaparinga Valley Road, and vice versa. A blank Contract for the Sale and Purchase of Land was prepared by the Council’s solicitor and sent to Adcock through Jones Lang LaSalle. A signed but amended Contract was returned. The Contract included an Offer of $310,000 (GST excl). It proposed a $10,000 deposit with a 30 day due diligence period and payment of the balance ($300,000) 150 days after the due diligence date. The Due Diligence was very open and more like a 30 day right of refusal. It is likely that the new shopping centre owner, John Vass, after being advised of the: • sale of an adjoining parcel of vacant land that was used informally for shopping centre car parking • existing use by the Foodland Supermarket of Allotment 202 as a truck turning circle and car park Page 4 Adelaide Hills Council Meeting 12 November 2013 - CONFIDENTIAL ITEM Sale of Asset 90a Onkaparinga Valley Road Balhannah realised that without Allotment 202 the shopping centre land limited car parking. John Vass has made an unconditional $320,000 (GST excl) offer to purchase Allotment 202. The offer proposes a Settlement Date of 17 December 2013. John has met with the CEO and emphasised the need to continue to use Allotment 202 for its current informal use as a car parking and as a turning circle for trucks. 2.4A OPTIONS The main options available to Council are: 1. Do nothing and continue to own and manage the asset, however there is no strong connection between the property and Council’s strategic plan or core business. 2. Accept the current offer from the proposing purchaser.
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