East Perth primary school
The City of Perth has advocated for a city primary school for many years.
A school is one of the recommendations within the City’s Local Planning Strategy May 2023 in East Perth.
The State Government proposed a Major Land Transaction and made an approach to the City in May 2023 to use approximately two thirds of the City-owned land in Nelson Cres, East Perth for a primary school.
The City worked with the Department of Education to carry out its investigations related to the land while preparing its own due diligence to inform negotiations with the State Government over the land.
The State Government has not offered any financial compensation to the City of Perth for land that they have had valued at approximately $40m.
The State Government has also refused to engage in a land swap with the City of Perth.
The current proposal would remove 513 parking bays, provide no cash compensation for 1.6 hectares of land and leave the City of Perth with no certainty whether the remaining portion of land – adjacent to a primary school – can be used to its full development potential.
A Business Plan was prepared and presented to Council, it concluded:
The City of Perth should decline the Major Land Transaction under the current terms proposed by the State Government. The City is not responsible for providing schools infrastructure, and must take a broader perspective when considering the use of scarce land within its boundaries. Appropriate compensation must incorporate the current and future value of the land to the City and its ratepayers, the opportunity cost of curtailing the future development potential of the land, and the value provided to the State Government in assisting it meets its own statutory requirements.
Outcome of Ordinary Council Meeting 26 March 2024
Leading economics, policy and strategy advisory firm ACIL Allen were engaged by the City of Perth to develop the Business Plan for the East Perth Primary School for Council consideration.
Council resolved to decline to enter into a Major Land Transaction in respect of the land under the terms and conditions proposed by the State Government.
Council authorised the City of Perth CEO to continue engaging with the State Government to negotiate satisfactory terms for the Major Land Transaction. Any revised terms will be presented back to Council.
Background
The land
The proposed site is the Queens Gardens carpark in Nelson Cres, East Perth.
The total carpark, which has 863 standard bays, is one of the most significant cash flow generating carparks within the City’s portfolio and is forecast to provide a net cash flow of $1.5 million this financial year. The revenue from the City’s parking business is a critical revenue stream that helps keep rates to a minimum.
The site is divided into three parcels of land which totals 2.6ha. The State Government wants to build the school on parcels 2 and 3 – approximately 1.6 ha.
The City of Perth purchased the land around 50 years ago from private landowners and holds it in freehold ownership.
Frequently Asked Questions
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How long has the City of Perth owned the land required for the primary school and what is its value?
The City purchased the land for carparking in the 1960s and 1970s from private landowners and currently holds it in freehold ownership. The carpark has been in operation for more than 50 years.
The market value of the land required for the primary school is approximately $38 million to $40 million.
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Why does the City need to go through this process?
The City must conduct a Major Land Transaction in accordance with the requirements of section 3.59(3) of the Local Government Act 1995 (WA) which requires the preparation of a Business Plan that includes:
- the effect of the 'major land transaction' on the provision of facilities and services by the local government; and
- the expected financial effect on the City.
Given the market value of the land required for the primary school is approximately $38 million to $40 million, the City needs to ensure a balanced result for ratepayers and the community.
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What other sites were considered for the school?The State Government has not disclosed what other sites were considered for the primary school.
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Who is responsible for the selection of public primary school sites?The State Government, through the Department of Education is responsible for the selection of school sites. The City was not consulted during the site selection and analysis process.
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Will the Council process delay the opening of the school?The school is earmarked to open in 2028. The schools typically take between 18 months and two years to build. We need to ensure that we get an optimal result of ratepayers and the community but don’t see that will impact the opening of the school.
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The State Government has advised of a $27million benefit to the City’s remaining land by the repeal of the Chevron Hilton Hotel Agreement Act 1960. Why doesn’t the City accept that proposal?
The City does not accept that the State’s proposal reflects a reasonable or cooperative approach to the common objective.
The State is not offering $27million in monetary compensation. It believes the remaining land has no current value and that there will be an uplift in value when they repeal the Act.
Appropriate compensation should incorporate the current and future use of the land to the City and its ratepayers, the opportunity cost of curtailing the future development potential of the land, and the value provided to the State Government in assisting it meet its statutory requirements to provide school education.
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Why hasn’t the City and the State Government agreed on the terms for the transfer of the required land for the primary school?
Local Governments have never been asked to provide freehold land for school sites for nil compensation.
A standard land transaction usually involves a willing buyer, and a willing seller whereby offers and counteroffers are made, and a fair value negotiated where both parties are reasonably satisfied.
In this situation the State requires the land be transferred free. The City is not a willing seller on those terms and does not accept the State’s assessment of the value of the land.
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What was the conclusion of the ACIL Allen business case provided to the City of Perth?The City of Perth should decline the Major Land Transaction under the current terms proposed by the State Government. The City is not responsible for providing schools infrastructure and must take a broader perspective when considering the use of scarce land within its boundaries. Appropriate compensation must incorporate the current and future value of the land to the City and its ratepayers, the opportunity cost of curtailing the future development potential of the land, and the value provided to the State Government in assisting it meets its own statutory requirements.
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What were the timeframes associated with the Business Plan being considered by Council?The City of Perth commenced due diligence investigations in 2023.
Elected members were provided with periodic updates and several briefing sessions including a detailed analysis of the financial issues, by advisors ACIL Allen, prior to the Ordinary Council Meeting on 26 March 2024.
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Why wasn’t the Business Plan advertised for public comment?
The Business Plan is available for the public to view here under Urgent Business Reports.
The draft Business Plan was informed by the terms and conditions proposed by the State Government in correspondence.
Such plans are usually released for public comment when the terms are acceptable to the City of Perth and accompanied by an agreed deed or other formal arrangement. There was neither an acceptance of the State’s proposal, nor was a formal arrangement completed. The Business Plan therefore could not be advertised in its current form.
Part of the resolution was that Council:- Declines to enter into a major land transaction under Sc 3.59(3) of the Local Government Act 1995.
- Does not proceed to advertise for public comment the draft Business Plan in accordance with Section 3.59(4) of the Local Government Act 1995.
- Authorises the CEO to continue engaging with the State Government to negotiate satisfactory terms for the Major Land Transaction.
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