East Perth (inner city) primary school

The options presented by the City for consideration were:

1. Sell the Freehold to the State based on fair market value

• The value of the land is approximately $40M
• The State could provide an offer on fair market value to purchase the land

2. State provides a Fund for community-based projects of equivalent value

• At the meeting on 23 May 2024, the Department of Education introduced a concept of the State providing funding for community-based projects
• The proposed future sport and recreation facility in East Perth was mentioned as one example
• The State could provide a fund of equivalent value, approximately $40M, for the City to draw on for a pre-agreed range of projects and pre-agreed terms and conditions

3. Enter into a Land Swap or Land Exchange arrangement

• The State could provide freehold land to an equivalent value as part of a land swap arrangement
• Identified parcels of land include Point Fraser, Ozone Reserve, 158 Royal Street, and No 2, 4, 6 and 8 City Farm Place
• This is not an exhaustive list and the City will consider other equivalent options identified by the State

4. Provide a Peppercorn Lease Arrangement over State-owned car parks

• A new five year lease is being negotiated for the Cultural Centre car park.
• The State Library car park lease arrangement is in place until 2040.
• Both car parks and the present value of their leases could be assessed, with the monetary value forming part of a 50 year peppercorn lease arrangement.

5. State reduces Perth Parking Levy for City-owned car parking bays

• The City currently pays around $18 million annually under the Perth Parking Levy.
• The State could reduce the Levy on the City’s car parking bays.
• This arrangement could be introduced over a short period or staged over a number of years to the State’s discretion.

6. Enter into a Leasehold Arrangement

• The City and State could enter into a ground lease arrangement.
• As an example, the City could grant a 50 year ground lease to the State to enable the East Perth primary school to be developed and operate until the end of its useful life.
• The State would pay a marked-based annual ground rent.
• The State would return a cleared site to the City at the expiry of the term or purchase the site at market 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. 

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. 

The State Government has not disclosed what other sites were considered for the primary school. 

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.

The school is earmarked to open in 2028. Primary schools typically take between 18 months and two years to build. The City of Perth needs to ensure that an optimal result is achieved for ratepayers and the community. This process should not impact the opening of the school.

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.

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. 

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.

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.  

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.

In 1960, the City agreed to establish a public car park on the Nelson Cres land, along with other property initiatives, as part of the agreements encompassed in the Chevron Hilton Hotel Agreement Act 1960.

The Act was introduced ahead of the 1962 Commonwealth Games to allow for the development of the Chevron Hilton Hotel (which never eventuated) in the Perth CBD and to facilitate a number of other property transfers. 

Whilst the key initiatives within the Act were resolved long ago, the Act was never repealed.

The City has long appealed to the State Government to repeal the Act and enable the City to consider developing the site for the benefit of the community.

Repealing of statutes that have lost their utility should not be used for commercial bargaining.

The new Act terminates the agreement entered on 2 September 1960 between the State Government, City of Perth, Chevron-Hilton Hotels Ltd and SGIO without the agreement of the City, and repeals the Chevron Hilton Hotel Agreement Act (1960). 

The new Act requires the transfer of 16,000m² of freehold land owned by the City to the Minister for Education for nil consideration, to allow for the development of the Inner City School. 

The new Act states that the City cannot commence any proceedings against the State Government and its right to claim compensation under parts 9 and 10 of the Land Administration Act 1997 (WA) do not apply in relation to the transfer of the land. However, the State must pay the City a lump sum of $4,217,000 for the loss of car park revenue calculated over the period of time from assent of the new Act to the opening of the Inner City School.