Hotel deal cost taxpayers $24m
Financial details of the deal that secured the construction of a Westin Hotel at WA's former firefighting headquarters can now be revealed.
High hopes: How the hotel could look. Illustration: Supplied
The State Government has consistently refused to say how much the former FESA House site at 480 Hay Street sold for, or to detail the value of incentives offered to secure an international standard hotel under a Tourism WA scheme, citing commercial confidentiality.
The West Australian can reveal BGC will pay about $8 million for the land, with the transaction to settle when the hotel is completed in 2017-18.
That is less than the $32 million the site was valued at on the books of the Department of Fire and Emergency Services, and less than valuations by the Valuer-General, Jones Lang LaSalle and Collier in 2013, which put the land at between $19 million and $26 million if it was sold on an unencumbered basis - that is, without the requirement to build a hotel.
There is no suggestion that the lower sale price was inappropriate; rather, the lower sale price reflects the value of the subsidy required to secure the Government's policy objective of a new hotel.
Details of the deal were pieced together from documents obtained by Labor's Margaret Quirk under Freedom of Information laws, DFES financial reports, Treasury's annual report on State finances and evidence given to an Upper House parliamentary committee.
Significantly, DFES will receive nearly the full book value for its asset, which it had planned to sell for top dollar to pay down debt associated with the construction of its new Cockburn headquarters.
The agency received $24 million from consolidated revenue to compensate it for the lower sale price, with the balance of the $8 million owing to be received in 2017-18.
With the Government saying Tourism WA is unlikely to enter into another deal of this nature, Ms Quirk said the Government's rationale for refusing to detail it fell away.
"If this is any indication of how they intend to handle all asset sales, then the taxpayer is not going to get value for money," she said.
BGC's bid was not the highest dollar value bid for the land - Finbar offered $11.7 million - but the Government judged BGC's overall proposal as better value, a Tourism WA spokeswoman said.
Tourism Minister Kim Hames defended the decision, saying the deal represented "excellent value . . . for a much-needed hotel in Perth".
BGC Development general manager Ross Catalano said it participated in a "full, open, rigorous and competitive evaluation process".
Source : The West Australian Gareth Parker State Political Editor March 9, 2015
