Fri 22 Nov 2013 5:51AM

Dec SDC - Proposal 11: Purchase of building

DU Deleted account Public Seen by 17

See: http://members.nsw.greens.org.au/members/Default.aspx?Page=6318


That SDC authorise:
A budget of $1M plus transaction costs of $50,000 (stamp duty, bank fees, valuation fees) for the purchase of a 350 - 400 square metre building for the ongoing operations of the Greens NSW.
That the final decision about which building be decided by COM in consultation with the Finance Committee and the Office relocation working group.
Name of Local Group/Committee/Office Bearer

Finance Committee
Name: Chris Harris
Budget implications


The GNSW must vacate the current office building when the lease expires in June 2014. building is to be redeveloped for affordable housing with a commercial space on the ground floor.
The GNSW will need a space of 350-400 square metres in order to:
Relocate the permanent office staff
Provide a space for SECC, FECC and LGEC operations when required
Delivery space for materials during election campaigns
The cost to rent a suitable space is in the vicinity of $70,000 - $90,000 plus on costs of $17-$27 per square metre of on costs (approx $7,000 - $11,000). So a range of $77,000 - $101,000 per annum

An alternative is to buy something:

The owner of the Eve St building has offered to sell the ground floor of a redeveloped building to the GNSW for $1M plus transaction costs. This would provide 465 sq metres of new office space with two conditions:
The space to be designed so that part of the space can be offered to casual use by community groups at a modest rental subject to the occasional additional needs of the GNSWduring election campaigns
Should the GNSW decide to sell the premises at a future date it must be offered first to the affordable housing provider at cost plus an allowance for annual inflation based on an agreed index. Should the affordable housing provider decline then it should be offered for sale to other progressive organisations on similar terms and should that not bear fruit then the GNSW would be able to offer the space to a commercial purchaser.
Finance for the purchase of a building is available from St George Bank. The bank will lend 70% of the purchase price. On a 15 year variable interest flexible loan the repayments are $5950 per month ($71400) at the current interest rate of 6.1%. Note that this is at the lower end of what the GNSW will have to pay in rent.
What about buying an existing building?

Should COM, in consultation with the Finance Committee and the Office Relocation working group decide not to pursue the Eve St option then another available building may be purchased.
It appears that the only affordable choices of sufficient size are located in industrial parks where it would be unlikely that a street frontage is either available or affordable.
The writer, Chris Harris, has been looking in the South Sydney/ Marrickville area and most recently visited several properties on Friday 1st November. All the properties available at around $1M were inside industrial parks and were combinations of office and warehouse similar to the exiting Eve St arrangement, The properties chosen were all between 350sqm and 400sqm. Probably the best was a brand new (one of about 12) industrial unit in Fitzroy St Marrickville, with a very high ceiling (high enough to build mezzanine offices). It was 15 minutes walk from Sydenham station and it was sandwiched between other units housing various businesses. The cost was $980,000 + gst and it would require substantial work to make it suitable for GNSW purposes - estimated work would be between $100k -$200K. The agents, with whom the writer has dealt, told the writer that a street frontage is rare,keenly sought and will cost more.
The Eve St option is larger (465sq m), will be custom designed and has a street frontage with known neighbours. At $1M it appears to be exceptional value for the GNSW compared to existing buildings that the writer has seen


If COM chose the Eve St option then the GNSW would relocate as soon as possible to suitable premises for the next three years. The GNSW can secure the future office space at Eve St via an option agreement with the owner Sylvia Hale. The GNSW would not need to finance the building of the office but would take out a bank loan for $700,000 once the office was ready for occupation. The transaction costs ($45,000 -$50,000) would be incurred at this time.

The balance of the purchase price ($300,000 ) will be paid for via an option agreement with the owner of the building during the construction period on flexible and favourable terms to the GNSW.

This could be part funded from $90803.39 in the Building fund reserve. There is also $43369.77 in the Bequest reserve which could be applied to the building purchase if SDC were to agree.

That leaves a balance $216,000 that could be paid over the three year period out of the GNSW's Administrative Funding and other funding that comes to hand.

On occupation of the new building after three years of renting alternative premises the GNSW would then have only a $700,000 loan with payments no more than the rent paid for the previous three years. The loan can be paid down more quickly if spare funds become available from time to time.