The City of Ballarat has reviewed the claims of the BRRA following their recent analysis of the financial business case supporting the Civic Hall development.
The business case was developed by Burns Bridge Sweet on behalf of Council. Burns Bridge Sweet has extensive experience in the preparation of property business cases for local Government and the commercial sector.
Council’s review indicates that the BRRA have made a number of errors in their assumptions which have supported their conclusions.
“Council Officers and a representative from Burns Bridge Sweet met with the BRRA recently to explain the business case for the project,” said Anthony Schinck.
“Unfortunately, we still do not agree on the figures in the business case.”
“It is important that the community understands that each of the criticisms made by the BRRA are not supported by the actual numbers in the business case.”
“Council remains confident that the business case is sound and would, if delivered, result in the best financial outcome for the City,” he said.
“The BRAA position on the Civic Hall business case is flawed as a result of using generalisations to arrive at a cost increase of $12 million”.
“To make some isolated changes in a manner similar to that done by BRRA Council could also make the case for Council’s preferred option to be approximately $2 million better than the current business case. This would be no more appropriate than the BRRA calculations”.
“If the business cases were to be re-worked in any way all of the figures would have to be totally re-worked with all assumptions to be reviewed”.
“It is not usual practice to pick and choose the information that is released and that which is not, generally a holistic approach is employed, as Council has done to date”.
“The BRRA assumption that the valuation of the new civic offices is $27 million in year 2 is not correct. Though they have completed the calculations correctly they have not started with the correct valuation position”.
“The $27 million valuation used by BRRA relates to the construction costs only. The full valuation of the building will also include the valuation of the land, and costs associated with the contract, site rehabilitation etc which is costed at $4.7 million”.
The starting valuation figure is:
Construction cost $27.0 million
Associated costs $ 4.7 million
Total valuation $31.7 million.
“The future valuation of the building based on a starting valuation of $31.7 million and indexed by 3% over the 18 years is $53,967,128, or approximately $54 million as correctly shown in the business case”.
“Irrespective of the above, Council values the contribution of the BRRA in reviewing Council’s plans. The business case adopted by Council is a sound plan which will deliver a $54 million building asset to the community after 20 years,” said Anthony Schinck.
Council was pleased to discuss the issues at today’s community forum on the project. Attended by 150 residents.
Council will consider the current planning permit application in early 2012.