Ordinary Council Meeting
18 May 2015
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Notice of Meeting
Notice is given of the Ordinary Council Meeting, to be held in the Council Chambers, 48 Longueville Road Lane Cove on Monday 18 May 2015 commencing at 6:30pm. The business to be transacted at the meeting is included in this business paper.
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2.†††††† Friedlander Place - Option to sell whilst retaining Public Open Space Podium †
Subject:††††††††† Friedlander Place - Option to sell whilst retaining Public Open Space Podium†† †
Record No:††† SU3378 - 27213/15
Division:†††††††† General Managers Unit
Author(s):††††† Craig Wrightson†
This report outlines a further request for Council to grant an additional alternate Option in respect of Friedlander Place which provides the opportunity for Charter Hall (the owners of 504 Pacific Hwy) to purchase the entire Friedlander Place site, construct the proposed Friedlander Place public open space at their cost and provide permanent public access for use of the public open space podium. It is recommended that Council grant the Option.
The closure of Friedlander Place as public road concluded on 10 January 2013, the land vesting in Council in fee simple, being Lot 1 DP 1179636.
At its meeting dated 18 February 2013 Council authorised the General Manager to enter into negotiations with interested parties to dispose of the property having regard to the valuations received and to report back to Council on the result of such negotiations.
At its meeting on 2 December 2013 Council noted advice that as negotiations to sell the property did not result in a satisfactory offer being received, it was ďin Councilís interest to continue to hold title to Lot 1 DP 1179636 at this time, whilst remaining amenable to future options for the site.Ē
Subsequently Council received Planning Proposals affecting 472-504 Pacific Highway St Leonards located either side of Councilís land which planned for an expanded public open space on Councilís land.
Council at its meeting of 20 April 2015 considered a report to grant an option to Charter Hall/BMax (the owners of 500-504 Pacific Hwy) to acquire a stratum below the public open space podium to improve constructability and reduce the depth of construction on commercial terms. This would provide value to Council whilst retaining the land in Council ownership and control the podium stratum and airspace above providing a significantly larger improved public open space, level with the Pacific Highway. Under the arrangement, Council would still be required to fund the above ground works for the landscaping of the podium.
Council subsequently resolved:-
ďThat the Mayor and General Manager be authorised to execute the Irrevocable Offer Deed, subsequent Sale Contract and all documents creating the stratum subdivision of Councilís land Lot 1 DP1179636 and affix Councilís Seal as required.Ē
Charter Hall have now approached Council seeking a further option (not a replacement of the original, but they are mutually exclusive) to purchase the entire Friedlander Place site, construct the proposed Friedlander Place public open space at their cost and provide permanent public access for use of the public open space podium.
This would have the following benefits to Council:-
∑††† Additional financial return to Council over the existing Option. (The commercial terms of the offer are included in a Confidential Memo circulated separately to Councillors);
∑††† Provision of the proposed Friedlander Place public open space at no cost to Council to an agreed specification; and
∑††† Removal of construction risk from Council for the proposed Friedlander Place public open space.
The benefits to Charter Hall include:-
∑††† The ability to transfer floor space into their main tower footprint. The current DCP controls set a maximum floor plate per floor of 1075sqm GFA. This in conjunction with the DCP setbacks sets the upper limit on the size and massing of the building. As the design develops it may be possible for additional sellable floor space to be included, without changing the size/footprint of the building. Ordinarily this floor space would be forgone, but by purchasing the floor space from Councilís lot, it will able to be included;
∑††† The developer can construct the car parking under the podium, with the price payable being contained within a fixed price; and
∑††† The developer will have full control in terms of the timing of the proposed Friedlander Place public open space podium.
The terms of the Sale Offer, which would be documented under an Irrevocable Offer Deed, would mirror the existing Option in respect of timing. The key terms have been grouped below in respect of the risk that they address:-
Risk - The developer does not commence the podium and plaza works
a)††† Lodgment of a Development Application for the development of the Friedlander Place car park works, podium and landscaping works by the Offeree is required within 12 months of the Date of the Deed;
b)††† Completion of the Podium and landscaping works within 2 years after commencement of the Podium Works;
c)††† The Sale Offer being made upon notification to the Council by the Offeree that an application has been made for the first Occupation Certificate in respect of 500-504 Pacific Hwy development and terminating the earlier of, 30 business days after the Sale Offer is made and 4 years after the Development Approval is granted; and immediately upon notification by the Offeree that it does not intend to proceed with the Development Application;
Risk - The podium and plaza works do not meet Councilís objectives
d)†††† Council shall have the right to approve the aesthetics of the podium works to the Nicholson Street frontage;
e)†††† The contract shall restrict the development on Councilís land to be in accordance with the existing landscape plan;
f)††††† Councilís consent as land owner will be required to any Development Application and any Occupation Certificate application ;
g)†††† The finalisation of the sale of the land is subject to the satisfactory completion of the Podium and landscaping in accordance with the plan and specification included in the Deed;
Risk - The developer in transferring the floor space seeks to increase the scale of the building
h)††† Council may at its sole discretion withdraw from the transaction if the proposed building form exceeds the LEP height controls or the DCP controls which limit the maximum floor plate for 500 Ė 504 Pacific Hwy to 1075sqm GFA;
Risk - The developer seeks to offset the costs against the existing VPA or S94 contributions.
i)†††† The contract shall include a specific provision that ensures the cost of the construction of the public open space podium and landscaping, cannot be offset against the existing VPA or s94 contributions;
Risk Ė Council loses control over use of the site.
j)†††† Transfer of the land will only occur after construction of the public open space podium and landscaping, with the payment to Council of the lump sum purchase price being made within 30 days of the application for the first Occupation Certificate;
k)†††† The Sale will be conditional upon the dedication to Council of the above ground public open space podium or provision of a permanent public right of way over the area, in return Council will carry out all non-structural maintenance for the public open space; and
l)††††† The Proponent indemnifying Council in respect of works and occupation on its land.
Prior to selling any Council Asset, it is important Council be satisfied it is achieving value for money. Councilís land only being 20m wide has limited development potential in isolation in the context of the planning proposals due to setback requirements between tall residential towers under SEPP65.† Its best value has always been considered as being achieved in conjunction with an adjacent development.†
As Council was previously (prior to Planning Proposals) unable to attract a purchaser for the entire lot, the minimum value of the Council Land was considered in terms of retaining the benefit of the public open space at ground level. Council in granting options to the adjacent site has the potential to ultimately achieve greater commercial value though the sale of a podium substratum (existing Option granted) or sale of the entire lot, with retention of public access to the open space podium (proposed additional alternate option). Ultimately, if the transfer of Floor Space or use of the substratum for car parking is not commercially viable for the proponents, the costs of construction of the new Friedlander place would need to be met by the funds from the VPA. It is therefore concluded that either option provides far superior financial return to Council, having regard to its obligation to achieve best value from its assets.
That the Mayor and General Manager be authorised to execute the Irrevocable Offer Deed† and, subsequent Sale Contract, which provides for the retention of public access to the proposed public podium open space at Friedlander Place, for the sale of Councilís land Lot 1 DP1179636 and affix Councilís Seal as required.
General Managers Unit
Friedlander Place - Arcadia Landscape Plan - November 2014