Gillman master plan raises profit questions
The final Gillman master plan lists a huge range of works and constraints on the site, raising new questions about the State Government’s controversial $100 million deal to sell the land to the Adelaide Capital Partners consortium.
The plan, to be released today, clarifies the size of the parcel of land available for development, and mounts an argument against devoting the site to a single industrial use.
Renewal SA’s outgoing chief executive Fred Hansen told a parliamentary inquiry that ACP would pay about $30 per per square metre for the site.
The master plan confirms the market value of the land – post improvement – at a minimum of $70-$100 per square metre for allotments of more than five hectares, ranging up to between $180 and $240 per square metre for small allotments of less than one hectare.
How much of this would be profit is yet to be seen: ACP is promising to bring the land up to scratch for industrial use and the master plan reveals how enormous that task will be.
It says that new transport infrastructure is needed along with sewage and water works, two new electricity substations, construction of a 3.7m sea wall, the careful management of potentially damaging acid sulphate soils, and the trucking in of a massive amount of fill – about 4.25 million cubic metres.
Critics of the deal argue that making such a huge area available to accept fill is a potential goldmine for ACP – even before the site becomes open to industrial tenants.
The master plan specifically argues against a single tenant for the site or a single industrial use.
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ACP’s vision is for the area to be a hub for the resources oil and gas industries.
The master plan by consultants Jensen Planning + Design argues against a singular focus, saying: “Gillman should adopt a flexible approach to land use rather than pursue clustering of a particular industries focus (for example, high-value industry or green-technology etc). The review of market conditions has shown limited advantage to marketing a particular industrial niche.”
It says that large industrial estates in Adelaide’s outer north have recognised the demand for small lots.
“Accordingly, Gillman should aim to have a diverse mix of lot sizes to maximise the take-up rate of the industrial sub-division,” it says.
“The number of large lots should be relatively low, reflecting the low demand for such lots.”
Planning Minister John Rau told InDaily there would be a risk to the taxpayer if the Government sold the land in small allotments.
“It would require the government to assume all of the risk in the take-up of allotments and to invest in the provision of services,” he said. “The ACP agreement, if concluded, would see that risk shifted to ACP.”
Somewhat bizarrely, the masterplan doesn’t reference the ACP deal in any way, but it does recognise – and dismiss – a push to establish a motorsports complex on the former MFP site near Port Adelaide.
The ACP deal has always been presented as a 400 ha land deal, under which the consortium would ready the land for industrial use.
However, the masterplan says the developable area is only 236 hectares, with other parts of the land required for stormwater management, an intertidal wetlands, roads and utilities.
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Rau said ACP would be required to use some of the 400 ha covered by its option agreement for environmental and other purposes.
“Chopping up the land into smaller allotments would not require any purchaser to take responsibility for these outlays, which would then become a cost to government.”
The master plan contains a long list of constraints on the site’s development, and identifies ways to overcome them. These include stormwater management, potential inundation by sea water, acid sulphate soils, transport issues, and protection of the sensitive coastal environment.
The plan sets the scene for the rezoning of the land from “MFP” to “industry zone (or similar)”.
Rau said the master plan found the area could support about 6,000 jobs once suitable parts of the land were rezoned, filled to protect against flooding, and supported with the required infrastructure.
ACP says its plan for the area is to create a large industrial estate which will become a “global logistics hub for South Australia’s resources and oil and gas sectors”.
Late last year, ACP finalised a 12-month exclusive deal with the Government which gives it an option purchase approximately 400ha at Gillman for more than $100 million. The purchase will be made in stages.
The deal sparked controversy, with potential competitors in the waste and engineering industries questioning why the land wasn’t put out to tender – and why the deal was struck before the master planning process was completed.
ACP’s Stephen Gerlach told InDaily earlier this year that much of the fill required to raise the site would come from waste company ResourceCo – which is a member of the consortium, and already owns large supplies of unused fill.
“ResourceCo have access to a couple of major sandpits in the southern suburbs, which is really good quality fill,” Gerlach said. “And there are other marketplace sources for clean fill where people are doing major excavations.”
In a series of exclusive reports this year, InDaily revealed that the board of Renewal SA initially opposed the sale, arguing the land should be subject to a tender process to test the market.
However, soon after preparing advice to the Government opposing the sale the board made another decision, this time agreeing that the ACP proposal was an appropriate use for the land.
Hansen, who has left Adelaide to return to the US, told a Parliamentary inquiry the ACP price offer was more than four times the value that Renewal SA’s valuer gave the land.
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