Saturday, December 20, 2014

Bob gives good headworks

Cairns Post, July 26: Approval sought for $200m seven-tower project on Spence St Cairns
The first stage, a high rise on Spence St behind the police station, is set to be completed in 2016.
Aspial bought the site in February this year for $18.9 million and plans to start building on it by the end of this year.

ABC, November 12: Green light for first stage of $200m Spence St tower development
Mayor Bob Manning said he hoped construction of the first high-rise could begin before the end of the year.
"I understand from the Aspial people that there is an urgency to get this work underway, so I'm hoping that we might start to see some activity down on the land even before Christmas, although it may be after but one would hope to see that things are starting to move down there very, very quickly."

Cairns Regional Council, December 17: New incentives round to boost development
To be eligible for the discount, construction must start before 1 July 2015, with a completion date of no later than 30 June 2017.
The projects must have a construction value in excess of $15 million, with at least 80 per cent of the workforce sourced from the local area.
"Council considers that the value of the incentive scheme – that is, the money that Council is forgoing to bring these projects on - will be recovered in additional rates income from these developments inside five years of the completion of projects," Cr Manning said.
The previous round of the incentives program ended on 30 November. Nine projects with a combined value of $63.4 million were completed.

Cairns Post, December 18: Singaporean developer commits to new $120m towers in Cairns; Aspial sees city on rise
Meanwhile Aspial has been waiting for some sign or incentive to get the first $120m stage off the ground.
As soon as the Cairns Regional Council decides on a new round of infrastructure rebates to spark investors to get some projects moving, Aspial acts, with a headworks discount of about $1 million being all it takes for its chief Koh Wee Seng to give the first stage of two towers the green light with the aim of a July 1 start.

Perhaps I have missed some nuance but trying to figure out how a $1 million infrastructure incentive to start a project in the same timeframe that had already been intended can be anything other than a direct subsidy transfer from ratepayers onto the bottom line of a foreign developer for no return. I would like some of the Council numbers and assumptions on that payback period as it would seem to me to be infinite in these circumstances?

As previously posted Aspial may have already been recipient of an unintended subsidy via mis-valuation of the subject land for rates and land taxes, unless corrected: Land valuation weirdnesses revisited.

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