A Canberra businessman was given a 99-year lease over Ginninderra Village by the Department of Environment, Land and Planning for tens of thousands of dollars under its present market value, according to documents received by The Canberra Times.
The lease was converted from a 50-year lease under which rent is paid. At the time the businessman owed back-rent of more than $100,000.
The businessman, Mike St Clair, got the 99-year lease for $70,000, yet three sub-leases of businesses at the site show a return $75,000 a year.
Mr St Clair said yesterday that he had had a verbal understanding in 1982 with the then Minister for Territories, Michael Hodgman, that if he took up a short-term lease with rent on Ginninderra Village he would get a rent-free 99-year lease (like the standard residential lease) at market value the following year.
However, with the change of government he had been given a bureaucratic run around. It had taken him 11 and a half years to get his lease regularised.
The departmental documents record an officer’s note that Mr Hodgman had put out a press statement denying and promise or agreement.
The documents show that in addition to the lease Mr St Clair bought the heritage listed Ginninderra Schoolhouse for $30,000 after Australian Valuation Office valuation for that amount. The department argued that building had to be sold because the City Area Leases Act provides for tenants rights in improvements on surrender or expiry and it might otherwise result in the Territory having to pay the lessee compensation for its own building.
The department argued for this “”for reasons of administrative efficiency and encouragement of private-sector activity”.
A senior departmental officer said that because Mr St Clair had applied for a 99-year lease in 1984 and others had had their 50-year lease converted to rent-free 99-year leases, it was thought that the price for Mr St Clair’s lease should be determined on the 1984 valuation.
The documents show that the department put three options to the Minister for Environment, Land and Planning. First, was to resume the lease for non-payment of rent (with presumably a public auction later). The second was to give Mr St Clair a 99-year lease at current market value and the third was to give it to him at 1984 value.
Mr Wood approved the last. It gives Mr St Clair 99-year lease for less than what he gets in one year from his sub-tenants.
Independent MLA Michael Moore said, “”It is hypocritical for the Government to run around playing poor while at the same time administering the leasehold system in such a way that public assets were sold grossly under value.”
He said there had long been concerns over the administration of the leasehold system in Canberra. It appeared this was another example of poor administration.
Mr St Clair said that although on paper it might seem generous, in fact a lot of the lease was unusable commercially because of the heritage listing, yet he had to do the upkeep.
“”I’m a glorified ground-keeper for the Government,” he said. “”Of the 2.9 acres, I can only work with .7”.
He had 530 square metres of commercial space and under the lease could add 600 square metres, but that would have to be built and would not justify the return.
Ginninderra Village has several businesses including Leather and Trading, the Wine Press, an ice-cream shop and a restaurant.
Mr St Clair said he had had great financial worry over the bureaucratic delay in getting his lease. He was very happy with the two senior officials in the department now who had dealt with his case. But earlier he had had delay after delay caused by inter-departmental jealousy and lack of co-ordination.
If it had been a council in NSW it would have been quicker and easier to put up your $5000 for an officer to have a holiday than have the bureaucratic rubbish we have here, he said.
Mr Moore said, “”The challenge has always been there to get the leasehold system under control and that challenge still exists.”
On the general question of converting 50-year commercial leases to 99-years leases, Mr Wood said the Government was still canvassing the options.
At present the law provides that leases can be renewed upon payment of a fee set by the Government. The Government has made it clear that for residential leases the fee will purely administrative. It has no policy for commercial leases and the Building Owners and Managers Association says this is affecting the market where long-term financing is a consideration.
Mr Wood said the options included adminsitrative fee only; renewal at full market value; full market value for perpetual lease; and annual payments tied to land tax.