$1 For Hilton Hotel Land
LANDCORP sold to the City of Karratha 4400sqm of the CBD pegged for a $20 million, 100-room hotel – for $1.
The bargain deal went through in December last year, two months after the council agreed to buy the empty block next to the council-owned The Quarter building on Sharpe Avenue.
A spokesman for DevelopmentWA (a merger of Landcorp and Metropolitan Redevelopment Authority) said: “The price reflected the condition that the land had to be developed for a hotel. The land has to be developed for a hotel.”
DevelopmentWA held the land from July 30, 2014 until it was sold in January this year to make way for the new four-star Hilton Garden Inn Hotel.
Council has entered into a lease agreement with Pacifica Developments to develop and operate the hotel, construction of which was supposed to start this year and finish in February 2020.
The City will contribute up to $10 million towards the project. In return, it is expected to receive $16.5 million in rent and $5.8 million in rates over 20 years.
Though a number of councillors and members of the community have criticised the local authority’s involvement in a commercial hotel development, the City says it will create jobs including more than 50 during construction and 40 to 50 full and part-time local jobs.
The project also is expected to generate an, “additional income stream for Council and fill a gap in the existing accommodation market”.
According to the 2018 Karratha Destination Management Plan, Karratha needs a, “higher quality accommodation offer”, to attract, “a higher yielding visitor market”. The current grey nomad market, “has limited disposable spend”, the report states.
Existing accommodation is described as, “of mid-range variable quality”, adding, “the product on offer mixes leisure visitors and mining, which struggle to be compatible”.
Mayor Peter Long has said construction is expected to start before the end of this year when in September last year he said it would start in January this year.
The hotel is now expected to open at the end of next year, one of the 13 conditions set by the Kimberley Pilbara Gascoyne Joint Development Assessment Panel that approved the project including the agreement would lapse after two years if the development had not substantially commenced within that time.
The City’s business plan rates: “Although this transaction may not appear to fit the perception of ‘normal’ local government operations, this proposal has very clear linkages to the City of Karratha’s approved Strategic Community Plan 2016-2026 and Corporate Business Plan 2016-2021.”
It adds: “The purchase price is expected to be a nominal amount reflecting the valuation of the property.”
Ownership of the development would revert to the City if the developer runs into financial difficulties. The lease includes an option to purchase the hotel site for the same purchase price paid by the City to LandCorp – $1.
The option is exercisable only after the outstanding balance owed to the City is paid in full.
