Tender history repeats over Kings Square

HERE we go again – just six months after Freo StreetWise exposed the lack of proper council process in the tender for the Kings Square hospitality space.
The City’s finance committee will tomorrow revisit old ground when it considers entering negotiations which include the offer of 10 years free rent for the only tenderer interested in occupying the restaurant, bar and cafe venue, Clancy’s Fish Pub.
In January, council decided to review its selection criteria after only one tenderer out of 130 businesses declined council’s lease offer, including $1.3 million in inducements including free rent.
This is council’s second attempt to fit a square peg in a round hole. Instead of following its own policies, the officer’s report to the committee recommends stepping outside the local government tender process as, “no suitable tender was received”. Clancy’s did not meet the criteria.
But rather than follow standard procedure and review its selection criteria before returning to the market, openly and competitively, officers recommend negotiating exclusively with Clancy’s to determine, “a position more aligned with Council’s criteria”.
Under the Council’s ‘Leasing of City Property in a Competitive Manner’ policy, it states, “This policy enables interested parties to compete in an open and competitive manner for City land and properties when they become available for lease. It aims to achieve a strong financial return on investment and strong community outcomes from the City’s property portfolio”.
Council could not explain why City officers did not return to the market with a new and decidedly varied lease package under its own policy guidelines, ‘Investments, Property and Other Non-current Assets or ‘Leasing of City Property in a Competitive Manner’ nor why the City officers did not recommend elected members consider risk management options available to them.
South Ward Councillor Marija Vujcic moved to refer the lease deal to an Independent Probity Auditor under council policy which states: “An Independent Probity Auditor may be engaged by the City for projects assessed as high risk of reputational, financial or community risk, through the project risk assessment process.” Her motion was defeated six to four.
Ms Vujcic told StreetWise Council’s role is not to use ratepayer’s money to give a ‘leg up’ to one business providing a similar service to others in the CBD who, “may well have a case to ask for similar treatment”. She told council the opportunity cost is huge for ratepayers, “all the cultural and civic pursuits are being traded for another alcohol outlet. What a poor return”.
Fremantle Mayor Brad Pettitt said the decision to offer a private company sweeteners such as free rent and ratepayer-funded fit-outs was a ‘pragmatic reality’ in a tough WA market.
“While the tender received was non-compliant the tenderer did meet most of council’s approved criteria, making them a desirable candidate for negotiation of a suitable leasing outcome for the property,” according to the officer’s report.
“As the tender received does not adequately address all of Council’s criteria, and the inflexible nature of the process prevents negotiation on proposed terms, officers propose that the CEO commence negotiations with the applicant to determine if a position more aligned with Council’s criteria can be reached.”
It adds: “Under the Local Government Act 1995 the City may negotiate a lease with a third party outside a recent tender process, if no suitable tender was received.”