This property developer’s pockets may be hurting as they must pay $25.5m to the City Council to build a $400m development on the former Le Cornu site in North Adelaide.
Revealed in a publicly-released confidential report, Adelaide City Council and Commercial & General (C&G) have struck an expensive deal.
The report by BRM Advisory outlines the potential financial risks if C&G are unable to complete the project or goes bankrupt.
With a casual $1m payment required for signing the formal agreement, C&G will have to pay a further $6 once construction kicks off. They must pay off the remaining $18.5m throughout the sale of properties.
The BRM Advisory report “C&G is contractually liable to pay the City of Adelaide the proceeds related to the project.”
“The City of Adelaide will receive the proceeds under a staged payment agreement over time. The total value of this payment plus a State Government $10m grant will see the City of Adelaide recover the initial payment for the land.
“The (total) payment is higher than the current value of the land as recently assessed by a licensed valuer.”
The O’Connell St site has been empty for almost 30 years, but the concept plans show three high-rise buildings with apartments, retail and food options, outdoor and entertainment areas. However, the community have always expressed their reluctance in the construction of high rise buildings.
“Many expressed that they do not want a large, monolithic structure, high rise or a development that dominates the entire site as it would negatively impact surrounding residences, the quality of the area and the development itself,” the report says.
“We are conscious that the height of the proposed C&G scheme, at between 12 and 14 floors, is likely to be a cause of community consternation.”
Purchased by the council 2017 for $34m, C&G were chosen as the preferred developer in 2020 with designs for apartment buildings of up to 16 levels including commercial and retail space on their lower floors and basement parking.