SUNSET HAVE GAINED RATEPAYERS’ $105,000 ‘SUBSIDY’
In a lease approved by Fremantle Council for Sunset Events ratepayers will fund a $105,000 subsidy to help the financially troubled company to establish their micro brewery and 400 seat bar in J shed.
An extension of 12 months for the time in which Sunset implement the lease has been applied for and will be considered by council tomorrow, Wednesday 14th June.
In an application lodged with Fremantle Council (7th July 2017) Benson Studio for Sunset outline a proposal which reveals a rent reduction of $105,000 in the first two years of the Sunset lease.
The rent for the lease of the J Shed studio, situated on Arthur Head below the Round House and site for Sunset’s proposed micro brewery, is $83.950 per year. Over the first two years rent would have totalled $167,900. Sunset are requesting they pay only $62,962 in that period. This represents a shortfall of $105,000 which effectively forces ratepayers to subsidise a private company’s startup. Several observers have commented that even without the subsidy the rent is very cheap.
Buried deep in the 62 page lease the relevant clause states:
Item 8. Rent: (clause 3.1)
$83,950.00 per annum plus GST
14.6 Rent Reduction
The Parties acknowledge and agree that during the period commencing from the Commencement Date and ending 24 months after the Commencement Date, the Lessee will pay Rent at a reduced rate and in the following manner
(a) for the first year of the Term, the Lessee will pay 25% of the Rent; and
b) for the second year of the Term, the Lessee will pay 50% of the Rent.
FINANCIAL CLOUD OVER SUNSET : ONLY ‘HOPEFUL’ THEY CAN PAY RENT
A number of media outlets have outlined some members of the events industry in Western Australia have had trouble paying creditors. Those businesses include Sunset who have been arranging financial settlements with their creditors.
Sunset are only ‘hopeful’ that extra time will help. The Application says: “Sunset has advised that it would be difficult in current circumstances for them to pay rent from July 2017 without the approvals they require to trade effectively. Sunset are hopeful that once approvals are gained, it will trigger investment and the ability to cover the rent and finalise the “Lessee Works”.
COUNCILLORS ADVISED ‘REJECT EXTENSION ‘
The application for the extension also says: “Sunset Venues have had ample time to gain required approvals and that the lease considers the scenario in which approvals have not been granted by the lease commencement date. Therefore, it is recommended that the request for an extension until 1 July 2018 be rejected.”
Council officers state the proposed leasing arrangements may continue in a state of ‘frustration’. They say “In the event that the approvals are not granted, the lease will continue in a state of ‘frustration’ where no outcome is achieved other than activation …”
WHY SHOULD WE SUBSIDISE THEM?
Sunset’s management admit they are financially frustrated. Is it reasonable for ratepayers to subsidise them?
There has been considerable angst among residents in the area of J Shed. The issue of this lease and the request for a $105,000 ‘startup subsidy’ may have a strong influence on the outcome of council elections in October this year.
A number of councillors and organisations have been asked by Fremantle Backchat to comment.
North Ward councillor Doug Thompson explained his considerations. He said: “Councillors are required to take into account a range of information before making a decision and to have an open mind about decisions. My general approach to decision making is to give primacy to the information contained in the report and to the officers’ recommendation”
He continued: “I keep an open mind ( as I am required to) in relation to information provided during a meeting and the issues raised in debate. In relation to your specific questions the decision in relation to the lease arrangements has already been made and is not being reconsidered. What I think about specific elements of the lease is irrelevant. The good governance recommendation by the Department of Local Government, and the Local Government Act, requires me to support decisions made by Council, regardless of whether I, as an individual Councillor supported those decisions at the time.”
Ra Stewart, a mayoral candidate in the City’s October electoral said: “I am supportive of the officer’s recommendation to reject the extension of the lease commencement date. It would appear that Council has been fairly generous up to this point in time.”
‘KICKING THE CAN AROUND’
The Mayor and City Ward Councillor Rachel Pemberton have declared a conflict of interest and feel in that circumstance they are not in a position to comment.
Maryrose Baker and Robert Mehan of Fremantle Inner City Residents Association declined to comment saying: “FICRA is currently preparing a formal response for Council re the latest Sunset Events J Shed proposal. We don’t intend to issue any statements on the matter as an Association nor as individuals right now”.
John Dowson was asked to comment as President of the newly amalgamated Fremantle Society and the Fremantle Residents’ & Ratepayers’ Association but chose to make a personal observation: “In terms of the J Shed lease Sunset may have a lot on their plate financially. Sunset and the Mayor may not want the lease to be a major election issue, raising again the question of the $5000 election donation from Chitty’s brother, and kick the can down the road until the October election is over”.
ELEPHANT IN THE ROOM A MAJOR ELECTION ISSUE?
If council approve the application for a delay the controversial elephant in the room may be given a lease of life. If they do not Sunset will need to implement the lease from 1st July this year, complete with the already agreed $105,000 rent reduction but still under their admitted financial difficulties.
It does seem likely that the J Shed lease and Sunset Events will become an election issue which will need to be addressed by all candidates, particularly those for City Ward and for the position of mayor.