FREMANTLE: RUNNING ON EMPTY

While council deliver a mantra of sustainability the signs of a collapse in the Fremantle economy is glaringly evident in the CBD.

I took a walk around  the area and counted in excess of 40 properties which are empty, offered for lease, or moving. The total is probably closer to 60 as the Woolworth’s building houses a number of vacant outlets  as does the Coles Woolstore.  These pictures were taken within about 250m of the Town Hall

Very recently one new retail outlet, selling high quality home furnishings and decorations, has closed after six months. It was located in the Mall, opposite the Town Hall. The rent was $240,000,  higher than similar sized properties in downtown New York.

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VILLA, closed after six months about a week ago. The rent was $240,000 a year but trade for this high quality retail outlet  didn’t materialise. This is in Fremantle Mall, opposite the Attwell Arcade development.

Shepherd’s News agency have to move from their prime spot. It holds the longest serving tenancy of Fremantle. The original Shepherd’s News Agency was established in this building in 1908 and the current business owners have been there for 26 years. They now have to move aside for developers.

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Shepherd’s Newsagency have been located in the Manning building  since 1908. They are the oldest  business in Fremantle still operating from the same premises. Now they have to move to make way for development.

The Woolworths shopping centre, next to St Patrick’s, has been closed for a couple of years. It was gleefully broadcast that this would bring new life to the east end of the city. Opposite them the Hilton site, which used to contain a number of shops, is derelict and scheduled to become a temporary car park.

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The Woolstores centre is hosting many empty premises. Even with a carpark in situ it was not able to survive

The centre  hosted about 20 retail and office business’s. They were not included in my count of about 40 empty premises.

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The Hilton Hotel site, due to become a temporary car park. 

CODA, a mainstay of council’s PR sustainability spin, have closed shop and amalgamated with a Perth based company. CODA was a foundation stone of the Future Fremantle organisation, established to build a better Fremantle.

 

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CODA’s vacant office

 

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Coles Woolstores site is home to several vacant retail premises
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A small selection of over 40 empty retail and office premises in the CBD is shown below.

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And finally, in one vacant shop window the mayor delivers his mantra of a vibrant city.

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NEW DAD BRAD SPITS DUMMY?

 

Mayor Brad Pettitt appears to be backing away from one of the most exciting election debate formats  a  candidate has ever proposed.

Mayoral challenger Ra Stewart has suggested a series of debates between Dr Pettitt, her and any other candidates who may run for the top job.  A debate will be held in each of Fremantle’s wards, one a week for six weeks.

Locals to ‘have a go’ on their territory

The diversity in the demographics of each ward mean a 6×6 series will give residents of each ward the chance to question candidates on concerns which are specific to their locality.

This style of localised debates may help residents understand the importance of local government effect on everyday life.

Brad’s immediate response was enthusiastic, agreeing to have diverse debates. Six debates in six weeks will offer a lot  of tempo and interest to the campaign. It’s an idea which deserves to succeed.

However Dr Pettitt appears to have distanced himself from the idea,  indicating it is necessary to liaise with precincts. That is a reasonable point but precincts are not wards and his request appears to be a delaying tactic, maybe on the advice of his campaign team.

Ra Will Run Alone – unless candidates for local seats join the debate

Ra Stewart  has resolved to run the debates alone which may be a little one-sided but an obvious expansion of her idea would be for local ward candidates to be part of a debate with her. This opens up a direct one on one discussion related to local issues.

The first debate is on the evening of Thursday 7th September, 5.00pm at the PCYC, 34 Paget Street, Fremantle.

And an apology to Brad: Sorry if the headline seemed a bit OTT but I just couldn’t resist it having considered the current family event. Best wishes to you all.

Roger Garwood

editorbackchat@gmail.com

0418 921 735

SUNSET: CONCERT CASH WENT INTO BACKPACKS

SUNSET’S EVENTS : CONCERT CASH FILLED BACKPACKS : PARLIAMENTARY INQUIRY INTO EVENT FAILURE : AUDITED ACCOUNTS : CONFIDENTIAL REPORT INTO CONFLICTS OF INTEREST
A music industry insider has informed Fremantle Backchat that within Sunset’s Business structures it was normal practice to sell surplus tickets at entry gates for cash. Most entry tickets were sold online through booking agencies but it is estimated as many as 2000 tickets, normally available to events online, may have remained unsold. Depending on the event these were sold for cash at prices of “$120 to $150”.
As cash registers filled a Sunset director, James Legge, “would empty them, putting the money into a backpack. As the tills refilled he would return and empty them into the backpack again”.
Fremantle Backchat’s informant explained that, if there were people still waiting to gain entry when tickets were sold out, Sunset’s volunteer workers were instructed to recover ticket stubs from waste bins. The tickets were then recycled “restamped” and sold again. It was impossible to know exactly how many cash tickets were sold but “anything from 1000 to 2000” was estimated.
This indicates that within the directors’ matrix of companies there could have been cash sales of $120,000 to $300,000 at any particular event.
It is not illegal to sell goods and services for cash but it is unknown whether all of the cash  collected at events went ‘through the books’ or was kept aside, possibly to avoid being used to pay creditors. Sunset has recently attempted to negotiate settlements with creditors.
Fremantle Backchat has been supplied with information which indicates the Sunset directors are secured creditors. This would mean that before other creditors are paid the directors have first call on funds.
PARLIAMENTARY INQUIRY INTO EVENTS FAILURE
In September 2011 a parliamentary inquiry was held into the dealings of One Movement Pty Ltd, Sunset Events and the three directors with Events Corp, part of Western Australian Tourism Commission. One movement had been sponsored by Events Corp for a series of three events which  failed financially.
‘Sunset’ has become an umbrella term which covers a matrix of companies. Each company ran events controlled by the three directors, David Chitty, Andrew Chernov and James Legge, each registered with ASIC as individual one dollar companies.
In summary it was proposed by the three directors that One Movement Pty Ltd should host an event in Perth each year for three years. The event was managed by Sunset Events, in itself a partnership operated by the three directors.
The events were planned for 2009, 2010, 2011 and involved agreed sponsorship by Events Corp of nearly $3m. The event of 2009, the first in the planned series of three,  did not meet expectations. Audited accounts of One Movement Pty Ltd showed sponsorship of $1,683,035 which included State Government sponsorship of $995,500.
Ticket sales were recorded in the company audit at $134,893 online and $23,023 in cash
AUDITED ACCOUNTS OF ONE MOVEMENT PTY LTD
The audited accounts of One Movement Pty Ltd, for an 18 month period ending on 31st December 2009, were submitted and reveal a net loss of $1,361,439.
Expenditure showed administration costs Of $202,667 and consultants’ fees of 364,083 were paid. It is not known who the administrators or consultants were but it may be reasonable to assume they may have been one or more of the three company directors. During the inquiry the directors claimed $400,000 was spent on due diligence at the event’s planning stage.
(A link to the audited accounts is shown at the end of this article)
It is reasonable to conclude that, in spite of $400,000 claimed to have been spent on due diligence, which presumably included calculations related to adverting and sales, the company did not follow its own research advice. Did they spend as little as possible to ensure the event’s attendance reached expectations?
A final report was made to Parliament in December 2011 (see link below). The report included many observations, among them:
“Total revenue was approximately $1.26m below that budgeted, with the largest variance being ticket sales which was $908k below that budgeted”.
The report continues “Total expenses were approximately $47,485 below that budgeted with the largest variance attributable to marketing expenses”.
The audited reported, under the heading “Emphasis of Matters Regarding Going Concern” said “One Movement Pty Ltd has a deficiency of Working capital and a deficiency of net assets of $1,361,588.  The liabilities of the company include borrowings from Sunset Events which is related to equity. The owner directors have pledged their ongoing financial support for One Movement Pty Ltd”
The Parliamentary Report said “The Committee views the Auditor’s “Emphasis of Matter” as significant”. (see Note below)
The Committee cast doubt on the liquidity of One Movement Pty Ltd, spoke of the considerable financial distress shown in the financial statement and outlined the directors’ explanation of delays in paying creditors. The auditors said: “This situation indicates the existence of material uncertainly that may cast significant doubt on the companies ability to continue as a going concern and therefore the company may be unable to realise assets and discharge its liabilities in the normal course of business. The financial report does not fully disclose this fact.”
One Movement Pty Ltd ceased trading on September 5th 2011.
CONFIDENTIAL REPORT : CONFLICT OF INTEREST WITHIN EVENTS CORP
In a separate report into matters surrounding government sponsorship of events, questions were raised in relation to a manager within Events Corp resulting in the Report on Allegations of a Conflict of Interest Involving a Tourism WA Employee and the One Movement Music Festival.
The report is relevant as a number of Fremantle City Councillors have expressed a conflict of interest in relation to Sunset Events.
There were several conclusions in Commissioner Wauchope’s report to the acting CEO of Tourism WA.
The principal conclusion was:
“There was both an actual and perceived conflict of interest … This presented a situation which raised competing interests and a perception that there was the potential for the individual concerned and or Sunset Events to receive an unfair advantage”
(Fremantle Backchat has a copy of the confidential report).

THE PUBLIC HAS A RIGHT TO KNOW

A 21 year was lease awarded to Sunset by Fremantle Council Chamber in the face of considerable public opposition. It seems reasonable to ask Council’s Administration to reveal what due diligence was conducted into the Sunset matrix of companies in relation to the application for the lease at Unit 1 J Shed. Fremantle ratepayers are subsidising the lease.

Did Council Administration have knowledge of these Parliamentary Reports, transcripts, financial statements and reports related to conflicts of interest?

If they did how much information was relayed to councillors and/or were complete reports made available to them?

If these reports were relayed to councillors did evidence of systemic failures within Sunset Events and government departments influence councillors decisions?
NOTE : Emphasis of Matter paragraph (EMP) has been defined in International Standards on Auditing (ISAs) as follows:
A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements.
LINKS:
One Movement Pty Ltd Audit:
http://www.parliament.wa.gov.au/publications/tabledpapers.nsf/displaypaper/3813489a0c12182a799c6d77482578b6004e0f55/$file/3489.pdf
Inquiry into WA Tourism Commission/One Movement:
http://www.parliament.wa.gov.au/parliament%5Ccommit.nsf/(Report+Lookup+by+Com+ID)/822360D9A7CAF4CB482579590024EFD4/$file/ef.mte.111201.rpf.035.xx.pdf

Roger Garwood

editorbackchat @gmail.com

 

LOW KEY KICK START IN BEACONSFIELD

FREMANTLE COUNCIL ELECTIONS ARE WARMING UP

A  small, low key, group of supporters gathered at the Hilton Bowling Club last night (Friday 21st July) to support Fedele Carmada’s run for a Beaconsfield seat in the Fremantle elections.

Mayoral challenger Ra Stewart and former mayor Peter Tagliaferri  attended but primarily this was a family affair. Even the candidate’s grandmother was sitting quietly in the background, underlining a deeply established local family. It was a modest, ‘Very Freo’ grass roots event at which Fedele Carmada appeared as an intelligent, well informed, home grown, candidate emphasised by the fact he is a third generation local fisherman.

He delivered no bullshit, no rallying cries, no political platitudes but a straightforward ‘we’ve got a job to do, let’s do it’ attitude.

Hannah Fitzhardinge, the incumbent councillor, will be tenacious and highly credible in defending her seat, making the battle for Beaconsfield  the bellwether to watch in the lead-up to the elections.

STIR THE POSSUM

Fremantle traditionally has a higher turnout of voters than many local council electorates, though not high enough. Because local councils effect daily living more than any arm of government it is essential for ratepayers and residents to get out, stir the possum, listen to candidates’ objectives and make a seriously considered choice. In October the city will experience the most interesting election for decades at a time when contentious issues related to development, heritage and city finances are surfacing.

SUNSET PAY $400 A WEEK

SUNSET PAY LESS THAN SMALL HOUSE RENTAL IN FREMANTLE
Sunset Venues received the keys to J shed’s number 1 studio today (Thursday 6th July) and will pay only $402 per week on the prime property, representing a lower rent than many families pay for a small home or apartment in Fremantle.
The rent, described by Fremantle Council as a ‘startup’ figure, is granted under a scheme designed to help companies establish new businesses in the city.
Sunset’s 21 year lease over no.1 J Shed was activated last Saturday morning, the rent will not increase until 1st July 2018. They will then pay $800 per week and will not pay the full rental figure, $1616 a week, until July 2019. The rent has been described as ‘too low’ and a ‘peppercorn rent’ by critics of the plan.
Had council insisted the site was activated, with full rent, in 2015 ratepayers would have been better off by about $255,000.
The council will only receive approximately $60,000 over two years.
Mayoral candidate Ra Stewart, has mentioned that council should not be responsible for Sunset’s poor management.

ARE THEY SUITABLE TENANTS? – NUMEROUS COMPLAINTS
At a public information meeting in the Council Chamber two years ago David Chitty, a director and principle spokesperson for a number of related companies, was asked, ‘What will you do with regard to public behaviour after your concert events?’
He replied, “I have no responsibility for the behaviour of people when they leave the venue”. In fact he does but seems to be blissfully unaware of laws related to licensed premises.
There have been numerous complaints in relation to concerts held in Fremantle, including those held by Sunset at the J Shed venue. Fremantle residents spoke of people vomitting, defecating and urinating in the streets and doorways after the concerts. There were also complaints of vandalism and excessive noise. Anecdotal evidence suggests that immediately Sunset’s concerts finished security guards, who searched concert patrons before entry to venues, were stood down.
Chitty was also asked what he would do in relation to people listening to concerts from public spaces. He replied that he would ‘call on the police’ to remove people from those locations. That is an indication he may only be interested in guarding profit margins at the expense of legal considerations for public behaviour.

FUTURE CONCERTS ARE POSSIBLE
A licensed bar of 400 people is not likely to be trouble free. There is also an underlying opinion that there will be concerts. The application for the site’s activities says there will be no ‘paid’ music. This could mean that unpaid musicians may be used and the potential remains to apply for professional concerts later.
The Sunset companies are struggling to pay their suppliers and have failed to reactivate the Drill Hall where Fly by Nite operated. Could this lack of activation be because the Sunset companies have a reputation for not paying their suppliers and artists and musicians are not prepared to work for them? Sunset had applied for a delay of lease activation for 12 months. A principle reason was related to financial instability.

COUNCIL APPLY PRESSURE: FICRA  SAY ‘SUNSET IN BREACH OF LEASE’
Council placed Sunset under pressure to perform following a unanimous vote to refuse an additional 12 months grace before the lease’s activation.
The Fremantle Inner City Residents Association (FICRA), in a submission to Council, outlined a number of issues related to Sunset’s inability to manage the site successfully. They say Sunset is already in fundamental breach of the lease by failing to “use its best endeavours” to secure necessary approvals by the required time. They also say, “Given that Sunset have known since the lease was signed in 2015 that they have had no financial success in the interim period it is unlikely they will gain large investment funding”.
It now rests with Fremantle Council to ensure the lease is implemented and, in the event of default, take rapid action, possibly to evict the company and revoke the lease.

CONTINUING FAILURE ‘ALMOST CERTAIN’
FICRA outline, ‘There will almost certainly be a continuing failure by the lessee to meet fundamental obligations saying, ‘The unwillingness or incapacity of [Sunset] to pay the already reduced rent (25%) does not suggest willingness or capacity in the future to provide substantial investment as the lease contemplates’.

HAVE YOUR SAY
A few days remain to contact council and express your opinion in relation to the revised plans for J Shed.

This link will take you to the web site.

[http://mysay.fremantle.wa.gov.au/jshed-unit-1-fleet-street-fremantle]

Roger Garwood : Editor

editorbackchat@gmail.com