Another loss for Redland City Council’s property company

Redland City Council’s wholly owned property company, the Redland Investment Corporation (RIC), has posted yet another loss.

For the 2021/22 financial year RIC made a loss of $20,379 as shown in the consolidated financial statements posted recently (and very quietly) to its website.

Redland City Council has made no public comment about RIC’s latest results. When these results were presented as closed session item 20.1 on 16 November 2022, the Council resolved

1. To note the audited annual financial statements for 2021-2022
2. To maintain the attachment to the report as confidential including maintaining the
   confidentiality of legally privileged, private and commercial in confidence information.

RIC’s performance over past 4 years

Over the past four years, the sum of RIC’s profit/loss results is a total loss of $766,108.

Year	2018/19	2019/20	2020/21	2021/22	4 Years
Profit/(loss) $	(555,468)	37,983	(228,244)	(20,379)	(766,108)
Employee cost $	1,232,540	1,117,667	1,117,739	1,155,432	4,623,374
Dividends to Council	nil	nil	nil	nil	nil
Total Equity $M	12.7	12.7	12.1	12.1	NA

The value of Redland City Council’s investment in its property company (total equity at year end) has reduced over these four years from $12,716,906 to $12,062,164.

If $12 million were invested in term deposits with Suncorp at current interest rates of 3.8% for 12 months, then Redlands ratepayers would be earning $456,000 per year.

But hang on. RIC’s employee entitlements expense for 2021/22 was $1,155,432.

So by closing down its property company and investing this $12 million more wisely, Redland City Council could gain better returns to the tune of $1.6 million per year (total of interest earned plus avoided cost of employee entitlements).

This additional $1.6 million per year would go a long way (80%) towards the minimum of $2 million per year required to fund the annual cost of owning and operating one new blue swimming lagoon which could mean less pressure for further rates increases.

Secret beginnings for property company

In November 2014, Redland City Council decided in closed session to set up a property company, following in the footsteps of other councils such as Ipswich City.

This decision was kept secret from the community until June 2015 when the Council announced: “Community to benefit from new land management company”.

This was soon before the fairly new State Labor Government unveiled its public support for Walker Group’s proposed Toondah Project, with claims that new Toondah jobs would offset job losses when sand mining ended on North Stradbroke Island in 2019.

Sand mining ended as scheduled three years ago in 2019 with no significant loss of jobs on North Stradbroke Island.

RIC to “minimise rates hikes”

The Council said that it had established “an investment arm to generate income that will help fund infrastructure and services and minimise rates hikes” in its RIC announcement on 12 June 2015..

“It’s not about selling off surplus land to make a quick dollar” said Council financial services spokesman Cr Mark Edwards.

But the Council’s initial plans for RIC included sale of many neighbourhood parks.

The park sell-off plan was made public in September 2015, when Redland City Council unveiled its Draft City Plan for public consultation.

The community was outraged. With an election coming up, the Council backflipped and neigbourhood parks were taken away from RIC. This left RIC little to do except sell off some car parks and provide property management services to Redland City Council.

Some of these property management services related to the Toondah Harbour Priority Development Area.

RIC and Toondah

RIC will “Lead the Redlands Coast development industry by delivering high quality,
exemplary projects that consider the environment, community and best practice
industry principles” according to the company’s Articles of Association.

But incongruously, the same articles of association say that RIC’s actions include “Providing professional commercial services and negotiations for progressing the Priority Development Areas (PDA) at Toondah Harbour and Weinam Creek”.

Thanks to information obtained through Right to Information, the community now has a little more insight into RIC’s involvement in the proposed Toondah project.

A briefing note to Queensland Premier Annastacia Palaszczuk, prior to a meeting on 6 September 2020 with Walker Group’s Chairman Lang Walker, included the following dot points relevant to the Toondah Harbour Project, RIC and in particular to a wholly owned subsidiary company of RIC called RIC Toondah Pty Ltd:

• The Walker Corporation (Walker) was selected as the preferred developer for this project in 2014 following a competitive process.
• Minister for Economic Development Queensland (MDEQ), Redland City Council (Council) and council’s wholly owned subsidiary RIC Toondah Pty Ltd (RIC) formed a joint venture for the project governed by a joint venture agreement (JVA).
• Under the JVA, the MEDQ and the council agree to act jointly to oversee the project and must always act in the best interests of the joint venture.
• RIC has been appointed manager of the joint venture and is paid remuneration for this role by the MEDQ under the Development Agreement (DA) and manages Walker’s compliance with the DA. The MEDQ has granted RIC a power of attorney to deal with the MEDQ’s land in the PDA.

This information shows that:

1. Redland City Council, through a subsidiary of its RIC property company, has a significant role in managing the Council and the State government’s role in the Toondah Project.
2. Redland City Council and the State Government have signed legal agreements which require them to put the public interest in second place, behind the interests of the joint venture.

Here are the six pages of the 2020 briefing note, marked up by Redlands2030, which have been extracted from documents released under Right to Information.

Redlands2030 – 3 December 2022