Open for business closed for winter: Chefs Inc.

“Closed for winter” said Chefs Inc. cryptically, after operating its food market in the Cleveland Library car park for just 15 weekends from March to June in 2018.

Chefs Inc. went bust owing 28 creditors an estimated total of $753,578. The company’s liquidator said the company may have been trading while insolvent before it opened for business.

The Cleveland Library car park which used to be convenient for library patrons is now used almost exclusively as a staff parking facility, with aggressive ‘tow away” signs at the entrance warning the public to keep out.

Redland City Council was very supportive of the Chefs Inc. project, seen as a way of bringing life back to the Cleveland CBD. But enthusiasm for something new and different didn’t seem to be accompanied by due diligence into the project’s prospects of success.

Recent availability of previously confidential documents now makes it possible for Redlands2030 to provide a detailed account of the Chefs Inc. debacle, raising some questions about Council’s decision making.

Open for business in Redland City

An innovative “alfresco style food market” set to set to “deliver four years of gastronomic delights” and drive economic growth in the Cleveland CBD is how the Chefs Inc. food market was promoted by Redland City Council a few months before operations commenced.

“This is an exciting project that reinforces that Redland City is open for business and we are welcoming initiatives with the potential to generate return for the community” said Mayor Karen Williams.

Chef’s Inc. was the brainchild of two chefs who lived in Cleveland, Colin and Sharon Mason. The vision originally put to Redland City Council was for “a restaurant precinct of the best entrepreneurial chefs at the top of their trade experimenting with cutting edge food ideas.”

Instead of pizzas or traditional Italian cuisine, Chefs Inc. customers might enjoy Moreton Bay bugs one week and roast suckling pig another said Colin Mason to the Redland City Bulletin.

Development of an ‘eat street’ precinct was one of many ideas to rejuvenate Cleveland CBD included in a Jones Lang Lasalle report to Council in 2013. If the name Jones Lang Lasalle rings a bell, it’s the same firm which did a report for Redland City Council in 2013 titled “Toondah Harbour Market Assessment Report”.

Normally, governments advertise for expressions of interest in opportunities that exploit public assets. This didn’t happen when Chefs Inc. was handed rights to use the Cleveland Library car park for a food market.

Avoiding a tender process

During the closed session part of Council’s meeting on 3 June 2015, councillors considered a confidential report proposing that a memorandum of understanding (MOU) be signed to “facilitate discussions with Chefs Inc. on the creation of a new form of restaurant concept.”

At two non-public ‘workshops’ held in May 2015, Council officers and staff considered six options for siting the proposed food market. The Cleveland Library car park was preferred over five other locations: the RPAC lawn, the Sands Hotel private car park, Waterloo Street car park, Wynyard Street car park and the Queen Street Woolworths car park.

Councillors were told in the confidential report report that by law arrangements to lease a council owned site had to be done through a public tender, auction or expression of interest process. But the report went on to say:

“This approach may not be appropriate in the circumstances as a preferred tenant has already been identified and this may conflict with the probity of the procurement.”

Instead, the report suggested that “a licence to occupy is potentially the most efficient arrangement. An advantage is it would avoid having to conduct a tender process.”

Councillors voted 10/1 to enter into an MOU with Chef’s Inc to facilitate discussions, noting that there was “no formal proposal”. The only councillor to vote against the motion was Paul Bishop.

Chefs Inc. gets Council consent during caretaker period

The community first became aware of plans to convert the Cleveland Library car park into a food market on 13 March 2016, when the local newspaper published a story: Eat street markets in Cleveland.

The Bulletin’s story pointed out that Council CEO Bill Lyon had signed a document allowing the food market proponent to submit a development application for work on Council land while the Council was in pre-election caretaker mode. Councils and governments don’t normally make major policy decisions after writs for an election have been issued.

An unnamed Council spokesman told the Bulletin that getting the CEO’s consent during the caretaker period prior to the election was necessary in order for the Development Application to be properly made and assessed. The unidentified spokesman said Mr Lyon was carrying out an established direction by council voted on in June 2015 and upholding a proposal in a 2013 Jones Lang LaSalle report.

But the resolution which Council voted on in June 2015 clearly stated that “there is no formal project proposal at this time” and “When a proposal and details on design issues are available, they will be presented to Council”.

Why was a developer allowed to submit a development application on Council land when a formal project proposal had not been approved by the Council, at a general meeting?

Community reactions to the idea of a new food market

A few months after the local council elections, the Chefs Inc. development application (MCU013700) was put on the agenda for Council’s meeting on 10 August.

The Redland City Bulletin ran an on-line poll ahead of the meeting which found, unsurprisingly, that a clear majority of respondents wanted some new dining out out options.

But some owners and operators of existing Cleveland eateries feared the impact on their businesses of the Chef’s Inc. food market. Hogs Breath manager Paul Piert expressed concerns to councillors on 27 July 2016, as reported by the Bulletin in: Redland City Council’s Eat Street plans should be dropped.

Chefs Inc. development application discussed by Council

Councillors had a wide-ranging discussion about the Chefs Inc. project on 10 August 2016.

Cr Paul Bishop raised a number of planning issues which he said were grounds for refusing the application. Cr Boglary expressed concerns about the proposed location of the food market and its potential impact on existing businesses.

Crs Paul Gleeson and Tracey Huges expressed some concerns about the project’s financial viability but in each case they ended up supporting the development application.

Crs Paul Golle, Paul Gleeson and Lance Hewlett raised concerns about the fact that councillors were being asked to approve the development application without seeing the agreement for Chefs Inc. to have use of the Cleveland Library car park.

Councillors Mark Edwards, Julie Talty and Peter Mitchell expressed their willingness to follow the officers’ recommendations and Cr Murray Elliot supported approval of the development application.

Mayor Karen Williams strongly supported the Chefs Inc. proposal, saying that it was necessary to do things differently. She referred to the local paper’s poll as evidence of community support for the project and dismissed concerns about impacts of a new food market on existing businesses.

The Mayor defended the lack of a competitive process, saying:

Unfortunately local government has to go through certain processes and we heard about the tender process before…we should have gone through a tender process. I can tell you now that every tender process kills an element of innovation in our city because you cannot expose a good idea.

As things turned out, the Chefs Inc. idea was not good and a lot of bother might have been avoided if the proponents had to go through a competitive process.

The Chefs Inc. development application was approved 8/3. Crs Mitchell, Hewlett, Edwards, Elliott, Huges, Talty, Gleeson and Williams voted for the development application. Crs Boglary, Golle and Bishop voted against the motion.

The whole Council debate about Chefs Inc. can be watched on the meeting video recording starting at 17:58 minutes.

“Cleveland may soon be home to a new alfresco dining and entertainment experience” said a Redland City Council in a news release issued after the meeting. But nothing was going to happen soon.

CEO signs licence agreement without Council resolution

Back in June 2015 officers advised councillors that public tendering could be side-stepped if the Chefs Inc. deal was structured as a licence to occupy rather than a lease.

We now know such a licence agreement was executed between Chefs Inc. and Redland City Council on 12 April 2017. There’s no public record of any discussion at a Council meeting about this agreement, prior to its execution. It was signed for Redland City Council by Bill Lyon a few days before he was replaced as CEO by new CEO Andrew Chesterman.

The signed licence agreement gave Chefs Inc. use of the car park from 1 September 2017 in return for monthly payments (at very reasonable rates) from 1 March 2018.

A few months after the agreement was signed, amendments were discussed at Council’s general meeting on 12 July 2017. It’s curious that amendments to the licence agreement were discussed at a Council general meeting though the original licence agreement wasn’t.

Chefs Inc. delayed because the Library site is contaminated

In late 2017 the Bulletin reported that the food market project had hit a ‘roadblock”. Approvals were held up because a petrol station was once located where the Library is now. This meant that the whole site, including the Library car park was classified as “contaminated”.

A proper structured competitive process might have resulted in site constraints being identified much earlier.

Chefs Inc. finally opens

The Chefs Inc. food market launched on Friday 2nd March 2018, operating from 5pm to 9pm on Fridays, 10am to 9pm on Saturdays, and 10am to 8pm on Sundays.

It appeared to start well with “thousands attending the eating out precinct over three days”, according to a Redland City Bulletin story.

But the novelty soon wore off. Many people complained about the two dollar cover charge and limited food choices. After five weeks, trading hours were cut back – no longer open for lunch on Saturdays.

Closed for winter then bust

Declining patronage meant closure was inevitable. On 14 June 2018 announcements were posted by Chef’s Inc. on Facebook and Instagram that the food market would be “closed for winter”.

Spring came but the food market stayed shut. On 2 October 2018 the Chefs Inc. company (4 Simplicity Pty Ltd) applied for voluntary liquidation.

Redland City Council gave notice on 9 October 2018 that it would terminate its licence agreement with Chefs Inc effective 17 October 2018. A week later, Redland City Council issued a news release saying that the food market was finished.

“Following the decision of Chef’s Inc. to go into voluntary liquidation, the company that owns the containers…is now expected to start removing containers from the site,” said Mayor Karen Williams.

Cleveland Library car park is now a tow-away zone

The double storey structures have been removed but Chefs Inc. signage and many containers remain at the Cleveland Library car park. The names of food vendors such as Tuk Tuk Thai, 12 Boar Jr and Industria Italia are displayed on some containers. Menus and prices on a couple of containers serve as a reminder of the food that was once on offer.

The Cleveland Library car park used to be available to the community, serving the needs of library patrons picking up or returning books.

Now the car park entrance displays large signs warning motorists that this is a tow-away zone, except for Redland City Council vehicles. Very few of the vehicles in the car park display Council logos. Some parking bays have large signs proclaiming the titles of various Council managers.

Car parks originally reserved for parents with prams remain inaccessible. Two ‘disabled’ car parks remain, but how many eligible users would dare to enter a car park with signs at the entrance proclaiming that this is a tow-away area?

Privatisation of public assets should be done very carefully

The failed Chefs Inc. project was based on the notion that a private sector developer could take a public asset (in this case a Council owned car park) and make better use of it than the Council.

Privatisation is normally implemented with a competitive process, to ensure probity. But that didn’t happen when Council decided to give Chefs Inc. exclusive use of public land for up to ten years.

Redland City Council’s handling of this project included some questionable decision making:

• The decision to avoid any form of competitive process for making Council land available to a food market operator
• The decision to give Chef’s Inc. consent to lodge a development application, during a pre-election caretaker period
• The decision to execute an agreement giving Chefs Inc. use of the land, without a formal Council resolution

Some basic due diligence by the Council on financial viability of the proposed food market may have led to fatal flaws being identified early on. Instead, Council resources were wasted, Library patrons lost access to the car park, and people in the community lost money when the Chefs Inc. went bust.

If the Council can’t deal properly with privatisating such a small space, residents and ratepayers may wonder what kind of mess the Council could make of larger projects involving more significant public assets – such as the Ramsar wetlands next to Toondah Harbour.

Redland City Council could and should learn from its Chefs Inc. mistakes by having a thorough independent review of the whole debacle completed and reported back to a Council meeting, before the elections in March 2020.

Redlands2030 – 19 June 2019