Yet another Triangle Masterplan

By  |  0 Comments

By Cr Andrew Bond – City of Port Phillip

In what has become an election year ritual in the City of Port Phillip, on the 22nd of March 2016, the majority of Councillors endorsed yet another masterplan for the St Kilda Triangle, a document I did not support for reasons I will outline below.

This year my six fellow Councillors approved the Purple Masterplan Document. In 2012 it was the Orange Masterplan Document. In 2008 we had the Babcock, Brown & Citta proposal, which flowed from the 2004 St Kilda Edge Urban Design Framework Plan. The search for a solution to the Triangle is a saga that has now been running almost as long as the St Kilda Festival. And with a total cost to ratepayers of $15 to $20 million since 2003, the annual cost of this search for a Triangle solution now rivals the cost of the St Kilda Festival also.

In 2008 the City of Port Phillip rejected a commercialised solution and agreed to a $5 million cash payment, plus a 6 year peppercorn Palais Theatre lease, as compensation to the developer in order to make this Citta option go away. Yet the only way the latest proposal will ever eventuate will be by reverting once again to a highly commercialised solution.

This 2016 Masterplan is much bigger than its 2012 predecessor. Step by step over the past four years the proposed built form has become bigger, the proposed space for a ‘Cultural Institution’ has become bigger, the proposed Hotel and Retail/Commercial space has become bigger, and the proposed car park has become bigger, and is now relocated entirely to a level below ground.

No consideration whatsoever has been given to the cost implications of any of the changes to the 2012 Orange Document, or to who was going to fund them. CoPP have now released this Masterplan and have now rather arrogantly demanded that the State Government recognise the collective brilliance of this masterplan proposal, put together by Councils best and brightest, and hand over the better part of $355 million to bring this plan to reality. This figure rises to $491 million if the much talked about, but highly unlikely, NGV Contemporary is to be sited on the Triangle.

A quick glance of the St Kilda Triangle Business Case (and the research papers and studies that were meant to inform it) it becomes quite clear why this masterplan will never materialise.

The main argument for this outcome is that it will inject $173 million annually into the Victorian economy by filling in a gap in the Melbourne tourism market – described in the Business Case as a dispersed cultural attraction. The rationale is that if the current NGV can attract 2.3 million visitors per annum, equivalent to 9% of the 26 million annual visitors to Melbourne, then a cultural institution on the triangle site could attract 5% of this market or 1.3 million visitors. Being located outside of the CBD, or dispersed, the Triangle Cultural Institution will result in these 1.3 million visitors spending an extra day in Melbourne. Based on the Tourism Victoria provided average daily spend figures for each of International visitors, Interstate visitors and day trippers (daytrippers is defined as those that have travelled over 50km or for more than 4 hours to get to Melbourne) an economic benefit of $173 million to the State will be realised. This benefit would be true if all 2.3 million visitors to the NGV, or all 1.3 million proposed visitors to the triangle site, fell into one of these three visitor categories.

Where this methodology fails is that only 33% of visitors to the NGV currently come from Interstate (15%) and Overseas (18%), with the vast majority of the remaining 67% coming from Melbourne and not falling into the definition of a day-tripper. As a result the economic benefit of the latest Triangle business case is overstated by approximately $88 million annually.

The new triangle masterplan also proposes the inclusion of a 350 space below ground car park. The cost of this car park is estimated in the Masterplan as being $64 million, or $182k per parking space. The nett revenue was estimated to be $1.5 million, giving any private car park operator who the business case proposes will jump at this opportunity, a return of just 2.4% return on their investment. That’s less than bank interest. However the proposed car park revenue is also overstated. The estimated revenue in the business case used to calculate the parking income was $5,900 per space per annum, despite the ARUP car park study stating it would be more like $3,700 per space.

But this isn’t the most concerning aspect of the proposed car park. St Kilda Triangle 2012 – the Orange document – also included in its plan a car park containing just 200 parking spot. This is because the ARUP Triangle car park study concluded that options for larger car parks “are not financially viable and should not be pursued in any capacity”. Yet the 2016 Masterplan not only includes a plan for 350 car parks, but has decided to locate this car park below the ground level of Jacka Boulevard, an option which can only be realised by excavating and remediating the contaminated soil located on the site, hence the unviability of this component as stated in the original feasibility study.

Along with the car park revenue, the retail revenue on the 7,000 m2 commercial component has also been exaggerated. The St Kilda Triangle feasibility study states that the comparable use current revenue per m2 for St Kilda can be set at somewhere between $340m2 and $290m2. Their recommendation was that $350m2 be used as the likely return on the commercial space in the masterplan however the Business Case uses $525m2 as the likely rate of return.

Together with the car parking, these two components alone overstate the estimated revenue on the site by roughly $2 million per annum above the figures recommended by the feasibility studies.

So how does an exaggerated and unrealistic business case of this nature get approved by six Councillors? As I concluded at the Council meeting they either haven’t comprehended the details contained in the business case and the three reports that were commissioned by Council to inform it, or didn’t read them.

So where to from here? What has become clear is that the City of Port Phillip does not have the capability to resolve the triangle, and that the State Government does not have the finances at present to build something on the triangle either. My concern is that in a rush to be seen to do something – anything – CoPP will throw itself, and ratepayers money, at the first developer to put a highly commercialised proposal (with a small cultural component of course) in front of us thus ruining all future opportunities to do something really great on the Triangle site.

The logical approach would be to accept CoPP cannot resolve the Triangle, and either leave it as it is, or turn it into a park, thus preserving this site for a future, achievable, opportunity.

Find us on FacebookFind us on FacebookFind us on FacebookFind us on Facebook