Public land sale mooted to cover $18m losses
STATE government developer Places Victoria is in turmoil over plans to cover a more than $18 million financial loss with a fire sale of public land to private developers - including overseas investors.
STATE government developer Places Victoria is in turmoil over plans to cover a more than $18 million financial loss with a fire sale of public land to private developers - including overseas investors.Fairfax Media has learnt that chief executive Sam Sangster will announce his resignation this week after being appointed only a year ago to the position, over a falling-out with acting chairman Ken Fehily over the agency's direction.He is just one of a number of high-level staff to leave the agency recently.Mr Fehily, an accountant who has "Mr Art" and "Mr GST" tattooed on his biceps, is said to be driving a plan to cut costs and pay down debt by selling public land in suburbs such as Footscray earmarked for government-led urban renewal.Mr Fehily is said to have recruited some highly paid consultants to make an inventory of its assets and review the agency's business plan to move away from doing the development itself.Fairfax reported last week that Mr Sangster spent $32,000 in October on a trip to Hong Kong where he promoted investment opportunities in projects such as Docklands, Fishermans Bend and Footscray to a conference of Asia's wealthiest property players. It is unclear whether this played any part in his imminent departure.A staff meeting has been called for Monday over concerns that up to a third of Places Victoria's 180 employees will lose their jobs, many before Christmas. Its latest annual report shows an $18.8 million loss and a $42 million writedown of properties because of a softening of land market values.In August, its chairman, Peter Clarke, stepped aside on full pay while the Australian Securities and Investments Commission prosecutes a case in the Federal Court over his role in the 2010 collapse of $400 million Prime Retirement and Aged Care Property Trust.The Baillieu government has pressured the agency to improve performance and limit exposure to financial risk.Mr Fehily, who is also the chairman of the Melbourne Art Foundation that runs the biennial Melbourne Art Fair, is said to be shoring up his position by getting the agency out of the red.He will announce a new direction for the agency at a meeting of the Property Council of Australia next week.Places Victoria has made a series of costly purchases, including $21 million for the Le Mans Toyota site in Hopkins Street, Footscray, which is in the 15-hectare Joseph Road Precinct earmarked for urban renewal.The deal will be settled next month, but the change of direction sees the agency already considering selling the site, which now has a market value of about $15 million.Another site in the same precinct is the Binks Ford site on Cowper Street, for which the agency paid more than $11 million. It is now worth about $8 million.Places Victoria facilitates the government's large-scale urban renewal policies by getting sites ready for development through master planning, land preparation and site acquisition, developing land and partnering with land owners, developers and builders.Several of the agency's projects have been shelved because of a lack of investment in infrastructure or finance available to build.A spokesman for Places Victoria declined to answer a series of questions about the cost-cutting measures and potential land sales saying he could not "speculate on any of these as the review is still under way"."The Places Victoria Board continues to review its business plan in light of the current property market," he said. "This review will lead to changes in what and how we do things to ensure we can deliver more efficiently and at a lower cost. As part of this review they are closely examining our resourcing and some redundancies are likely."Mr Fehily did not respond to a phone message left by Fairfax on Sunday.