Since the completion of Clarence Valley Council’s (CVC) Maclean Sports Centre, it has been dogged by building defects, disputes with lessees and losses in revenue (‘rent holidays’) – and it is now closed for “about a month”.
These issues have now come to a head: the current lessee, McPherson Sports Pty Ltd, completed its troubled five-year tenure and operation of the facility on Saturday, amid claims and counter claims of non-communication, which are in the hands of McPherson Sports’ solicitor.
Director Janine McPherson advised Clarence Valley Council she would not be taking up an option to continue for another five years, because, she wrote in a letter on June 20, 2016, “under the existing arrangements [it] is not financially viable”.
Ms McPherson pointed out that her “ability to run a successful business has at times been hampered by council”.
She says that “problems with rainwater ingress and squash court wall deterioration … have resulted in parts of the centre being inoperable at times”.
“Getting [the] council to rectify faults and defects in a timely manner is problematic at best and requests for abatement of rent for lost income have been rejected,” she wrote.
Ms McPherson also questions the different models put in place to manage its sports centres: CVC meeting papers indicate that the rent at Maclean is around $23,000 per annum; meanwhile, at the Raymond Laurie Sports Centre in Yamba, CVC pays the centre’s operator around $120,000 per annum and the operator retains 50 per cent of the booking fees and 100 per cent of the canteen take.
“I ask council to seriously consider adopting the same operating model for Maclean Sports Centre as exists for the Yamba and Grafton centres,” Ms McPherson wrote.
These disputes were considered in a confidential session at the August 2016 CVC meeting, however, the resolution of council “noted and received the report” – with one dissenting councillor, Jim Simmons.
The defective building took its toll on the first operator, McKee Sports Pty Ltd, which cited a list of 14 defects through his solicitor in July 2011.
“The lessee is still not able to operate the centre at a reasonable financial level, hence extension of the reduced rent period is sought,” the report to council stated.
At that meeting, councillors approved “the extension of the reduced rent period (at $75 per week) for six months to 31 December 2011. The level one rent of $11,000 per year would then commence on 1 January 2012 and extend to 31 December 2012, before moving to the level two rent of $23,100 per year (GST inclusive).”
McKee Sports was released from its lease at the August 2011 CVC meeting; McPherson Sports began its tenure in September 2011.
When asked: Why did CVC not hold the builders, Lahey Constructions, to account for [the long list] of defects at the building and, instead, take ownership of the defects? The council’s works and civil director, Troy Anderson, said in an emailed response: “Defects known at the time of practical completion were identified with the builder and rectified during the defects liability period (DLP).
“Some others have emerged post DLP time and have been attended to and also monitored.”
He said there “is no long list of [existing] defects”.
“This is routine maintenance and review of the building upon vacancy by the lessee,” he said.
“Maintenance has been undertaken over the past five to six years.”
On the different models in place among the council-managed/owned centres, Mr Anderson said: “The Maclean Sports Centre is currently on a lease model as council owns Wherrett Park, while the other centres are on Crown Land.
“Janine McPherson went through an open tender for the lease and her offer was accepted at the time.
“If she believed it wasn’t financially viable, her business case and due diligence should have addressed that before she made an offer under tender to lease the facility.”