City Block FAQs
Is the construction of City Block complete?
Yes the construction is City Block is complete with the exception of further fit out as new tenants move in.
How many of the units are rented? What percentage of the floor space does this equate to?
Only two units on the ground floor and the majority of the first floor is unfilled. This equates to about 10% of the facility.
Why does the restructure of the finances need to take place?
It was never the intention of either ICC or HWRF to provide debt funding to the development on a long term basis. The significant increase in interest rates and increase in costs of construction due to Covid-19 have meant that the required levels of bank funding is no longer possible. HWRF, as a commercial entity has alternative uses for their funds and ICC is better placed to manage debt funding at this stage.
What is Council's preferred option for the financial restructure of ICL and why?
Council's is committed to supporting ICL to succeed. To achieve this, their preferred option is Option 1 although they could see the pros and cons of both approaches.
They prefer Option 1 because they believe it is the most prudent investment option for Council. It will put ICL in a financially sound position, while ensuring Council will still have a small return on its loan and in the long-term can expect a repayment of this loan.
They identified the risk with this option, that, while its not expected, its possible ICL could need further funding in the future. If that happens, Council will consult you again.
What does it mean for Council’s investment and debt?
Council’s debt facility may increase from $31.45M to $40M under option one. Under option two it is unchanged.
Who will hold the debt – Council, ICHL or ICL?
Council will remain the debt funder.
What does the change to a CCTO under Option 2 mean for ICL?
The reporting requirements becomes more formal. Annual reports will be made public and a Statement of Intent will be produced.
Why did ICHL have to write down the value of its share investment?
ICHL is required to assess the fair value of its investment in ICL. Accounting rules require the fair value to be determined as if the investment was sold today. Based on anticipated dividends over the coming years at 30 June 2022, ICHL was only likely to receive $0.5M for its shares. ICHL and Council have no intention of selling the shares recognising that this is a long term investment of 10 years or more.
What does the additional allocation of funding to ICL mean for Council’s ability to fund other projects?
To the extent to which Council provides debt funding to ICL it does not significantly impact Council’s ability to fund other projects.
At the time of the last consultation in 2022 Council indicated that they expected the bank loan to return and for the $22.75M loan to be short term? Why has this changed and what is the expected term of the remaining loan?
Bank interest rates have increased which makes it no longer possible to borrow the funds required. The term of the remaining loan is proposed as 15 years.
What does it mean for my rates?
There are no implications for rates under either option. This is because ICHL will manage the equity holdings for Council while Council retains the debt which brings in a small revenue in interest payments. There is a risk under Option 2 that ICHL's future dividend to Council may be impacted meaning Council needs to make up any shortfall from rates. This is not a risk thats expected to eventuate.
Is Council still forecasting ten years before it receives a return on its investment in ICL?
What would happen to Council’s investment and loan if something goes wrong?
The loan has first mortgage security on the land and building so would be repaid. Equity held by ICHL on behalf of Council would potentially be lost.
Is this the last investment Council will be required to make? Could there be further requirements for funding?
ICHL will continue to have responsibilities as shareholder. At this stage no further funding requirements are anticipated.
Will a new piazza be created as part of the project?
There will not be a new piazza. Council remains open to other options for a gathering space for the city.
Is there a plan for the area next to the Kelvin Hotel?
The land is currently owned by HWCP. Council is working with HWCP to consider options.
What is happening with the Troopers Memorial building Bank of New South Wales building (previously Pumpkin Patch)?
Council is considering entering into an agreement with HWCP to enable it to explore options for that site.
Who will be responsible for the ongoing costs of managing City Block?
ICL is responsible for the ongoing management costs.
How can I have my say?
Let us know what you think about the options for further investment into City Block using the submission form at the bottom of this page!