City Block FAQs

Yes the construction is City Block is complete with the exception of further fit out as new tenants move in.

Only two units on the ground floor and the majority of the first floor is unfilled. This equates to about 10% of the facility.

 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.

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.

Council’s debt facility may increase from $31.45M to $40M under option one. Under option two it is unchanged.

Council will remain the debt funder.

The reporting requirements becomes more formal. Annual reports will be made public and a Statement of Intent will be produced.

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.

To the extent to which Council provides debt funding to ICL it does not significantly impact Council’s ability to fund other projects.

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.

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. 

Yes.

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.

ICHL will continue to have responsibilities as shareholder. At this stage no further funding requirements are anticipated.

There will not be a new piazza. Council remains open to other options for a gathering space for the city.

The land is currently owned by HWCP. Council is working with HWCP to consider options.

Council is considering entering into an agreement with HWCP to enable it to explore options for that site.

ICL is responsible for the ongoing management costs.

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!