Insurance giant ING is facing a minimum $17 million loss on its contentious $350 million Victoria Quay project at Fremantle Harbour because of the global economic crisis and unforeseen land contamination.
After tortuous negotiations with Fremantle City Council in the face of heated local opposition, ING was granted approval, after State Administrative Tribunal intervention, to develop the multistorey commercial building from March 16 last year.
The approval was conditional on the 30,000 sqm project starting by March 16 2011, which ING now concedes is unlikely.
Major delays to commencement have been caused by the global economic crisis, and complex negotiations with Fremantle Port Authority over unforeseen soil contamination on the site.
In a decision published on Friday, tribunal president John Chaney dismissed a request by ING to extend the start date.
In the tribunal, the Western Australian Planning Commission argued this would be an abuse of process.
ING project manager Brynn Shute told Justice Chaney that $17 million had already been spent on the project and a further $10 million was required to move it to commencement stage.
Mr Shute testified that the global financial crisis had impacted on funding the project and the capacity to attract lessees.
Justice Chaney noted that ING must have known by December 2009 that the prospect of starting by March 2011 “was bleak if not unachievable”, and yet a request for extension was not made at that time.
“I am mindful … that a failure to extend the time for substantial commencement of the development might put in jeopardy a very important development of regional significance and result in many millions of dollars of wasted expenditure,” Justice Chaney noted.
During the hearing, the WAPC argued it would be unable to vary the two-year commencement requirement without a completely fresh development application being lodged.
If this happens, a hornets’ nest of latent local opposition is likely to be stirred up in the heritage-conscious port city.
Justice Chaney concluded that in the interests of good planning the requirement for a new application should somehow be removed, if necessary by changes to WA planning laws.
Victoria Quay has been in the pipeline since 1997 when work on a masterplan for redeveloping the historic area commenced.