In the 2022/23 Shire Financial Report, Council has booked a cash loss of $5.7 million on the purchase, refurbishment and subsequent sale of The Rex.
The Local Government Act 2020 requires that Councils obtain an independent valuation of any property prior to disposal. The valuation Council received prior to the sale of The Rex was $3.7 million and the eventual sale price was $3.75 million. But the question has been asked numerous times about the valuation of The Rex at the time of purchase by Council. The purchase price was $6.345 million which, based on changes in property values over the timeframe, was likely substantially above the price of any knowledgeable valuation.
In discussion of the 2022/23 Financial Statement at the Council meeting last week, Cr Lesley Hewitt directed that question to Council officers: “Was there an independent valuation of the Rex at the time it was purchased and if there was, what was that valuation?”
Shire CEO, Bradley Thomas, responded, “To the best of our knowledge, officers have not been able to ascertain whether an independent valuation was undertaken when the purchase was made. We have been through a number of records and reports presented. It’s not to say that one was not done but I can confirm that officers are unable to locate an independent valuation at the time of the purchase.”
Although an independent valuation may not have been required by law prior to the purchase, due diligence for a statutory authority would dictate that a valuation should have been obtained in investigations for the purchase of a multi-million dollar property.
It seems then, that either a valuation of The Rex was not done prior to the Council’s purchase in 2016 or a valuation was done and someone lost it somewhere along the way. Either way, the carelessness of Council officers at the time is breathtaking.
Presumably, negotiations about the purchase price of The Rex form a chapter of the Local Government Inspectorate report into the affair. The refusal of the LGI to provide a full and transparent report, more than four years after they conducted their investigation of The Rex, is similarly breathtaking.
Related stories:
The Rex Investigation Should be Referred to IBAC
Editor’s note: The Local government Inspectorate was invited to comment on this piece prior to publication. The LGI did not respond by deadline.
