Murky unsolicited leasing proposals could bypass EOI under draft leasing policy. Trust should withdraw public exhibition until controversial Review is concluded.
by Linda Bergin OAM, Founding President Headland Preservation Group
In a strange timing coincidence, the Harbour Trust has placed on exhibition a Draft Harbour Trust Leasing Policy 2020, even though the Review of the Trust has not been completed.
The Harbour Trust says they are “Clarifying the process for the consideration of unsolicited proposals to the Harbour Trust”, however it contains a major change, not just a clarification.
The draft policy proposes to allow unsolicited proposals to dodge the previous competitive tender processes (called EOI) for "first-time leasing” opportunities, if a proponent submits one before any EOI has commenced.
This change to unsolicited proposals seems divergent to the Trust’s statutory Comprehensive Plan, a legal instrument:
“In order to ensure that management of commercial leases and the generation of funds through the use of Trust assets are carried out in a publicly transparent and consistent manner, the Trust will:
• Develop a Leasing Policy that is compatible with the goals and objectives of the Trust and offers leasing of premises through a publicly transparent and competitive process”
The current policy defines a “First-time Leasing Opportunity” as buildings never before made available for lease, OR a new use not previously offered to the market.
But the draft policy defines “First-time Leasing” only as “buildings never before offered for lease”. Because 10 Terminal has an EOI in 2009, under this new definition, 10 Terminal would not require and EOI. The Trust recently revealed there would be an EOI for 10 Terminal in the first half of this year, are they still going to?
Also, under this new leasing policy, an unsolicited proposal from a proponent such as the Cockatoo Island Foundation Limited (SMH 15/2/20) might not require an EOI. (There are a number of buildings on Cockatoo Island that have never been leased).
This is not the first time that lease approvals have been watered down.
Back in 2017, the Trust amended its policy to exclude options in the calculation of the lease term. However, this fact was not specifically revealed in the Board Minutes and required some sleuthing by me.
“10.3 Term thresholds The Sydney Harbour Federation Trust Act 2001 (including amendments up to Act No. 62, 2014) requires:
• Approval of the Minister for leases (
including options) which extend beyond the 19th September 2033.• Concurrence of Parliament for leases (
including options) exceeding 25 years. The 2006 tripartite agreement between the Trust, the Commonwealth and the State of NSW requires the approval of the State for leases at North Head Sanctuary which extend beyond 31 December 2031.”
I asked the Trust for a list of leases that extend past the 2033 life of the Trust, and therefore would require Ministerial approval. As a result of the 2017 change to exclude options, 1 month later the lease to Blaxland House – Childcare Centre no longer required Ministerial approval. Australian Sailing also no longer required Ministerial approval.
“There are no leases that extend beyond September 2033, other than leases that have the potential to extend beyond September 2033 due to their options (as listed below).
As requested, the terms of the leases have been included in the table below –“
| Lesee | Location | Initial Lease Term | Initial Lease Term Expiry | Option | Option Expiry |
| Blaxland House – Childcare Centre |
Headland Park | 10 years | July 2027 | 10 year | July 2037 |
| Sergeant’s Mess – The Tea Room |
Chowder Bay | 12 years | April 2021 | 2 x 5 year 1 x 3 year |
April 2034 |
| Australian Sailing | Sub Base Platypus | 10 years | December 2029 | 5 + 5 year | 1. December 2034 2. December 2039 |
And just revealed last week, the Trust's own submission to the Independent Review seeks to remove the ability of Parliament to scrutinise (called a “legislative instrument”) and potentially reject long leases and to specifically “empower” the Trust to approve leases up to 49 years with only the approval of the Minister not Parliament.
The Trust states:
“we suggest a further amendment to the Act to allow the Harbour Trust to enter into longer term leases or joint venture arrangements, before a legislative instrument is required. This will empower the Harbour Trust to provide a greater level of certainty and attract a higher level of private participation and investment. Leases of up to 49 years — in limited circumstances and subject to Ministerial approval — would provide viable partnering opportunities which would enable preservation of heritage buildings and delivery of community benefit to the sites."
I strongly advocate that the Trust should withdraw its draft policy on public exhibition until the government has made its decisions on the results of the Review.
Further, there should be no case when an unsolicited proposal can bypass an EOI process for first time opportunities, including new uses of a previous EOI.
Finally, unsolicited proposals and proponents should be identified and publicly notified as soon as they are approved by the Tenant Selection Committee.