June 3, 2015
A decision to declare Memerambi Estate a “benefitted area” which was taken at the South Burnett Regional Council’s June 3 meeting provoked heated debate.
A motion to draw down a $2.1 million Treasury loan so work could begin on building missing infrastructure to make the Estate habitable split the Council 4-3.
Crs Tessmann, Duff and Green opposed the benefitted area proposal, arguing that it posed risks to ratepayers and was unfair to two property owners in nearby King Street who would also face a “benefitted area” charge because new roads to be built in the Estate would pass the rear of their properties.
However Crs Campbell, Heit and Palmer – and ultimately Mayor Wayne Kratzmann – argued they thought the risk to ratepayers in the arrangement was slight to nil; that “doing nothing” was not a real option; and that while it was unfair some property owners who were not part of the Estate would be asked to pay part of the costs of fixing it, a decision to press ahead was in the best interests of the Estate’s property owners, the village of Memerambi and the region as a whole.
Because Memerambi Estate has blighted the region for more than four years and because there has been enormous general interest in the matter, we are publishing this detailed report on the debate for the benefit of readers who would like a deeper insight into the factors individual Councillors considered when arriving at today’s decision.
We are also republishing the full responses of Crs Tessmann, Campbell and Heit, who spoke from prepared speeches at the debate, in PDF format.
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The Arguments Against
Cr Damien Tessmann said he was against making the Estate a benefitted area for two reasons: the financial risk the loan posed to ratepayers, and the burden the arrangement would place on some property owners in nearby King Street.
Cr Tessmann said he’d consulted widely with local real estate agents, Kingaroy bank managers, builders and valuers to get their views about how likely it would be that the Council could resell any properties on the Estate if existing owners defaulted on the deal in order to assess the real risk to ratepayers the benefitted area agreement posed.
He felt that in the current market, it was highly unlikely the Council would be able to recoup the $30,000 that would be owing on any of the 20 vacant blocks on the Estate if the current owners defaulted on the deal.
He suggested this would put at least $600,000 of the $2.1 million loan “at risk”.
Cr Tessmann conceded it was likely the Council could recoup its money from lots with houses on them, but warned that even then potential new owners would still have to spend $50,000 to $70,000 to bring the properties up to a habitable standard.
Cr Tessmann said he was also concerned that some owners in nearby King Street who had purchased their properties before the Estate was developed would now be hit with the $30,000 per lot charge because the rear of their properties will back onto the newly created Prince Street or Earl Street.
“I have had personal contact with one owner who purchased her house with her husband in 2005, well before the developer for the Memerambi Estate acquired the 80 acres in question that was already subdivided in 1908,” Cr Tessmann said.
“This current ratepayer faces … a $60 000 bill for the two back blocks that she has currently, which when combined with the two front blocks make up her acre block. That is $60 000 for something she already owns and can get access to via the current road reserve.
“I did not join this Council to send people broke, certainly not because of the actions of others trying to make a quick dollar in investment properties that have now gone wrong.”
Cr Tessmann was also withering about the “litigious group” of property owners who had taken the Council to court.
“It is not lost on me that there were somewhere around 30 property owners tied in with Members Alliance that took legal action against Council, surmising that Council was to blame for this situation,” Cr Tessmann said.
“This court case has already cost the ratepayers of the South Burnett money defending Council. As far as I am concerned this Council is owed something by those who brought about a failed court case in the Planning and Environment Court.
“The proposal as it stands today is designed to assist these owners of the Estate, almost all whom do not live in the South Burnett.
“I can live with Council bending over backwards to help ungrateful property owners that do not live here to see this place sorted.
“What I cannot live with is sending a young family and others to the point of almost bankruptcy because of legal requirements for them to be included in this area because – in the eyes of the law – they receive a ‘benefit’ from this benefited area.”
- Full text of Cr Tessmann’s speech
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Cr Kathy Duff said she agreed with Cr Tessmann’s arguments.
“As a ratepayer and especially as a Councillor, it is an unpleasant exercise to drive past the wasted, uncompleted Memerambi development several times a week with its weeds and grass growing to waist height,” Cr Duff said.
“It is particularly frustrating the Council could do little to stop the current situation and I hope the public clearly understands two points: firstly, that Memerambi was an existing but dormant subdivision created decades ago so Council couldn’t condition residential development on it; and secondly, Council is not at fault when a development goes bust prior to completion. There are dozens of these types of developments around Queensland.
“I would like to see a solution where funds are found to complete the development so that in the long term Memerambi grows into an affordable and pleasant place to live, adding to the diversity of housing options in the South Burnett region.”
Cr Duff said she was opposing the motion because she had concerns about how watertight the “benefitted area” agreement was.
“I am not satisfied we have done our homework thoroughly enough. I need more assurance that the whole group (of property owners) are on board and that we can move confidently forward with everyone on the same page for the good of the region.”
Cr Duff said while 30 out of the 39 “litigous owners” had signed an agreement, the remainder had only been notified of the offer and had not been given the opportunity to sign anything.
She said she didn’t think this was a secure enough arrangement to risk ratepayers’ money on a $2 million loan.
“I think if we asked ratepayers would they like us to borrow funds to fix a problem that is not really their responsibility with no assurance that all of the funds would be redeemed, or would they prefer us to take more time to ensure that if the money is borrowed then it is guaranteed to be paid back in a timely fashion, I believe they would choose the second option.”
Cr Duff said she also agreed with Cr Tessmann that it was unfair that residents who were not part of the development were being roped into the benefitted area levy because they had properties which would back onto newly created roads in the Estate.
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Cr Barry Green said he had wrestled with his decision on the “benefitted area” arrangement for a very long time.
In the end, he said the inclusion of several King Street ratepayers in the benefitted area was the main thing that pushed him to vote against the proposal.
“This is the biggest injustice I’ve seen in 68 years,” the 68-year-old Councillor said.
“I have grave reservations about lots being included in the benefitted area that were not part of the Estate, so in all good conscience I really cannot support this.”
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The Arguments In Favour
Crs Campbell, Palmer and Heit took opposite views.
Cr Campbell said he felt the arrangement with Estate owners was watertight enough, given that almost 79 per cent of the “litigious owners” had signed an agreement to waive further legal action against Council, and 94 per cent of the “non litigious” group had raised no concerns or objections about the Council’s offer.
“In the end, if any owner defaults Council will acquire ownership of their property, and I think that we stand a reasonable chance of recouping our funds on the open market.”
“I’ve done my own independent assessments with real estate agents and builders who would mostly agree that if these properties came on the market and sold for low prices, there would be no difficulty in selling them.
“Investors love bargains and it’s amazing where the money comes from at times.”
Cr Campbell also warned that doing nothing was not a real option. It would either result in more lawsuits, or the Estate remaining an eyesore for many years until it eventually had to be bulldozed. And in both cases, ratepayers would bear the costs.
“We’ve been elected by our constituents to not just make the easy decisions, but to also deal with the tough ones when they come along,” Cr Campbell said.
“This is a tough one and we’ve procrastinated too long. This is a time to be courageous and act in a forthright and positive manner.”
“I will not be sidetracked by fear of financial calamity.
“Today presents an opportunity to clean up a mess and convert it into a livable community to breathe new life into the Village of Memerambi.”
- Full text of Cr Campbell’s speech
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Cr Heit agreed.
“Sadly there are no good news stories about Memerambi at the moment,” Cr Heit said.
She said the issue had been unfair on the Estate’s property owners, who’d naively trusted the developers.
It had also been unfair to Memerambi’s residents, who’d had their town blighted by the neglected estate, and to every resident who’d had to drive past it the last few years.
And it had been unfair to the Council, who’d been blamed for the Estate and had been taken to court twice to prove its innocence.
But she felt the matter had to move forward, and the Council was the only organisation which had the capacity to borrow the funds and make good on the work the developer should have done.
“Whilst it is taking a risk, I think we as council have to do this otherwise the estate will continue as is and the 73 lot owners will have to write off debts up to $300,000,” Cr Heit said.
“Some may face bankruptcy, and the South Burnett will be stuck with this eyesore.
“I think we have to take this risk and I certainly hope the Memerambi lot owners appreciate what we are doing to get them out of their difficulties.”
- Full text of Cr Heit’s speech
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Cr Deb Palmer said she agreed with Crs Campbell and Heit, and had nothing further to add to the arguments they’d both advanced.
“I feel sorry for the investors who’ve made a bad decision but I must vote yes on solving this problem,” Cr Palmer said.
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Summing Up
Mayor Wayne Kratzmann, who had stayed silent while all Councillors put their points of view, then added his voice to the debate.
“We need to stop the blame game,” the Mayor said.
“I understand the argument about the King Street properties and I am very sympathetic about the situation they’ve found themselves in through no fault of their own.
“And if this were a vacant subdivision, this would be a much easier decision for us to make.
“And I share Cr Tessmann’s concern that even if we do fix up the Estate, will this also fix the situation?
“However we were elected to fix Memerambi Estate, and doing nothing would be wrong.”
The Mayor said he thought it was best to proceed with declaring the Estate a benefitted area and if this proved to be unsuccessful, at least Council would have “had a go”.
“This is the toughest decision we’ve faced,” Mayor Kratzmann said.
“But I agree with Cr Campbell that making tough decisions in the best interests of the majority of our residents is what we’re here to do.”
The motion was then voted on, and carried 4 to 3.
- Related article: Memerambi Estate Fix Gets Green Light
