Sutherland Council to bail out developer of Nth. Cronulla SLSC 05:59

It's 25 minutes to four. Now, at what point is it unfair to ask a council or a government to bail out a project that's just gone bust or a project that is turning pear-shaped financially? Whether it's a block of units or a refurbishment, should it be on the taxpayer or the ratepayer to bail it out?

Well, in some circumstances, maybe, because this is what's happening at North Cronulla Surf Club. So this is right on the beachfront there at North Cronulla, right opposite North East. And the refurbishment, without question, has been an embarrassment. An embarrassment, a shameful, shameful process.

So you had construction on a new two-story extension at North Cronulla Surf Club with an upstairs bar restaurant and downstairs chaos. Now, this began all the way back in February of 2022, two and a half years ago. And it's been ongoing at snail's pace. It was supposed to be all done and dusted in 12 months. It was then pushed back until March 2024 and work has been suspended indefinitely. Nothing is happening at all.

Now, North Cronulla Surf Club got taxpayer grants to do this work. That money's now been torched. And Sutherland Shire Council, well, they'll have to bail the surf club out if they want to finish the job. And guess how much it's going to cost the ratepayers of the Sutherland Shire to fix this mess? $8 million. Well, Sutherland Shire Mayor Carmelo Pesci is on the line for us. Mayor, thanks for your time.

But, Chris, who are you? I'm not too bad. Look, I don't know whether I'm blaming the surf club operators, the surf club management, the builder. Regardless, if I'm a ratepayer in the Shire, I'm scratching my head saying, really?

Yeah, it is a shame the way it's turned out. Unfortunately, the Surf Club had particular ideas to upgrade their facility. They appointed a builder. They applied for federal grants, and at the time it was Scott Morrison that was able to give them. Mark Speedman gave some money from the state government. They went and borrowed money and council guaranteed a loan for the Surf Club of $5.3 million. $5.3 million.

They appointed a builder. At the time, the builder's a good builder. The builder now has gone broke and liquidators have been appointed last week. This started probably at the beginning of the year when the builder stopped paying contractors. Contractors then walked off the job and hence why the work stopped. They're at a point now where...

The builder was at a fixed price. Things have changed, obviously, through COVID and a lot of prices have gone up. And to finish the project, it's going to cost a lot, lot more than what was put aside. And the club has now approached council. I've had a number of meetings with the executive and a paper will come up on Monday to councillors to decide what we need to do.

Look, it's a significant building, as you said. It's right in the middle of Cronulla. It's on the beachfront. The longer we leave it, that building's going to deteriorate with the elements of the sea. So something needs to be done. It can't stay like that. It can't stay that way. But we also need to make sure that the rate payer across the Shire doesn't miss out as well because there's obviously projects that we put in line. So the club needs to sit down and we've got to look at it on Monday night.

but interest will need to be paid to be charged as well. So then that money doesn't miss out on other projects throughout the show. So would it be your understanding that, say, North Cronulla Surf Club, I'm assuming it's on a sort of a peppercorn lease from council, is that correct? It is. Okay, so it's on the peppercorn lease, then will it be something of the situation so ratepayers can actually recoup some of the money that you're handing over? Yeah.

If they make, I don't know, $800,000 a year from whatever when they open it, that money then goes back into the council coffers rather than sitting in the surf club's coffers because whichever way you cut it, Mayor, the management of the surf club, clearly they've got this wrong.

So you're 100%. The ratepayer of the Shire can't miss out and can't be funding this. So everything you just said is correct. And the conditions of council going in and taking over the project where any income that comes out of the... ..any revenue income that comes out of the leasers will need to go out and pay this loan first before they receive any money back.

Management, are you going to ask for a change in management or are you a little bit sympathetic to them because it was just one of those things?

I think it's one of those things where at the time they appointed a builder, the builder has gone in liquidation. They had a fixed price. Builders are going, in this day and age at the moment, builders are going broke everywhere at the moment. So you can't really totally blame the management. They never saw this happening. The person I blame is the builder that wouldn't pay their contractors. And now we are in a situation where we are.

$8 million, it's not like you're the ANZ Bank or NAB or anything. It's the Sutherland Shire Council. Where do you find that kind of money?

Well, it's actually a bit more. It's actually, you know, when you finish it all up with the interest and everything, it's around $9 million. The money has been put aside for other projects that we've earmarked to do, other parks, other projects. They might have to take a step back, a back burner. We need to assess that. And obviously, as we said, this is a priority because...

I think the longer we leave it, the elements of the sea and the weather will deteriorate that building and cost a lot, lot more if we don't do something now. All right, Mayor. It's an unenviable position, but it feels like this is the only way forward. I appreciate you jumping on. Thank you, Chris. That's Carmela.