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The fate of the Kempsey cinema project hangs in the balance ahead of an extraordinary meeting of Kempsey Shire Council on Tuesday.
The meeting comes after the Office of Local Government refused to approve Kempsey Shire Council’s Public Private Partnership with shopping centre owners Gowing Bros and cinema operators Majestic, with the office citing concerns over the “procedures and processes” council had followed thus far.
In a letter tabled at council’s June 20 meeting, the chairman of the Office of Local Government’s project review committee (PRC) Grant Gleeson was scathing in his refusal to approve the partnership.
Mr Gleeson wrote that council did not submit the proposal in accordance with the NSW guidelines stipulated with Public Private Partnerships, while council’s May resolution to proceed with the cinema project “appears to pre-empt matters”.
Mr Gleeson said that the PRC found that council had not, so far, fully considered independent analysis of the project, including “adverse comments” made by an independent accountant.
These comments included criticism that council appeared to be “unnecessarily subsidising Majestic” and that council’s involvement in the partnership was “marginal and beyond normal commercial risk”.
In a statement on Wednesday, council’s general manager David Rawlings said that the issues raised by the PRC were complex.
“The concerns of the PRC focus on processes that we’ve followed, the advice we received from an independent accountant and the need to further demonstrate the financial risks and implications of this project in Council’s budget documents,” Mr Rawlings said.
The PRC also cast doubts that the Kempsey public had been fully informed of the potential financial impacts of the project, writing that the long term financial plan that council currently have on exhibition to the community doesn’t outline the “full financial implications” of the project.
The letter also said that while council criticised the independent accountant’s report, the PRC noted that council itself had failed to supply an independent cost benefit analysis which supported council’s position that the cinema would benefit the community.
“Furthermore, it is not clear whether the Public Interest Evaluation document has been put on public exhibition,” Mr Gleeson wrote, adding that the document does not contain any references to “the substantial risk associated with entry into the project”.
A report will now be tabled at the extraordinary meeting on June 27 detailing whether the issues raised by the PRC can be addressed in a timeframe to meet the requirements of all parties.
“Council take on board this feedback and detailed consideration of what is now being required will form the basis of the report to next week’s council meeting,” Mr Rawlings said.
Mr Rawlings said the prospect of the project not going ahead would be a blow to Kempsey’s economy.
“While the issues raised are about process and financial implications, it is unfortunate that there is no weighting being given to the economic and social implications our community face if this project doesn’t go ahead.”
“The risks associated with this project not proceeding include the loss of an immediate $6 million investment into Kempsey, the loss of existing jobs and income impacted by retail leakage out of our CBD, the lost opportunity to bring the valley’s significant tourist numbers into the Kempsey CBD and the lost social and cultural benefits that the cinema can bring our residents.”
“Council has been very clear about the fact that investing in this project aims to create a vibrant CBD, provide ways for people to spend money in Kempsey and therefore secure jobs.
“For those reasons Council will continue exploring the feasibility of progressing the project, which will be further analysed at next week’s meeting.”
