Kilgariff suburb still a work in progress

By ERWIN CHLANDA

 

If the government wants 100 residential blocks in Kilgariff ready for sale “off the plan” by July – the target date, according to minister Adam Giles – then they’ll have to get a wriggle-on.

 

Mr Giles (pictured below) says he’s been fighting hard to bring on the subdivision early but apart from the number of blocks, very little seems clear at the minute.

 

On the face of it, this is the situation: The new suburb will ultimately have 1000 blocks.

 

The headworks (power, water, sewerage, etc) have already been taken to the edge of the suburb at a cost of $10m ($10,000 a block).

 

As the land is flat and sandy, development costs (internal roads, power, water, etc) could be around $80,000 a block, a figure we published in October 2009.

 

Mr Giles disputes that figure, saying if the next stage of Stirling Heights goes ahead, there is a “rough assessment” the development work would cost $170,000 per block. But he concedes that is in difficult, stony country.

 

A civil engineer today, speaking on the condition of not being named, says $100,000 plus is a more likely figure now, although for 100 blocks economies of scale may be kicking in.

Kilgariff is not encumbered by native title, and so the land belongs to all Territorians, including you and me.
At prices for residential land last year of $300,000, the 1000 blocks would be worth $300m.

 

Mr Giles says the prices may have gone down recently, with some blocks at Mt Johns now on offer for $220,000 or $250,000.
At the conservative estimate of $100,000 a block, development costs will total $100m.

 

Into whose pockets will the difference go, looking to be at least  $200m, a nice little earner?

 

The land has a few drainage problems. The St Mary’s Creek skirts the eastern edge, and there is now a requirement, regarded by many as onerous, to provide for a Q100 flood – a magnitude likely to occur once every 100 years.

 

(Of course a dam in the Todd River, stopped by Aboriginal interests more than 20 years ago, would make compliance with the Q100 rule far less onerous and expensive because the flood depth would be much lower.)

 

How much storm water management and flood prevention will cost and who will pay for it is not yet decided.
Two tenders will be called. They will be for the purchase of the two parcels to be subdivided, on either side of the spine road, each to accommodate 50 blocks.

 

The sale price for the land will go into consolidated revenue.

 

The developers will then have 50 blocks each to sell for whatever the market will bear.

 

Well, maybe not quite, says Mr Giles: the tenders may include conditions such as a completion date and a maximum sale price.

 

Why 100 blocks now? “We have to balance supply and demand to keep the prices as low as we can, that we don’t have price gouging, and that there is an opportunity for more affordable land,” says Mr Giles.

 

He also says that the number of blocks has been raised from 75 to 100 to qualify the suburb for the National Broadband.
Mr Giles says an earlier proposition, for the government to carry out the subdivision, has been dropped.

 

This would have allowed some blocks to be sold at the at cost of development, if that serves the interests of the town that has been driven into decline by extortionate land prices.

 

That was an option floated in 2010 by Robyn Lambley, now the Treasurer and Minister for Central Australia.

 

What’s more, this process would have given the government very precise information about the development costs.
“We need to find out exactly what it costs to service a block, we are going to test the market and that process is underway now,” says Mr Giles.

 

We put to Mr Giles that the government seems happy to rely on the offers from developers.

 

“We are not in the business of selling land,” he says. “Our costs would be dearer than a private developer’s costs.
“The machinery of government is better used to support the private sector rather than the government controlling everything.

 

“I’m not in the business of big government. I’m in the business to try and have small government and we support the private sector to be able to do the work. We’re not going to do that [suburb] in-house.”

 

How will he decide what price is reasonable and acceptable and what’s not?

 

“We’ll be asking for a cost structure, for a time frame, there will be caveats. The tender process hasn’t been finalised so I can’t give you a definitive answer.”

 

The government may, of course, not accept any tenders.

 

Mr Giles says he has succeeded in having the National Rental Affordability Scheme applied to Kilgariff, and to other land in The Alice, including “under-utilised infill”.

 

Under this Federal scheme the NT has been allocated 650 affordable properties for which the Feds will pay 30% of the market value rents for 10 years.

 

IMAGE: The approximate area where the first 100 residential blocks will be developed. The circled number 1 is the new Stuart Highway intersection.

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2 Comments (starting with the most recent)

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  1. Shaun
    Posted March 7, 2013 at 4:59 pm

    Here we go again. How long was it for Mt Johns to get up and running after all the fiasco with the headworks and the related indigenous company going bust? The Government and the developers are making a killing. It’s a joke. With the cost of building an average house in Alice ridiculously high you need to get a block for $100,000. Ain’t gonna happen. At the bare minimum they could be $200,000, plus the house and you are well over $600,000. What family using home start will be able to afford that. Have a look at the new builds in Mt Johns, most of them are all builders because they are the only ones who can afford the prices and once they have put their two cents worth on top of the price look out $700-800,000 or more, here we come. Wonder why people are leaving town and heading south when you buy a house and land package with a new 4 bed 2 bath for half the price. It is even cheaper now to fly a tradie up from Adelaide, get him to do the work, and fly back than have someone in town do it. That’s how crazy it is. They want people to come to town then make it more affordable for them to come here.

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  2. Steve Brown
    Posted March 3, 2013 at 4:16 pm

    The Q100 Flood Level requirement is not only “onerous” as you put it, it is in fact sheer economic stupidity!
    There is always a level of risk in anything that we do, but just how far do we ago in attempting to mitigate those risks?
    The last 20 years of uncontained bureaucratic obsession with risk assessment has resulted in an unaffordable escalation in the cost of civil, commercial and in particular domestic construction.
    The Q100 Requirement is a ridiculous and unaffordable level of risk reduction!
    A Q100 flood is no more likely on a Kilgariff home than a Tornado, Earthquake, Plane crash, Meteorite, Fire or a nuclear blast!
    Are we going to insist on proofing against all of those as well?
    Along with the trendy add-ons of solar power, water tanks, enhanced levels of insulation plus of course the massively escalated labour cost due to the now very onerous work health requirements and all of this on a home that has design life somewhere between 30 and 50 years a Warranty on the construction for six years!
    Yeh, all really great I’m sure but we’ve just escalated the cost of a family home into the realms of being completely unaffordable!
    Building the whole Kilgariff subdivision up to a level and installing Storm Drainage to cope with a Q100 is utterly ridiculous and unnecessary expense, especially given that it is pretty much a flat plain!
    One that might be expected to hold a couple of hundred mill of water once in a hundred years!
    Asking our young and our low payed workers to find the huge extra sums required to reach the Q100 level of flood protection is quite frankly immoral!
    This level of protection should be achieved by large public infrastructure such as a mitigation dam. Concerns about housing inundation can be alleviated by raising houses with economic methods such as stumping the floors!
    Street and storm drainage should be to a level that can cope with a Q30 flood event and no more! The last dozen years of Labor Government have all but completely stifled our building industry time for the CLP to show some guts and some vision get rid of the idiotic nanny state levels of red tape that have been allowed to develop.
    Legislate a Q30 requirement for Kilgariff and get on with it!! Further to all of that, if government can tender for “developers” government can tender for civil contractors! Pay for the work yourselves and maintain ownership of the land!!
    If we get to the end of this process and find a developer squeezing the market and dribbling out blocks at an unaffordable price, we will have failed the community of Alice Springs in the most miserable and devastating way! Which I am absolutely certain the community of Alice will find unforgivable!
    GUTS, VISION, TAKE SOME RISK! IT’S PART OF LIFE! And PART OF GOOD GOVERNMENT!

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