UTAS’s growing Hobart CBD property portfolio under fire after Forestry building price revealed
The University of Tasmania has paid almost three times the estimated value of the former Forestry Tasmania building on Melville Street as part of its expanding Hobart CBD property portfolio.
- UTAS pays $15 million for the former forestry building in Hobart, which was valued in 2018 at $5.7 million
- The REIT claims UTAS’s increasing CBD portfolio is putting stress on other rate payers
- UTAS says although it doesn’t pay rates, its ownership of CBD property brings other benefits
The purchase — alongside recent city accommodation acquisitions of the Fountainside Hotel, MidCity Hotel and land in Melville Street — has stakeholders worried that the Hobart City Council is losing out on significant rates revenue.
According to a property report for the Forestry Tasmania building, the university paid $15 million for it late last year, after Tasmania Police dropped plans to establish a new headquarters at the site.
The property was valued at $5.7 million in 2018, with the majority of the building having been internally demolished.
It was previously valued at $12 million in 2016.
The university has not said what it plans to use the building for, but said the purchase was “financially prudent” because it is deciding whether to centre the campus in the CBD or to continue facilities elsewhere in Hobart and in Sandy Bay.
“Should we wait until a decision is made, the university would be forced into a position of navigating a shift into the CBD in an overheated commercial property market,” a spokesman said.
“It was financially prudent to purchase the property at 79 Melville Street when it became available.”
The university also took possession of the Fountainside Hotel this week, but has not said how much it paid for that site.
Worries over rates revenue
UTAS is not saying what it wants to do with the former Forestry Tasmania building. (ABC News: Sam Ikin )
Real Estate Institute of Tasmania president Tony Collidge said he was concerned the university’s rapidly increasing property portfolio could put pressure on Hobart’s ratepayers, who will have to shoulder an additional rates burden.
The university is entitled to an exemption from paying general rates for properties used for educational purposes, which includes student accommodation.
“We can’t go and give them half of town or a third of town, and then all of a sudden expect everybody else to have to pay the rates to support the services that they’ve been provided with,” he said.
“That’s not fair, it’s not Australian, and it’s not right.
“If [the university] is not paying rates then that puts an extra burden on the retailers and the other property owners in the city precinct in the Hobart municipality.
“They should be treated like any other ratepayer.”
Anti-logging protesters let off flares in 2010 in the entrance atrium of the building. (ABC News)
Mr Collidge said the university appeared to have paid a “reasonable” amount for the Forestry building, because significant parcels of land in the city often had a premium attached.
Robert Mallett from the Small Business Council said the university-owned land was prime rate-earning property, and commercial properties such as hotels helped ensure Hobart could afford services such as roads and lighting.
“Hobart ratepayers should be completely incensed that these large commercial properties are being used for nothing more or less than student accommodation because, other than water and rubbish, they attract no rates whatsoever,” Mr Mallett said.
“So those institutions are being funded by the Hobart businesses and the residential ratepayers.
“In Hobart, 60 per cent of the rates are paid by 40 per cent of the people, that’s the commercial sector. The remainder is paid by the residential sector.
“By closing out these commercial properties, it’s going to put an awful lot of pressure on residences in Hobart.”
Hobart alderman Jeff Briscoe also said he was worried the burden of foregone rates revenue would fall on other ratepayers.
A university spokesman said the institution contributed in other ways.
“As a provider of higher education, the University of Tasmania is exempt from general rates and federal taxes, but provides significant economic impact through our teaching and research, along with key economic sectors such as tourism, hospitality and construction,” he said.