Fremantle Council has pulled the plug on a proposed baugruppen project, leaving tenderers “bewildered”, after it imposed conditions on the project that were deemed unacceptable and then refused to negotiate.
The council announced in 2016 that it would offer up an unused 1477-square-metre council site at 7 Quarry Street for a baugruppen co-housing project, with councillor Rachel Pemberton calling the model “the perfect fit” for Fremantle.
The model typically cuts developers out of the process, with groups of homebuyers working directly with architects to create a development often prioritising affordability, sustainability and community.
But the council has now sent letters to final tenderers stating that the Quarry Street project will not go ahead, due to non-compliant tenders being received.
“It is with regret that the City of Fremantle, in consultation with elected members, has decided to conclude this tender process and to not proceed with any further consideration of a co-operative housing project at 7 Quarry Street,” Fremantle director city business Glen Dougall said in a letter to tenderers dated 22 March.
The letter was published by one of the tenderers, the Quarry St Steering Committee, in late April, following a meeting with the council.
Eugenie Stockmann, founder of co-op housing consultancy Green Fabric and one of the steering committee members, said in a post that her group was “bewildered” by the council’s decision to cancel the project.
“Their decision has removed the chance of creating perpetually affordable housing for owner-occupiers in Fremantle,” she said.
Ms Stockmann said the group had initially responded to an Expression of Interest (EOI) in October 2016, which had “challenging” criteria to meet.
“They included meeting high level sustainability results, providing affordable housing for owner occupiers, in perpetuity, and for the developing entity to be democratically owned and controlled by the future owner-occupiers.”
A year later, four parties, including the Quarry St Steering Committee, were invited to proceed to the second stage of the tender, however the council dramatically changed the goalposts, which forced the group to redevelop its proposal entirely.
“The committee believes this submission again met all the selection criteria,” Ms Stockmann said.
Legal sticking points
However, in addition to meeting the selection criteria, Ms Stockmann said the council had included a requirement that “an unconditional contract of sale be signed as a part of the tender submission”.
“The committee raised serious and valid issues and concerns about this proposed contract with the City. One of issues we pointed out to the City was that, if signed, [Fremantle] would not be able to enforce compliance with the tender’s selection criteria. Another concern was that the contract removed standard clauses to protect purchasers.”
Was the process set up to fail?
Another group member, architect Sid Thoo, told The Fifth Estate “based on how the tender was structured, it seemed like it was almost impossible to submit a conforming tender”.
The unconditional contract of sale meant that the group had to commit to purchasing the site if selected as the winning tender. However, the site was also required to be owned by a housing co-operative – a legal entity. However a co-operative would not be formed until the site was secured, and Thoo and his group members – as facilitators – were unwilling to personally buy the site and hold that risk.
Ms Stockmann said the group was under the impression the council would further engage on these points when raised, though instead it cancelled the project without discussion.
“We found the city’s lack of communication highly unusual as it is common during a tender process to seek further clarification if required from tenderers,” she said.
Mr Thoo agreed the “take it or leave it” approach was very unusual, and it was not uncommon to negotiate the conditions of tender. He expected there would have been a more iterative process with the council, but instead the council had been “defensive”.
“It has been very disappointing,” he said.
The letter from the council said that two responses were received to the tender, both raising concerns with the requirements. It said the concerns were considered by the selection panel and the council’s executive – the outcome being the cancellation of the project.
“The City of Fremantle argues they were unable to proceed with the project because they did not receive any compliant tenders,” Ms Stockmann said.
“We stand by our decision not to sign the proposed contract of sale for obvious reasons and are perplexed by the City’s insistence on compliance from tenderers with a document that was flawed. We firmly belief the City could have handled the process differently, but chose not to.”
She said the group had put “considerable time and expense” into the EOI and tender.
Is it back on the cards already?
However, it appears the council may already be reconsidering its position on the project. The Fifth Estate contacted the council on 12 April to check the progress of the Quarry Street project, following an announcement regarding another site offered up for sustainable development.
At the time, a media spokesperson told The Fifth Estate council staff had relayed that the project was “a work in progress”, even though this was weeks after the letter stating the council would not be considering a co-housing project on the site.
On Thursday the spokesperson clarified that a report was being prepared for council following the cancellation of the project, with more details to be released when the report is on a council meeting agenda. Until that time the project is considered to be under active investigation. A timeframe for the report is not known.
Ms Stockmann said her group was ready to work with the council and future residents to deliver a co-housing project on the site.