Social benefits vs land value for aged care block

The council owned block on Clement Street is the preferred option for the upcoming aged care facility to be built by Anglican Care, which is seeking to acquire it for a nominal price.
The council owned block on Clement Street is the preferred option for the upcoming aged care facility to be built by Anglican Care, which is seeking to acquire it for a nominal price.

Anglican Care is seeking to purchase a large block of council owned land in Gloucester for its aged care and retirement facility, for a ‘peppercorn price’. 

The practice of asking for a ‘peppercorn price’ enables signatories to a contract to provide ‘something of value’ to the other party for as low a price as possible. 

“I think it’s a very old term which essentially means you will pay a token amount for the land on the basis that the seller will derive a whole range of benefits as a result of the transaction. In this case the council is acting on behalf of the community, which will reap those benefits,” Anglican Care’s chief executive Colin Osborne said.

The 2.94 hectares low residential zoned block on Clement Street consists of three blocks and has been identified as the ideal property on which to build the town’s much needed aged care facility.  Although there is the potential to sub-divide the block into eight to 11 residential housing lots, the costs of providing the associated infrastructure mitigates this option and reduces the size available for an alternative facility. The property has already been on the market for several years. 

“We’ve identified it as being appropriate – it’s a good site, council has taken the nature of the sight and its location as being appropriate for aged care and retirement and we agree. Whilst there is one other site in town that’s come onto the agenda, this is our preferred option,” Mr Osborne said.

Anglican Care’s correspondence to Gloucester Shire Council was discussed at this month’s council meeting. 

“Essentially our correspondence covered why they should potentially consider a price less than market value, given the benefits it would bring to the town.”

Whilst other properties and services owned and run by Anglican Care elsewhere have not negotiated similar agreements, Mr Osborne said that their main campus at Booragul near Newcastle was situated on a parcel of land originally donated to the church by a mining company. He said it was not unusual for not for profit charitable organisations to acquire real estate through charitable means.

“Everywhere else we own the land on which our services are conducted... We want to own the piece of land on which we build. In any land transaction there’s a buyer, a seller, a price and they need to come to an agreement.”

Admitting that council would no doubt want something in return, Mr Osborne said that any conditions placed on the transfer would be reflected in the contract. 

“I would expect them to say - if we sell you this piece of land at this price, we will expect Anglican Care to do A,B,C,D,E. Those conditions have to be acceptable to both parties.”

Mr Osborne said that their main focus so far has been trying to finalise the acquisition of a site.

“Really we can’t do anymore until such time as we get that land transaction agreed.”

Gloucester Shire Council’s general manager Danny Green said he has since begun negotiations with Mr Osborne for the sale of the block at an appropriate price. 

“Any organisation is going to try to get something for nothing... They’ve asked for the lowest price possible in their letter and whilst we’re cognisant of the holistic benefits to the community we would not give it away, but the sale of land may reflect those benefits.”

Mr Green said that council would work to ensure that as many local contractors were used in the building and maintenance as possible and that the price might be dependent on the commencement date set by Anglican Care, as council were keen to set things in motion as quickly as possible. 

“But once you’ve sold the land, you’ve sold the land. There’s no control. But depending on how the price is negotiated council might or might not retain some input.”

Mr Green added that he had been working on an aged care facility for a couple of years and was keen to get it started.

“I’d like to hear from Anglican Care’s board with a firm offer next week.” 

Mr Osborne concurred. 

“My objective is to resolve it before Christmas.  We’re certainly committed to commencing the construction of the nursing home in mid 2017 and we’re still exploring any possibilities to start a retirement village a little bit sooner than that.”