AS revenue from the ACT government’s controversial Lease Variation Charge continues to fall, so does the amenity of our city centre.
Many of the buildings in Civic are in a state of disrepair. Look around our CBD and you’ll see boarded up windows and faded “for lease” signs on every street. The 14 per cent office vacancy rate and 15.9 per cent street-level vacancy rate are more than statistics: they have a real-world impact on our city’s heart.
One of the fastest ways to revitalise our CBD is also the simplest – relax the LVC.
The LVC has been a massive obstacle to adaptive reuse in our city centre for years. As it now stands, developers must pay LVC – that can easily run into the hundreds of thousands of dollars – on any building that changes use. These significant additional costs are preventing the adaptive reuse of redundant commercial offices into stylish new apartments, fabulous student digs, boutique hotels or retirement living towers.
And the worst thing? The flawed LVC policy has never achieved the revenues it forecasted.
In fact, forecast revenue from the LVC has plummeted year on year – a sure indicator that the volume of redevelopment continues to drop.
The ACT government budgeted for LVC to bring in $23 million in 2012 and missed the mark. After lowering its expectations to $14 million this financial year, it still hasn’t managed to meet budget.
The Territory’s Consolidated Financial Report for June 2015 finds that LVC revenue has raked in just $11.35 million. That might sound like a lot – but it is actually $2.8 million below budget.
What the LVC has done successfully is pull the handbrake on investment and renewal in our city centre.
Our office vacancy rate remains the second highest in the country. To a large degree, the LVC prohibits the adaptive reuse of empty, redundant C and D-grade commercial offices. Unless the ACT Government adopts a more realistic taxation policy, these older buildings will continue to deteriorate and the people of Canberra will be the long-term losers.