City of Newcastle has confirmed it will spend at least $35 million in rent on its new administration building over the next 15 years.
After months of pressure from the Newcastle Herald and some councillors, the council on Friday made public details of its lease with developer Spartohori for the six-level office building in Stewart Avenue.
The lease shows the council will spend at least $2.835 million plus GST in the first year of the 15-year deal to rent just over half the building, including $482,509 on outgoings and $272,250 on 99 parking spaces.
The council forecasts it will recoup about $500,000 a year by subletting one floor plus 20 car spaces, resulting in a net annual spend of $2.335 million.
That equates to a 15-year total of $35.025 million, excluding GST, a figure likely to grow beyond $40 million after annual inflation of 2 per cent. The lease caps inflation increases at 3 per cent.
Independent councillor Kath Elliott said on Friday that ratepayers "deserved to know what their council is spending their money on".
"This is, after all, one of the biggest contracts ever awarded by City of Newcastle," she said.
A council statement issued on Friday said Spartohori had agreed to waive its right to confidentiality over the lease agreement after a direct request from lord mayor Nuatali Nelmes.
The council has repeatedly refused to detail the full price of its move from the Civic precinct, but public documents show it has cost at least $10 million, excluding ongoing rent.
The council said in April that a business case prepared by commercial real estate services firm CBRE showed the move would benefit ratepayers by $13.1 million over 25 years, but it refused to release the document.
Cr Nelmes said two weeks ago that most ratepayers supported the move and that it had been a "frugal exercise".
Cr Elliott wrote a scathing opinion piece in the Newcastle Herald on Thursday in which she questioned whether the council was in breach of the Local Government Act and Government Information (Public Access) Act by not including the lease details in its publicly available contracts register.
Council chief executive officer Jeremy Bath this week rejected a notice of motion from the four Newcastle Independents councillors calling on the council to release details of the rental agreement plus the full costs of the move.
Mr Bath rejected the motion because making public the details of a confidential financial agreement with a third party would be "unlawful".
He made the same ruling on a similar notice of motion from the Independents in April.
Cr Nelmes said on Friday that Spartohori had been clear when negotiating the lease in 2017 that it wanted the terms to remain confidential.
"This is standard business practice, noting he was negotiating leases with other parties for the same building," she said.
"Councillors voted in support of the recommendation to relocate the city's administration centre to 12 Stewart Avenue and to maintain confidentiality on this information on commercial grounds.
"With the owner having now finalised all leases for the building, I considered it a fair and reasonable time for the lease to be publicly available."
Cr Elliott said the council's decision to release the lease details was long overdue.
"I thank the lord mayor and the building owner for finally releasing the rental figure and realising, at last, that this kind of transparency is for the public good," she said.
"I remain concerned that the full extent of costs associated with the move to Stewart Avenue have not been made available to the public.
"The $9 million fit-out is just one part of the total costs incurred to date. How much has been spent on IT, consultants, project managers, removalists?
"Has council forked out $100,000 in a performance bonus to the contractor to deliver on time?
"Why can't these figures and information be collated in one accessible place for scrutiny by ratepayers?
"Would the lord mayor accept an independently funded forensic accountant to review all the figures to finally put this issue to bed?
"Why does the CEO continue to refer to the business case by CBRE but not release this publicly as well?"
The Stewart Avenue building includes a new sixth floor containing executive suites for the lord mayor and chief executive officer plus communal indoor and outdoor areas for staff.
Staff moved in last week, but the ground and top floors will not be completed until February.
The council said in its statement that it would pay $276.92 per square metre for the office space, which was "significantly less than the average gross A Grade rental in the Newcastle CBD of $500/m2".
It also has first right of refusal, after the mortgagee, to buy the offices.
An industry source said A-grade office space in Newcastle was fetching $400 to $450 per square metre. The owners of an A-grade office development planned for 130 Parry Street are advertising rents at $395.
Cr Nelmes said the council's rental agreement was an "excellent result for the city".
Mr Bath said the move would improve the council's efficiency and remove the need for expensive maintenance bills at its former administration building.
The sale of the "roundhouse" had netted $16.5 million and selling the now-vacant Fred Ash building would generate more income.
"In recognising the financial benefits of leasing our head office over owning it, City of Newcastle has done what many others locally did years ago," he said.
"Hunter Water, the Newcastle Herald, ANZ, Telstra, RMS, Coles, Kmart, Big W, David Jones and Woolworths have all recognised that there are significant financial gains from leasing a building rather than owning it."