According to a confidential business case used to justify council's move to new rented headquarters in Stewart Avenue, Newcastle West, the shift would also increase staff productivity, decrease absenteeism and act as a catalyst for broader city development.

Now a Newcastle Herald investigation can reveal that calculations done by council's finance department found that the shift would actually cost ratepayers money over the long term.

According to the April 2019 report by consultants CBRE, sections of which were obtained under freedom of information laws, the finance staffers' analysis was "refined" as part of the business case.

CBRE, in conjunction with City of Newcastle, revised the net present value (NPV) cashflow modelling done by the council staffers to factor in additional economic, social and environmental considerations.

The report, that the council said CBRE threatened legal action over if it was made public, concluded there was a "compelling financial benefit" and "sound rationale" for the move.

"Overall, the financial analysis (excluding productivity gains etc) has determined a relatively modest cost over the long term associated with the relocation to 12 Stewart Avenue," the report states.

"This is more than offset by other financial benefits, including productivity gains achieved."

It's unclear exactly how much the finance staff estimated the move would cost, or how the calculations were revised as all of the figures and analysis in the version of the business case provided to the Newcastle Herald were blacked out.

The heavily redacted 21-page report includes case studies of other organisations, including City of Melbourne, outlining savings from increased productivity due to shifting into higher quality offices.

It details how millions can be saved annually due to everything from faster typing speeds, to reduced sick leave and cheaper electricity bills.

But there are no figures relating to the Newcastle move left in the report, not even the $13.1 million savings spruiked by the council to sell the project, after City of Newcastle's legal staff successfully argued the information should be kept secret or council would breach its contract with CBRE.

According to the report, CBRE was engaged to consider the financial and economic impacts associated with the move to Stewart Ave.

It states there was "limited scope" to renovate the former City Administration Centre, known as the Roundhouse, due to its inefficient design and the Frederick Ash buildings due to heritage considerations

"NCC is seeking to relocate to a new office building at 12 Stewart Avenue which is at the west end of Newcastle, underpinned by a broad business case supporting this move," the report reads.

One of the "key drivers" for the shift was concern that City of Newcastle "continued to lag a majority of Sydney-based local councils in terms of quality work environment, support services and staff amenities, and functional public venue for the local community".

"Both buildings [the Roundhouse and the Frederick Ash Building] which are more than 40 years old do not represent the image of a progressive and expanding regional economy," the report states.

According to the CBRE report, which was later updated to include the sale costs of the Roundhouse and Frederick Ash Building, a comparison between moving to Stewart Ave and remaining in the old buildings "forms an incomplete assessment".

"The financial assessment needs to include quantification of the productivity and reduced absenteeism benefits which are typically achieved in relocating to a contemporary workplace environment which focuses on employee engagement, collaboration and overall morale," the report reads.

"These benefits are well documented in past studies and empirical data - both by local and overseas studies. Once these benefits are incorporated in the financial analysis, there is a positive cost saving of some $[redacted] achieved through relocation."

CBRE examined the move using a "triple bottom-line" analysis that included predictions on economic, social and environmental gains associated with the shift.

The economic impacts listed as part of the analysis involved forecasting productivity gains, sub-letting income and estimating rent savings from being a "first mover" to Newcastle West.

The social impacts included estimating gains from reduced staff absenteeism and turnover, disability inclusion and connectivity with the community.

Environment impacts included saving on energy and cleaning costs, recycling and sustainability initiatives and "environmentally friendly place making".

According to the report, the 'triple bottom-line' analysis found the "financial analysis alone provides a 'base-line' justification for the relocation, demonstrating a net positive financial result over 'status quo'".

It's unclear exactly what additional financial factors were added to the calculations to result in a cost saving as all the figures were redacted.

A City of Newcastle spokeswoman declined to answer this week if any analysis had been done to measure productivity change and absenteeism rates since staff moved into the new headquarters.

There are three pages of appendices at the back of the report titled 'NPV Analysis', all of which is blacked out after the Information and Privacy Commission NSW ruled making the detail public would be a breach of contract between City of Newcastle and CBRE.

According to the council, CBRE initially objected last year to all of the report being made public and then changed its mind in March objecting to "specific information" being disclosed.

All financial analysis was removed from the report, even the original council finance staff's estimated cost of the move.

Council says the controversial fit-out of the six-storey, A-grade office space at Stewart Avenue cost ratepayers $17.6 million.

The spokeswoman refused this week to reveal how much had been spent on IT as part of the move and initially did not answer a question about whether the $17.6 million included spending on IT.

When asked to clarify, she said the $17.6 million included all IT spending.

"The business case supporting the move to 12 Stewart Avenue from its previous four separate offices showed ratepayers will benefit by $13.1 million over 25 years," she said.

"These savings were based on all costs associated with the move including IT."

According to annual reports and the March Quarterly Review 2021, council has spent $25.48 million on IT since 2017, and the budget for next financial year forecasts further expenditure of $6.345 million.

Internal council documents obtained by the Newcastle Herald reveal a potential spend of $3.4 million listed under the heading "City Change IT Estimate".

City Change was the name council gave to its move to Stewart Ave.

The planning document indicates that cost would cover IT equipment, audio visual services and connectivity.

It then goes on to list "City Change dependencies" as an additional $2.3 million, stating that the strategic plan initiatives are "to be brought forward from future years to support the move to 12 Stewart Avenue".

But council's spokeswoman said this week the projects were not related to the move and declined to answer if they had been completed.

According to the document, the IT dependency projects included transition to target infrastructure, transition to modern workforce, eliminating paper and improving document and records management.

Council's chief executive Jeremy Bath referred publicly in late 2017 to the "one-off $7 million cost of the relocation", and councillors approved the move based on an original business case which included that figure.

In October 2019, the Newcastle Herald reported that council had confirmed it would spend at least $35 million in rent on its new administration building over 15 years.

Sections of the CBRE business case can only be made public now because the Newcastle Herald made an application in August last year for the report under the Government Information (Public Access) Act.

After the application was refused by council, the Herald appealed the decision to the NSW Information and Privacy Commission (IPC).

Council had ruled that the whole report was obtained in confidence and releasing it could spark legal action from CBRE and impact it's ability to function because it might not be able to obtain consultants in future.

In January, the IPC found council's decision was "not justified" and recommended a new decision be made because council had not placed enough weight on the public interest of releasing the report.

Two months later, council released a heavily redacted version of the report, that had all figures and financial analysis relating to the move blacked out.

The Newcastle Herald again appealed the decision to the IPC and council's decision was ruled justified after it argued successfully that the report was confidential and releasing it could result in legal action by CBRE for breach of confidence and would impact council and CBRE's ability to conduct business.

"As the Newcastle Herald is aware, a small amount of the business case was withheld following a request from the business case author CBRE due to its commercial interests being compromised," council's spokeswoman said.

"In April the Newcastle Herald asked the Information and Privacy Commission to make the full business case public.

"As the Herald is aware the IPC rejected the Herald's appeal on four separate grounds."

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