The following article appeared in the Sydney Morning Herald on April 5, 2005
A government agency transferred prime real estate to a Sydney club for $2 – and helped it save taxes.
Jock Cheetham and Ross Duncan report.
‘Big trots – crowd runs wild,” roared The Sun-Herald’s front page on February 14, 1960. “Part of a record crowd of 50,346 people ripped down a fibro wall at Harold Park last night to watch NZ pacer Caduceus win the Inter-Dominion pacing championship.”
It seemed half of Sydney had converged on Forest Lodge, near Glebe, to witness the £15,500 event, billed as Australia’s richest horse race. Those who weren’t pulling down the fibro wall “climbed lamp posts, stood on grandstand roofs and on the roofs of cars to watch the race”, the paper reported.
The crowd “hooted” when the second-placed Apmat’s driver lodged a protest. But the “hoots turned to cheers” when stewards dismissed the protest six minutes later. There was never a night like it at the trots – and there hasn’t been since. Half a century later, the track’s still there, but the biggest prize may be a chunk of land next door.
These days the club’s directors are involved in another form of speculation: the property game.
The heritage-listed “Rozelle” tram sheds next to the track are set to be developed into a huge apartment complex.
The club stands to make $11 million from selling the land to a development company, the club’s directors reportedly told members. The developer, Murlan Consulting – led by Iain Murray, world champion sailor and yacht designer – plans to turn the tram sheds into 122 units, commercial spaces and a child-care centre.
Once the second-biggest depot in Sydney, the Rozelle tram sheds housed 200 trams in its heyday, servicing Glebe Point, Leichhardt and Balmain until 1958. The 1904 building is one of the most complete tram buildings left in the city, still housing six old corridor-style trams under a rusting roof.
The controversial plan has galvanised parts of the community, which has organised opposition – despite the developer’s promise to preserve a significant part of the building and restore and display some of the trams. But the controversy runs beyond community concerns over the $53 million development to how the club came to own the property.
Five years ago the NSW Harness Racing Club, which runs Harold Park, paid $1 for the tram sheds site, which is about the size of a small football field. An adjacent patch of gravel, where horse trailers and cars park on race nights, was thrown in for another $1.
The story behind what appears to be one of Sydney’s best land deals dates to the 1980s. The Harold Park club says it paid full price for the land years before the $2 deal. The club’s chief executive from 1988 until early last year, Peter V’landys, says the Racecourse Development Fund granted Harold Park club money to buy the land in 1988 and ’94. The fund was a portion of TAB profits set aside for industry investment.
To avoid duties, the fund wanted the Government authority that oversaw the industry, Harness Racing NSW, to own the land, V’landys says. “But the money that was allocated went to the club,” he says of the original sales in ’88 and ’94. “So Harness Racing NSW didn’t actually pay for it, even though it went into that organisation’s name.” Harness Racing NSW agrees with this version of events.
Because Harness Racing NSW was a statutory authority it “didn’t have to pay stamp duties”, V’landys says. “You didn’t have to pay land tax and council rates, etc. So it was much more cost effective.”
V’landys was quoted in the club’s paper, National Trotguide, in 1996 as saying: “By taking this approach the club saved $70,000 in stamp duty and $50,000 a year in council rates.”
In the 1990s, the tax-exempt Harness Racing NSW was accountable to the Government. In 2002 – at the time the development deal was being finalised – the law changed and Harness Racing NSW became a commercial body not subject to government control. (Its regulatory work was split off into a separate body, the Harness Racing Authority.)
The club eventually wanted to own and develop the two parcels of land, paying a $2 fee in 2000 to have the land transferred from Harness Racing NSW. “It was transferred for that amount because the club paid for it in the first place,” V’landys says. The state racing minister at the time, Richard Face, approved the deal.
The land had been bought in two lots in 1988 and 1994 for a combined cost of $2.3 million. For stamp duty purposes, the site was valued in 2000 at $1.6 million – $700,000 less than the original purchase prices.
The club’s chief executive, John Dumesny, says the site was independently valued. “You have to take into account what the zoning is and also that it was then within boundaries of Leichhardt Council,” Dumesny says.
Four years later the land is expected to sell for $11 million. Boundary changes have since placed the site within the City of Sydney council area.
An Office of State Revenue representative declined to comment on the purchase because “privacy legislation prevents the OSR providing details on individual cases”. A spokesman for the state Treasurer, Andrew Refshauge, said: “We can’t discuss tax details for individual land owners.” A spokesman for the Minister for Gaming and Racing, Grant McBride, declined to comment.
The club is now in a dispute over unpaid council rates for a period in the 1990s when Harness Racing NSW owned the land. The Herald understands the amount sought is $120,000 for 1995-2000.
City of Sydney council is “obtaining legal opinion as to the club’s rateability for the period in question”, a council spokesman says. The club says it has paid rates since owning the land in 2000. “We’re living with the legacy of when these clubs were handed public space on a platter as a public good,” says Maire Sheehan, Leichhardt’s mayor from 1999 until last year.
“There was local employment, local industry and community participation, including great crowds at the events. That’s all gone.
“Now you’ve got a small group of people holding on to land and operating it virtually like a private fiefdom.”
Dumesny disagrees: “Whatever money comes from the sale of that piece of property can only go back into harness racing. It can’t be split between members or anything like that.”
The Glebe Society is one group leading opposition to the developments. Its objections include increased traffic, heritage impact and no benefit to the community of rezoning open space. The society’s Andrew Craig says it would like to see the tram sheds become a community arts centre as part of an arts-led recovery for Glebe.
The club is under pressure from within, too. “Harold Park is the best 800-metre track in NSW, but we need at least 1000 metres,” says Paul Fitzpatrick, a trainer, former driver and regional club president, as he leans on a rail to watch a race on a recent Friday evening.
There has been talk of selling the site and moving west towards the demographic heartland of harness racing for at least 30 years. Although the club is officially staying put, the talk continues.
Fitzpatrick watches as one of his horses races by. It’s drawn a wide lane, which usually means a bad result – one of the drawbacks of the track, he says.
“The Harold Park site should be sold and a better track developed elsewhere for the future and betterment of harness racing,” he says.
The track cannot be lengthened any further, so the industry must leave Harold Park, says Wally Mann, a trainer, owner, breeder and former administrator. “As long as there’s a public perception of horses being locked up and not having a chance if they draw a bad barrier on half-mile tracks, racing will be held back,” he says. He believes harness racing should be based at the Sydney International Equestrian Centre at Horsley Park, instead of it becoming a thoroughbred training centre.
The club believes Harold Park is the best track and premises in the southern hemisphere, having spent $20 million on the site in 1996, Dumesny says. The stables need upgrading, however, and much of the land sale proceeds will be spent on stables, he says.
How much upgrading is debated within the club. John Starr, a club member and horse owner, says the club told members the estimated cost of building stables had risen from $5 million last year to $9 million. “We can’t see why you’d want to spend that much money on the stables,” says Starr, who is also a property consultant who runs a chain of 36 real estate agencies.
The club says there has been no tender for the stables yet and declined to give a cost estimate.
Harness Racing NSW does not have a position on the development, says its chief executive, Max Pool. The proceeds of the sale, however, should be used in the interests of the industry, he says.
The club says the masterplan is to leave Harold Park as a racecourse for the foreseeable future. V’landys says while he appreciates and respects any member’s viewpoint, it is unfortunate the critics “look at the negatives of all the things the club has done over the years and not the positives”.
These include establishing a registered club and getting 200 poker machine licences that are now worth tens of millions of dollars, V’landys says.
Fitzpatrick smiles as he heads off towards the stables. “Old horses, like old people, get slower – but they get stronger.” Later, one of his horses, Push Leads To Shove, wins the final race.
PUBLIC PROPERTY TURNED PRIVATE
The first blocks of land on the former Prince Henry Hospital site at Little Bay are expected to fetch $1.5 million each at auction on April 23. The Government’s $400 million masterplan includes 850 new dwellings for the 85-hectare coastal site.
The Government plans to tear down the residential towers in Waterloo and privatise $540 million worth of public assets. The Redfern-Waterloo Authority will oversee the process, which includes the possible sale of Redfern police station, Redfern Public School and the Rachel Forster Hospital site.
In 1996 the Government sold eight hectares at Walsh Bay to a Transfield consortium. The $650 million Mirvac redevelopment created 350 dwellings.
Plans to sell the Hunters Hill, Marrickville and Dulwich Hill high school sites lapsed amid controversy, but the Maroubra Bay High School site was sold to Lycee Condorcet, the French School of Sydney, for $11 million.
In 1995 the Government sold the 5.9-hectare site of the Royal Alexandra Hospital for Children in Camperdown to Sterling Estates for $26 million.