Annual Report 2018–19

Renewal SA is a critical delivery agency that initiates, supports, undertakes and promotes strategic property based initiatives aligned to the Government’s policy objectives. Renewal SA continues to support the government’s growth agenda for the state through a focus on property development that build’s new industries, infrastructure and communities.

As the state government’s leading urban development agency, Renewal SA has delivered continued progress on flagship developments:

• Lot Fourteen – the former Royal Adelaide Hospital site on North Terrace being transformed into a seven-hectare innovation and culture precinct

• Tonsley Innovation District – being the revitalisation of the former Mitsubishi Motors assembly plant on South Road. Tonsley now has more than 1700 FTEs on site, 6,500 students each year and the first residents will move in from July 2019
• Bowden – the rejuvenation of a derelict 16-hectare industrial site off Park Terrace into a thriving residential and mixed-use precinct, now home to more than 1,000 people
• Lightsview — our multi-award-winning residential development in Adelaide’s north-east suburbs in joint venture with Peet.

From a financial perspective, the underlying operating result for 2018-19 before non-cash valuation adjustments was a profit of $13.2 million which is $1.7 million better for the Urban Renewal Authority than budget before valuation adjustments. Land sales of $66.8 million were achieved across our projects. Capital expenditure of $108.8 million was invested into activities ranging from civil works, building refurbishment, environmental remediation and road construction, creating significant employment and contracting opportunities for the local property development sector.

The majority of this capital investment ($72 million) supported further development at Lot Fourteen to transform the former Royal Adelaide Hospital site into a neighbourhood of ideas, entrepreneurship, research, art and culture. Significant progress has been made this financial year in refurbishing heritage buildings on Frome Road and North Terrace and undertaking the major demolition program to remove obsolete hospital structures.

The strategic guidance provided by the Urban Renewal Authority Board of Management has been integral to Renewal SA’s success. I wish to acknowledge that after serving seven years in the role, Bronwyn Pike will conclude her term as Presiding Member on 30 July 2019. Board Members Phil Baker, David McArdle and Terry Groom will also conclude their terms in July 2019. I would like to again thank the each of them for the valuable contribution they have made to Renewal SA over the years. I also want to acknowledge the important contribution made to the Board by the late Geoff Knight, who continued to attend meetings until August 2018. Following these significant departures, the State Government has announced the appointment of Anne Skipper, Phil Rundle and Kimberley Gillan to the Board of Management, effective from 1 August 2019. Current Board member Con Tragakis will succeed Bronwyn Pike as the new Presiding Member. The Board will continue to benefit from the experience of two other continuing members, Jim McDowell and Helen Fulcher. These new appointments bring to Renewal SA considerable local experience and strategic knowledge of the residential, retail and commercial property sectors in South Australia.

The state government has a clear growth agenda for South Australia, and Renewal SA will continue to play a critical role in stimulating public and private sector investment in real property to drive economic growth and deliver projects of public interest.

Mark Devine
A/Chief Executive

Our purpose

The Urban Renewal Authority was established under the Urban Renewal Act 1995 with the primary purpose to initiate, undertake, promote and support strategic urban development activity to help deliver key strategic priorities of the South Australian Government, particularly the new urban development directions outlined in the 30 Year Plan for Greater Adelaide.

Renewal SA is responsible for leading and coordinating urban renewal activity to ensure that the state’s future employment and housing needs are met through well planned, affordable and vibrant urban development located near transport, employment, education and other services.

Our values

Our values convey how we work with each other, our customers and our stakeholders.

They provide a framework for making sound decisions and actions that ultimately affect the quality of service we deliver to the South Australian community.

The following values are integral to guiding the implementation of our Strategic Plan.

• Accountability
  We hold ourselves responsible for the work we deliver and
  how we deliver it.
• Unity
  We embrace a team spirit. We seek opportunities to support each other’s objectives and understand and align ourselves
  to one vision.
• Respect
  At Renewal SA we are courteous, listen and communicate openly. We value diversity and model ethical and professional behaviour towards all people.
• Excellence
  We are committed to excellence in everything we do.
• Fun
  We have fun at work and celebrate our success.

Our functions

The key functions of Renewal SA as outlined in the Urban Renewal Act 1995 are to:

• initiate, undertake, support and promote residential, commercial and industrial development in the public interest
• acquire, assemble and use land and other assets in strategic locations for urban renewal
• promote community understanding of, and support for, urban renewal by working with government agencies, local government, community groups and organisations involved in development
• undertake preliminary works (including the remediation of land) to prepare land for development and other functions such as planning and coordination
• encourage, facilitate and support public and private sector investment and participation in development of the state
• acquire, hold, manage, lease and dispose of land, improvements in property.

Changes to the agency

• social housing functions previously assumed by Renewal SA have been transferred to the SA Housing Trust on 1 July 2018. As part of this change, 165 Renewal SA employees were transferred to the SA Housing Trust
• the dissolution of the Riverbank Authority was gazetted on 19 July 2018. The assets and liabilities of the Authority at the date of dissolution were subsequently transferred to Renewal SA
• administration of the Capital City Committee transferred to the Department for Premier and Cabinet, effective 1 July 2018.

Our Minister

Agency contribution to whole of Government objectives

The Government of South Australia is committed to change that creates more jobs, lower costs for families and businesses and better government services.

Renewal SA has a targeted and tangible contribution towards the government’s objectives through:

• initiating, undertaking, promoting and supporting strategic urban development activity to help deliver key strategic priorities of the South Australian government
• fostering urban regeneration
• facilitating the supply of strategically located residential, commercial and industrial land to support South Australia’s economic and employment growth

• enabling development opportunities for the private sector through access to government land holdings
• conducting detailed precinct planning through consultation with government agencies, local communities, councils and other stakeholders
• identifying and assembling development sites and engaging early and often with local communities, local government, other government agencies and the private sector to facilitate quality, well designed, affordable and sustainable developments.

Performance at a glance

Innovation precincts

Lot Fourteen

Lot Fourteen is being transformed into a world-class neighbourhood for innovation, entrepreneurship and research in technology and creative industries. Renewal SA has worked closely on Lot Fourteen with other key agencies including the Department of the Premier and Cabinet and the Department for Innovation and Skills. These agencies led by Premier Steven Marshall as the lead Minister for Lot Fourteen, have delivered the significant progress now evident on the site.

For its part, Renewal SA has undertaken one of Australia’s largest demolition programs over the past 12 months to remove redundant hospital buildings from Lot Fourteen, while also refurbishing and retaining the magnificent heritage buildings fronting Frome Road and North Terrace. Stage 1 of the demolition program involved the demolition of the 1960s-era East Wing building near the Adelaide Botanic Garden and was completed during the year. Stages 2 and 3 are now underway to create more space for future development activity.

During 2018-19, approximately 70 per cent of available commercial space within these heritage buildings was committed or is in negotiation with prospective tenants aligned to Lot Fourteen’s target industry sectors. This included providing accommodation for the Office of the South Australian Chief Entrepreneur and the Defence and Space Landing Pad. Major progress was made in the construction of new headquarters for the Australian Space Agency. By June 2019, there were approximately 250 people working in the Lot Fourteen neighbourhood.

The Adelaide City Deal was announced during the year with the following Commonwealth commitments in relation to Lot Fourteen:

• $85 million toward the Aboriginal Art and Cultures Gallery
• $30 million toward the International Centre for Food, Hospitality and Tourism Studies
• $20 million toward the development of an Innovation Hub for Lot Fourteen
• $6 million toward a Mission Control facility associated with the Australian Space Agency, and a further $6 million toward a Space Discovery Centre

Renewal SA is also coordinating the delivery of the Lot Fourteen Master Plan to maximise connectivity to the Botanic Garden and the East End to allow greater public access across the entire site from North Terrace to the River Torrens.

Tonsley Innovation District

To the south, Renewal SA continues with the redevelopment of the 61-hectare former Mitsubishi Motors manufacturing site, transforming it into the award winning Tonsley Innovation District. This key South Australian Government project is pivotal to facilitating growth in the high value manufacturing sector.

Tonsley brings together leading-edge research and education institutions and established businesses like SAGE Automation and Micro X, in addition to start-ups, business incubators and accelerators who connect and collaborate in Australia’s leading innovation district.

The Tonsley project progressed significantly in 2018-19, including commencement of several new developments, securing a number of new tenants and delivering further on the innovation district model, transforming this site into an active and collaborative business and residential community.

Committed and commenced developments include development of Tenancy 8 and 9, the Boiler House adaptive reuse and neighbouring retail development, relocation of Bedford Medical Centre, a short-stay hotel and mixed-use development and development of a multi-deck car park progressing Tonsley’s transport and parking strategy.

In 2018-19 Tonsley has helped expedite business growth with several existing tenants securing additional space at Tonsley to accommodate their growing operations. Micro-X has doubled its assembly line space and secured accommodation in to manufacture cutting-edge carbon nanotube x-ray tubes. AZZO have also acquired additional space and negotiations are ongoing with the SAGE Group to expand at Tonsley. Meanwhile global giant, Tesla, joined the Tonsley business community and set up their Asia Pacific service and maintenance hub, the first of its kind outside of the United States.

The Peet residential development, Tonsley Village, also progressed well during 2018-19 with many apartments and terrace homes sold and under construction and the first residents now living on site. One of these residents also works at Tonsley and is an apprentice at TAFE SA on-site, demonstrating the potential for Tonsley to deliver on new live, work and play standards.

The innovative Tonsley District Energy Scheme was executed with Enwave Australia in 2018-19, which will see a large solar PV installation on the Main Assembly Building (MAB) and TAFE SA roofs, along with battery storage and smart metering technologies. On top of that, the Australian Gas Infrastructure Group continues their work on the Australian-first hydrogen production and distribution facility at Tonsley.

Technology Park Adelaide

About 12 kilometres north of the city is a similar size innovation precinct also under the stewardship of Renewal SA — Technology Park Adelaide. Technology Park Adelaide is a vibrant world-class business community of innovative, high tech organisations.

Anchored by global companies such as Codan, Daronmont Technologies, Lockheed Martin, Ellex Medical Lasers, Saab Australia and Tindo Solar, the park is now home to over 100 companies.

With an established hub of defence and aerospace, advanced electronics, health, training, consulting, and information communication technology companies, Technology Park Adelaide provides a thriving environment for business collaboration and networking located on 65 hectares adjacent to the world-class Mawson Lakes residential development.

Residential and mixed-use

During 2018-19, Renewal SA continued to invest heavily in the development of not only Lot Fourteen and the Tonsley Innovation District, but its other flagship projects at Bowden, Port Adelaide, Playford Alive and Woodville West.

While Renewal SA’s urban development activity over the past 12 months delivered real economic and employment results for the state’s construction-related businesses, the significant investment undertaken successfully leverages new private sector investment (such as residential construction at Bowden, Playford Alive, Woodville West and Tonsley Innovation District).

During the year, significant planning and work has been undertaken toward the rejuvenation of the Bowden Heritage Precinct. The redevelopment of the former Brompton Gasworks site is the next step in transforming this former six-hectare industrial area into a great place to live, work and shop. Demolition of obsolete and non-heritage structures started in late August 2018 and continued through to February 2019, with remediation now the focus.

At the Port, private developers Cedar Woods and Starfish Developments continued to deliver on the plans for their respective Fletcher’s Slip/North West and Dock One/Port Approach (South) precincts.

In August 2018, Starfish Developments was appointed to unlock the waterfront Dock One area, making way for 650 new homes, a new pedestrian bridge spanning Dock One, the adaptive reuse of the six-storey former Department of Marine and Harbours Building a new community garden and generating in excess of $200 million in private investment.

Cedar Woods has commenced construction of stages 1 and 2, the first of four stages totalling approximately 15 hectares. When complete, the four stages will include 500 dwellings, adaptive reuse of the Fletcher’s Slip State Heritage Place, more than 20 per cent public open space, affordable homes, and second-road access to the existing New Port Quays
development to Semaphore Road.

This activity was further supported by Renewal SA releasing to the market one of the area’s last significant land parcels, Port Approach North, through an expression of interest process in June 2019. The relocation of Incitec Pivot from the Port Approach North precinct to outer Port Adelaide has provided the opportunity to release this land for redevelopment.

Commercial and industrial land

During the year, Renewal SA continued to supply strategically-located commercial and industrial land to support South Australia’s economic and employment growth, including Edinburgh Park, Northern Adelaide Food Park and Seaford Industry Park.

In addition to land held for other identified projects, Renewal SA manages a portfolio of 2,865 hectares of commercial and industrial land on behalf of the Government of South Australia, including 728 hectares within designated industrial projects.

A total of 111.6 hectares of commercial and industrial land valued at $16.736 million was sold in 2018-19 including parcels of land at Gillman, Mawson Lakes, Osborne, Seaford and Wingfield for employment-generating outcomes (totalling 13.9 hectares) and in Bowering Hill for rural living outcomes (totalling 97.7 hectares).

These sales generated hundreds of jobs and tens of millions of dollars of new private sector investment in the State’s commercial and industrial sectors.

Community participation

The past year also saw another excellence performance from Renewal SA’s Works Program. This community-based initiative is now in its tenth year and extends the benefits of the agency’s urban renewal activities by creating employment, work experience and training placements.

These opportunities were directly linked to the $100 million in contracts awarded by Renewal SA to the private sector. During the 12-month reporting period, the Works Program provided 241 people with pathways to employment through education, engagement, training and work experience across Renewal SA’s flagship projects and communities.

Renewal SA engages with organisations and the community to place people at the centre of urban planning and design. Almost 58,000 people were engaged across all of our project activity through face-to-face community forums, newsletters, electronic mail or online tools.

During the 2018-19 financial year Renewal SA led a number of activities across its flagship projects to drive visitation, engagement and future private investment. More than 10,000 visitors were attracted to the Tonsley Innovation District through a major partnership event with Science Alive. Five thousand members of the local community attended the Playford Alive Fun Day in November 2018 as an indication that the community spirit is truly alive.

The Port attracted more than 80,000 people gefting their skates on at the local Winterfest activation in July 2018, while a further 35,000 people visited Lot Fourteen through a range of Renewal SA and externally-led activations and events.

Infrastructure and planning activity
During the 2018-19 financial year, Renewal SA also progressed the following significant ongoing programs:

• The Adelaide Railway Station is set to transform into a unique destination that excites and connects people. On behalf of the state government, Renewal SA is overseeing and managing the revitalisation of the Adelaide Railway Station, including the $2.7 million restoration of heritage façades and features, the upgrade and expansion of commercial tenancies and the negotiation of future leasing opportunities. Funding for the works was confirmed in the 2019-2020 State budget handed down in June 2019. Renewal SA also agreed a scope of works with the City of Adelaide for upgrades to the North Terrace footpath and public realm adjacent the station.

• Extensive community engagement program ahead of proposed structure planning at Aldinga and Oakden/Gilles Plains. Renewal SA owns approximately 94 hectares of land in Aldinga with the potential to support a new community of around 1,000 homes while at Oakden and Gilles Plains, the state government owns approximately 79 hectares of land which could accommodate some 1,500 homes, subject to rezoning.Renewal SA’s significant landholdings at Osborne are vital to the growth of South Australia’s defence sector and the agency continues to work closely with the Commonwealth Department of Defence to ensure the Australian Navy’s shipbuilding facilities are accommodated, along with associated maritime industries. During 2018-19, Renewal SA worked closely with Australian Naval Infrastructure and
  Defence SA to resolve land tenure for the expanded Osborne Naval Shipyard. Renewal SA also commissioned a master plan review by independent planning consultants to prepare an updated Master Plan for the northern LeFevre Peninsula.

• The Adelaide Festival Plaza is currently undergoing major redevelopment with $1 billion of public and private sector investment with DPTI as project lead for the state government. During the year, Renewal SA worked to finalise the design for the integrated development with DPTI, Walker Corporation and other key stakeholders under Walker’s development agreement. Leases have been granted to Walker Corporation for the car park and office building and related demolition, excavation and piling works are well progressed. SkyCity commenced work on site for its expansion project in 2018 and is on track to reach completion in late 2020.

Employment opportunity programs

Agency performance management and development systems

Executive employment in the agency

Executive Employment data from previous years is available on Data.SA.

The Office of the Commissioner for Public Sector Employment website provides further information on the breakdown of executive gender, salary and tenure by agency.

Work health, safety and return to work programs

*Number of claimants assessed during the reporting period as having a whole person impariment of 30% or more under the Return to Work Act 2014 (Part 2, Division 5).

**Before third party recovery.

Work Health and Safety and Return to Work Performance data from previous years is available on Data.SA.

Financial performance at a glance

The underlying operating result for the year ended 30 June 2019 is a profit of $13.2 million, excluding non-cash asset valuation adjustments. After these valuation adjustments, which aggregate to $219.5 million, the reported Comprehensive Result
is a loss of $206.3 million.

The asset valuation adjustments are principally driven by non-cash accounting adjustments that flow from the Government’s decision to provide capital funding for several development projects by way of equity contributions. In past years, capital funding for those projects was provided to Renewal SA as Community Service Obligation (CSO) payments.

As a result of the change in the character of the funding provided, this funding can no longer be included in the valuation of inventory assets as was the case in prior years. As a result, the carrying book values of the assets concerned have declined.

It is important to note that this change does not adversely impact Renewal SA’s future overall cash flow and financial viability in that the required cash funding continues to be provided to Renewal SA and has been included within the 2019-20 State Budget. The Statement of Financial Position shows a Net Asset and Total Equity of negative $63.9 million as at 30 June 2019. This is not reflective of a going concern issue given that Renewal SA’s expected future cash flow has not been adversely impacted. In the absence of the non-cash decline in asset values, the net asset position would be positive $155.5 million as at 30 June 2019.

It should also be noted that Renewal SA’s inventory assets are recorded at the lower of cost and net realisable value, in accordance with the Accounting Standard AASB 102 – Inventories. The net realisable value of Renewal SA’s inventory assets are estimated to be significantly higher than the reported book value.

A summary of the financial result is presented below. Full audited financial statements for the year ended 30 June 2019 are attached to this report.

Risk and audit at a glance

Renewal SA has in place a robust risk management framework. The objective of this framework is to ensure an appropriate risk culture prevails with a high level of risk awareness throughout the organisation. The framework includes formalised risk management processes to manage risk in line with contemporary risk management standards whereby risks are identified, assessed and assigned to risk owners with risk treatment and mitigating strategies required.

There is also in place appropriate risk reporting to the Executive, the Audit and Risk Committee and the Board of Management.

The Urban Renewal Authority Board of Management has an established Audit and Risk Committee whose principal functions are to:

• assess the quality of financial reporting and the effectiveness of internal controls;
• oversee the administration of the Risk Management Framework;
• maintain an effective and efficient internal control environment; and
• advise the Board on procedures and ways of working within Renewal SA to align these with the organisation’s overall strategic direction.

The Audit and Risk Committee comprises members of the Board of Management.

Renewal SA’s Internal Audit function is provided by the Department of Human Services Internal Audit team, under a Service Level Agreement. The Internal Audit work plan is reviewed and approved by the Audit and Risk Committee, with all findings reported to the Committee.

Strategies implemented to control and prevent fraud

Renewal SA’s fraud policies include a range of internal controls to ensure employees, volunteers, agents, contractors, sub-contractors and suppliers of goods and services are aware they must refrain from engaging in any activity that is, or could be perceived as, fraudulent or unethical.

Renewal SA has developed a fraud and corruption control strategy, which includes operational arrangements to improve awareness of obligations and to minimise the chance of fraud such as:

• training for all staff in fraud and corruption control is conducted every three years and was conducted in 2018-2019
• induction is provided to all new starters and includes information on fraud and corruption as well as obligations for employees
• all offers of gifts or benefits (whether or not they are accepted) are centrally recorded and reported to the Executive and the Audit and Risk Committee
• employees are required to conduct risk assessments, as appropriate, at an enterprise, program, project, operational and transactional level
• an annual assurance program is undertaken, whereby all directors and executives sign statements of compliance regarding fraud and risk management and any breaches are reported to the Audit and Risk Committee.

Whistle-blowers disclosure

Number of occasions on which public interest information has been disclosed to a responsible officer of the agency under the Whistleblower Protection Act 1993: one.

Data for previous years is available at: https://data.sa.gov.au/data/dataset/245d5172-5781-460b-ad5a-243909eb44ad