Hakoah: She said…he said..he said

The future of Sydney’s Hakoah Club is the focus of intense campaigns by both the incumbent board and a group focused on a different plan for the development of the sporting organisation’s White City site.  David Singer responds to Andrew Boyarsky and Victor Grynberg joins the debate.

In the meantime, comments on J-Wire’s site by Sheila Philippsohn, David Singer and David Balkin merit reading and we reproduce them, with others, below…

I attended the meeting by the Balkin group prior to last year’s annual general meeting where the group showed details of its then proposed development.

I then attended the annual meeting where the Club’s Architect produced the Board’s proposed plans for the site.

The Board’s plans were exciting, visionary and innovative and promised wonderful sporting, social, recreational and communal facilities – far preferable to the opposing group’s plan.

The Board’s plans were enthusiastically endorsed by the large number of members present.

I am therefore very surprised to now hear another attempt is being made to replace the present Hakoah board who have worked hard and assiduously over the last 12 months to progress their plans at what must be a considerable cost – if one has regard to the frequent and detailed reports sent to the members by the Board during that period.

I would like David Balkin to detail:

1. What area of Hakoah land will be sold, whether there is a buyer for it and if an indicative offer has been received.

2. Why it is essential that communal organisations from Darlinghurst need to be relocated to prime recreational and sporting land, and who are those organisations?

3. Is it correct that uncommercial rents and security costs were offered by those communal organisations?

I am closely associated with Betar which has been leasing facilities at White City for the last three years. I can understand having youth groups using White City and its sporting and recreational facilities as their meeting place both during the week and on weekends. – no doubt bringing their parents in to enjoy those facilities as well.

I find it hard to fathom the need to have communal organisations that are there essentially 9-5 Monday-Friday and closed on public holidays – using their facilities exclusively for work during those hours – not for sport and recreation.

Have any of these communal organisations said why they want to re-locate to White City and have they given reasons why?

Are we going to now have two communal centers – Darlinghurst and White City?

Surely what the Hakoah Board is proposing – an active and healthy sporting, social and recreational centre with lights on at night – is preferable to a large part of the site empty after hours and with its lights off at night.

Having been a former Appeal chairman of the JCA and Chairman of its Allocations Committee and a member of its planning Committee – I am concerned that the Hakoah ad should have had to point out that Hakoah is not a constituent member of JCA and that White City is an asset that belongs to Hakoah – not the community.

Perhaps this serious rift in the community could be defused if those communal organisations in Darlinghurst came out with a statement that they were no longer interested in moving from Darlinghurst to White City – and if they had to move they would relocate to some other commercial area in the Eastern suburbs.

The heading in the ad says – “Another Office Block”

These organisations can have their office block somewhere else and end this feuding – and let the Hakoah Board get on with its plans and bring them to fruition.

 

Submitted on 2015/03/12 at 4:57 pm  from Sheila Philippsohn:

I have read David Singer’s emotive response.

It seems that although I am a member of Hakoah, I have not received the “frequent and detailed reports sent to the members by the Board”, not via email nor post. Why not?

Also, I was at the last AGM and don’t recall that the Board’s plans “were enthusiastically endorsed by the large number of members present.”.

I was not privileged to attend the meeting whereby the “Balkin plans” were explained and I would like the opportunity to have them presented in a calm and measured way without the emotion that has been generated through this whole process. I would hope that this will be done at this year’s AGM.

Sheila

I have no idea why you did not receive at least three letters sent by the Board during the last twelve months detailing progress with finalisation of the plans and appointment of consultants.

My wife – who is also a member – received a separate letter from the Board on each occasion.

Perhaps you should enquire from the office to see what happened. Is your husband a member of Hakoah? Did he receive copies of those Board letters?

It was a pity you did not attend the meeting where the “Balkin plans” were presented. Only a small percentage of those attending the Hakoah annual meeting were present at that earlier meeting.

To wait almost a year to raise their plans once again after the Board has spent what must amount to a large amount of money in progressing its plans to the stage of being ready to lodge a development application shortly with the Council seems very strange indeed.

As to your recollection of the meeting enthusiastically endorsing the plans – do you recall Maccabi NSW President Danny Hochberg and Maccabi Australia President Barry Smorgon welcoming the provision of a full size soccer field in the Board’s plan?

Sheila – I have no idea what will be presented at this year’s AGM. What I do know is that the rift caused by last year’s two meetings is only going to be made far worse if two competing plans are presented at this late stage of the planning process and there is a contested election for three vacancies on the Board.

This will surely be compounded by an Extraordinary General Meeting one month later seeking to get rid of the whole Board

It is divisive and communally destructive and every effort should be made to prevent it happening.

I think that the differences between the opposing camps could be ended pretty quickly if those communal organisations in Darlinghurst issued a statement that they are no longer interested in moving from Darlinghurst to White City – and if they have to move they would be relocating to some other commercial area in the Eastern suburbs.

 

I recall David Singer’s probing questions when I was the Treasurer of Moriah and he a member of the Allocations Committee back in the late 1980s. The questions he poses directly to me are as important to answer now as they were 12 months ago when the Hakoah Board refused to allow our group to present our plan to Hakoah members at that AGM.

At that AGM Hakoah’s then President spent 20 minutes grossly misrepresenting our plan as seeking to build a ‘community office block’ and advancing unsubstantiated and absurd conspiracy theories about the community seeking to rob Hakoah members of their land. As an aside you may be interested to know that what we have been hearing from the 400 plus members we have collected signatures from, is that the real conspiracy is that the current Board, dominated by soccer enthusiasts, is seeking to expropriate the best recreational land on the site for its own narrow purposes. But I digress. We were then shown pretty pictures of the current Board’s alternative plan which you may recall that we were told not to photograph. Unfortunately, you like all Hakoah members have been kept so well informed by the current Board of what they are planning to provide for us, that we have not been allowed to see these pretty pictures again. If the Board had bothered to let the members really understand these plans and had the fortitude to let the members understand our plan, David, you would have discovered that there is almost exactly the same amount of community office space included in the Board’s grandstand than is contemplated in our social/community building. Knowing this, I wonder whether you now still believe the current Board’s plans for its grandstand are so visionary or whether you are now prepared to stop perpetuating the myth of us seeking to build a Jewish community office block at White City.

David there is much more that you would have been able to learn if you along with other Hakoah members had been given the opportunity to truly understand what our plan offers, what it costs, how it will be funded and how it will enable Hakoah to be economically viable.

Hakoah, as the site’s landlord, needs to provide basic security to the site given its Jewish orientation in addition to meeting the outgoings for the property. Combined these costs are in the order of $900,000 per year. Almost half of these costs relate to providing 365 day general security for the site. This is a massive impost, but is one that the landlord needs to find a solution for. If it cannot be funded, then a Jewish anything cannot be built on the property. This is truer today than it was 12 months ago.

Our plan to generate this annual income stream is to build a 3500sqm social/community building. 800sqm of the building will owned by Bnai Brith and Hakoah the balance. Hakoah will then be able to lease out their 2700sqm to a restaurant operator, a café operator, communal organisations, a fitness centre operator, a wellness centre operator, a crèche operator and any other operator who provides a service that Hakoah believes the community centre requires. Our modelling indicates that these leases will generate almost all the income Hakoah needs to be economically viable. The balance will come from facilities that are not contained within the social/community building.

But now we come to the problem that you are alluding to. How does our plan provide the capital to build the 2700sqm that Hakoah will earn the rent from?

There are 5 possible sources of funding:
1. Borrow from a bank; we along with the current Board agree that debt is unaffordable given that Hakoah will struggle to meet its outgoings let alone be able to pay interest, even when interest rates are at an all time low.
2. Sell ground leases to capital providers. Hakoah has tried and failed multiple times over the last 5 years to attract capital through this approach. So going down this path is not going to generate significant capital or recurrent income.
3. Raise capital from the community. Having been the JCA Appeal Chairman, David will almost certainly agree, that the community will not be giving its charity to Hakoah to build social facilities for Hakoah’s members. The community has much higher priorities for its scarce capital.
4. Sell country club memberships with a large upfront entry fee and a significant annual charge. We have discarded this option because it works against our goal of making this club affordable for all. We also see this model as a slap in the face for Hakoah’s long suffering members who are the ultimate owners of the site and who have been denied for 5 years. They have paid once. Why should they pay again?
5. So we come to our last capital source; our land. Hakoah has no other significant assets.

We believe we should sell land provided two criteria are met:
First, that the sale of the land does not stop Hakoah from what it wants to offer on the White City precinct.
Second, that the sale of the land is to operators who will build/provide facilities that the precinct requires.
Applying these criteria, we have concluded that we will be able to sell land or a share of the social/community building to capital providers who will build an aquatic centre, build community offices, add parking, and supply a kosher function centre to the site. These are all facilities that Hakoah has believed, from its earliest days at White City, should be part of the precinct. We estimate that we will need to sell approximately 5000sqm, of the 22000sqm Hakoah currently owns, to generate $4-5m of capital. In addition we shook hands with Bnai Brith to sell an 800sqm strata in the social/community building for a further $5m which is a full and fair arm’s-length price for the area. In our discussions with Hakoah’s Life Governors over the last 6 months, we have been able to demonstrate through letters of intent from three capital providers, that Bnai Brith, a swimming pool operator and a childcare operator are committed to our plan and are prepared to invest a minimum of $8.5m. Notably, they have been clear that they are not prepared to commit themselves to the current Board or its plan, because of the Board’s commercial terms and/or how it seeks to develop the site. We have not negotiated with the other parties who we know are interested because we have no standing to do this. Nor have we wanted to undermine what the current Board may or may not be doing with these organisations.

This leads directly to your third question about uncommercial rents and security costs. Bnai Brith, who wishes to purchase the strata in the social/community building, made it clear from the outset that they did not want to be the only community organisation relocating to White City. We talked to the major community organisations about their willingness to relocate and the price they would be prepared to pay if they did. These discussions lead to the conclusion adopted by our plan, as well as the current Board’s plan, that 750-800sqm of community office space would be taken up. These discussions also indicated that the maximum price they could afford to pay would be about two-thirds of what a commercial operator, such as a gym operator, would pay. We factored these parameters into our model and concluded that even with the community office discount, Hakoah would generate $370,000 more net rent per year by going ahead with selling the strata to Bnai Brith, than by walking away from the deal.

In case you are wondering why this is the case, the money Hakoah gets from selling the strata builds 2000sqm of the community/social building. This leaves 1200 sqm for Hakoah to rent out. Bnai Brith has stipulated that it wants other community organisations who will join them to be able to rent 775sqm of this space with the balance for Hakoah to do with as it pleases. The discounted rent on the 775sqm and the full market rent on the remaining 425sqm generates $370,000 of net rent per year.

So what does this have to do with security costs? Earlier in this reply I intimated that the site’s general security costs are of the order of $450,000 per year. $370,000 of rent pays for 82% of the security bill leaving Hakoah as landlord to find the balance which is more than reasonable for a site of this size. So David, imagine if Hakoah lost the deal with Bnai Brith? Hakoah would still have to find $370,000 to fund general security on the site whether or not Jewish community organisations moved to the site. Remember Hakoah was bombed when no Jewish community organisations were resident at Hall Street. So David, would you still be delighted that there would be no community organisations moving to the site from Darlinghurst or anywhere else in Sydney?

Which brings me to my final point. The major charge by the current Board against our plan is that we are selling land and title in our building to provide the capital that is needed to build the social and communal facilities the members expect and the precinct requires, while generating the recurrent income Hakoah needs to be viable. The current Board are making a virtue of their resolute stance not to ‘sell out’. But where is the virtue if they cannot tell you where they are going to get the capital to build the facilities, you believe are so visionary, to generate the income Hakoah needs to sustain itself? The current Board’s grandstand is akin to our social/community building. We have explained how we will fund ours, but they have not, because they cannot. Telling us that it will be funded by the community’s charity is totally unrealistic and the current Board knows this. So no grandstand. Without the grandstand and without the capital from the sale of land to the swimming pool operator, all the current Board’s plan can ever deliver is a full-sized soccer field and multi-purpose sports hall for Maccabi. This outcome is what Hakoah members should expect from the Board’s current plan and it will not be particularly visionary or economically viable. David, I think you know what happens next. One hundred percent of the site will be sold just like Hall Street had to be sold when the current Board’s vision proves to be financially unviable. Then, there will be no lights on at White City at all, day or night, forever. So what would you prefer David? Selling one hundred percent of the site because Hakoah has gone mechullah, or twenty-five percent of the site’s least desirable recreational and developable land to ensure Hakoah thrives? I know what our plan is recommending.

David, it would be helpful if you could ask the current Board to provide one of those detailed reports to members that explain how they plan to retain the whole site, fund their vision and remain economically viable. While you are at it, a second report explaining why seven Directors rather than 6500 members, is the right and fair way to make fundamental decisions about the future of our club, would be most appreciated.

PS: You can log onto our website http://www.hakoahcommunitycentre.com to get even more information about our plan.

 

David

Firstly let me thank you for your very honest and detailed reply.

I note that in response to my questions you have given the following responses:

1. Your group would sell 800 sq metres to B’Nai Brith for $5 million and give it strata title. Such sale is conditional on other communal organizations moving to White City.

2. You estimate that you will need to sell approximately a further 5000sqm, of the 22000sqm Hakoah currently owns, to generate $4-5m of capital.

That to me David means that Hakoah will lose a quarter of its present site to persons as yet unidentified by you – as well as present control of the remainder of its asset – becoming instead a member of a Body Corporate that will make all future decisions in relation to what remains of White City.

You also do not mention what restrictions – if any – Hakoah would place on B’Nai Brith selling its strata in the future – and whether B’Nai Brith has accepted them.

To me these sales are too big a price for Hakoah members to pay and are decisions I cannot endorse as being in the best interests of Hakoah and its members.

You ask:

“David, it would be helpful if you could ask the current Board to provide one of those detailed reports to members that explain how they plan to retain the whole site, fund their vision and remain economically viable.”

In fact this was made public by Phil Filler at the AGM last year when he stated that plan of the present Board was predicated on Hakoah not breaking up the site or Hakoah’s control of the site and called for this to be achieved by only proceeding to build in stages when the funding had been received to allow each stage to be achieved.

Phil announced at the AGM:
“There is sufficient space to include a full size football field a consortium is prepared to pay for. We must never forget our initial reason for existence was to support and encourage the sport of football. Beyond that, and looking into the demographics within the Hakoah Maccabi network, there are over 1,500 boys and girls, men and women aged from six to sixty who would utilise this facility.”

I guess this would be stage 1 – a great start that would see 1500 people using the facilities where they presently do not.

Meantime Maccabi Tennis would be able to build a ninth court (not provided in your plans) and the current gym and yoga centre would continue to operate as present whilst Magen David Adom and Betar would continue to operate under their existing leases.

I can assure you that when I go to play tennis at 7 am on a Thursday the parking area is full and the activity going on at White City at that time is something to behold.

Sure the fancy buildings, swimming pools, pre-school and indoor stadiums will take time.

These would come in stages- as Phil explained – when funding became available from people who wanted to take up the concessions available.

To me this is an infinitely better decision than compromising the site by selling a large chunk of it and also losing control over what is left.

If that means B’Nai Brith walks away that would be a great pity – but the price Hakoah is being asked to pay for their coming to White City does not justify the end.

David – you ask another question:

“While you are at it, a second report explaining why seven Directors rather than 6500 members, is the right and fair way to make fundamental decisions about the future of our club, would be most appreciated.”

Your request is – with respect – a little mischievous.

12 months ago the issues were fully raised in the Jewish press in an expensive advertising campaign by your group and the Board. This managed to bring about 50 members to view your plans and about 250 members to the AGM that followed when the Board presented its plans.

Going through the same exercise again now is not really in the interests of Hakoah or its members.

Maccabi NSW and Maccabi Australia’s endorsment of the Board plans at last year’s AGM – giving Maccabi tennis an extra tennis court and Maccabi Soccer access to a full size football oval – swayed it for me.

Accept the decision of twelve months ago and support the Board in lodging their DA.

By all means – have a fall back plan – but allow the Board to proceed to try and implement its vision and retain 100% ownership of Hakoah’s asset.

If you will it – it is no dream.

 

David with all due respect;

The board has been willing it for the last five years- and its still dreaming.

Your blind confidence in their ability to actually deliver anything is quite perplexing. Their record speaks for itself. There is no development expertise left on the Board and frankly they have had an inability to attract any because their proposal is basically a non-starter with council, they have no funding (except for maybe a soccer field) and no plan for sustainability. Yet you blindly follow?

The time for dreaming is over and a good dose of reality needs to be brought to the table. That is what we offer. The suffering members and wider community should be able to have a fantastic sporting, recreation and community facility and not just pretty pictures of one while the site gathers dust, which is all this current board has proven it is capable of delivering.

Your above analysis is incorrect in terms of control via the uses of stratum as well as strata and the only body corporate that would exist on the site is in the communal building which Hakoah will have two thirds of the unit entitlements. The balance or 15,000sqm of the site (70%) will be owned and wholly controlled by Hakoah to do with as it wishes. The other owners proposed, with letters of intent, are entirely well known COMMUNITY groups and members who share the dream of a Jewish community centre. All are aware of the sensitivities about securing of jewish tenure and these issues are at the forefront of negotiations.They too are concerned about the solvency of Hakoah, and given the current management could you blame them? Do you think those commercial imperatives will ever go away?

As for some of the other issues you raise; If in the unlikely event a soccer field is actually approved (highly questionable- go and ask council officers yourself) The building that houses Betar and the gym will be demolished to make way for the field which will take up half the site, so no traffic generation there. Besides, currently Maccabi can only pay $150,000 per year for the soccer rental at Hensley and is the absolute maximum they can afford. That is hardly the basis of a sustainable financial model when the site outgoings are $800-900K per year. Subsequently whilst waiting for the rest of the dream to materialise in stages, the entire site will go broke in the meantime.

At the very least you must concur that there should be open debate amongst the members and we should have the right to present our plans in an open forum. Over 400 members have spoken and the Board should listen.

You keep referring to last years meeting. Were we at the same meeting?? You make it sound like everyone was happy?? As I remember it a lot of people were agitated and very displeased. Given the previous years of inaction by this board I think my memory is probably a more reasonable reflection. You claim that Maccabi endorsed the plan. They did not. And they are not endorsing it NOW. Their position is that this is a matter for Hakoah members to decide. That is frankly a good decision because Maccabi gets a lot out of our plan too with a home for Maccabi NSW, indoor multipurpose courts and a home for junior Maccabi soccer (and Maccabi tennis can get 9 courts contrary to what you have been led to believe). And they know we have a credible plan and people who can deliver. If you recall Barry Smorgon raised concerns about how much the facility would cost and how the proposal would be funded. He was very sceptical of their $60 million + scheme. The Board could not answer. Guess what? we are 12 months further down the line and the board still can’t give satisfactory answers to those questions. Also note at that meeting there were no members up for re-election and there was no vote on the plan. We were not allowed to present or speak. There was no debate. They have continually denied us this right. I don’t believe that suppressing discussion of a realistic plan in a proper forum than can deliver is in the best interests of the members or the community.

The question is why do you?

I notice that both David’s have used my name , both with different interpretations.
Firstly let me state that I attended the AGM as an individual, not in my then capacity as Chairman of Maccabi Australia.
The question I asked of the outgoing President was in relation to the funding model, specifically as to cost of building & where the funds would come from ,an answer I was assured I would receive in the next week or so, which to this date has not occurred
I specifically stated I was not taking a position of support of either side of the argument as I, & most others were not afforded the opportunity to a moderated debate in a calm manner so that the members could decide which program they would prefer.
My personal desire would be that a forum is created where both sides could present their plans , funding, base case for their proposals in order that the members themselves decide the outcome without all the acrimony flying around at present.
I emphasise this is still my personal view, not in any Maccabi Australia capacity

 

Andrew

You state:
“The board has been willing it for the last five years – and its still dreaming.

Your blind confidence in their ability to actually deliver anything is quite perplexing. Their record speaks for itself”

Weren’t you a member of that same Board for four of those years?

Since your resignation the Board has progressed its plans to the point of lodging a DA. Why would you be seeking to have them torn up at this late stage?

You bemoan the fact that there is no development expertise left on the Board. It is indeed a pity that you chose to resign and leave the Board in that situation.

The Board has reported to members that PAYCE has been appointed as Project Manager and AECOM as Principal Consultant. Their impressive CV’s were set out in one of the letters you no doubt received.

No doubt their expertise is well known to you anyway

You say the site is gathering dust. That is not correct. As I have pointed out it is a hive of activity every day with tennis, yoga and the gym very busy and Magen David Adom and Betar being located on site.

My analysis of what will happen if part of the building is strata’d is correct. A strata Title building with two owners represented on the Body Corporate is not the same as one owner in full control of the building.

Now you tell us you have other well known Jewish community groups who will be buying 5000 sq metres of the site. Who are they and do they have any sporting and recreational activities as part of their focus?

Betar and the yoga centre are housed in a different building to the gym – a fact of which you are apparently unaware.

There was open debate at the two meetings last year when your meeting drew about 50 people and the AGM attracted about 250.

Going over the competing plans once again seems pointless.

The two visions have been made very clear – the Board’s to retain the site intact and your plans to break it up and contain Hakoah and its activities within 70% of the site.

Are you saying Danny Hochberg did not endorse the plans now that a full size soccer field was included and that his remarks were not supported by Barry Smorgon?

Certainly Barry raised questions as to the financials which obviously are needed to be satisfied if the Board’s plan is to work.That is for the Board to determine and re-assure the members.

As Phil Filler stated at the AGM – the Board only intends to proceed in stages as the funding is secured. That is a fairly straight forward and responsible statement to make. No money – no build.

The fact that funding has been obtained for the soccer field ensures a major part of the project can be commenced.

Your plans seem to call for a total demolition and reconstruction in one go. Is this correct and how long do you estimate it will take? Will such reconstruction take place in concert with buildings to be erected by the other communal organisations on the land they are purchasing? Will Hakoah have any say in their size and design?

I am glad to see you confirm that there is an extra tennis court in your plan. Why did you not correct Phil at the last AGM when he said it was not included?

Correct me if I am wrong – but hasn’t the Board always sought to retain White City in Hakoah’s absolute ownership since you were on the Board -having turned down an approach from Double Bay Bowling Club which wanted ownership of its proposed site?

Shouldn’t the Board be allowed to put in the DA – backed by its consultants and architects – to see if this is still a possibility?

The communal centre vision may have to be cut back but the sporting, social and recreation vision that Hakoah in concert with Maccabi would bring to the community must surely be worth pursuing.

My suggestion:
Let the Board lodge their DA. If their plans are knocked back – as you confidently predict – then the Board should proceed on your plans for breaking up the site. There will then be no option. At the moment there is.

Get together guys and shake hands on that deal and avoid the nasty confrontation that is surely developing if you both don’t retreat from your current positions.

Well maybe the Junior Soccer Club has been directed to “stay neutral” on the subject, but clearly the Hakoah Club WHite City development needs to have a full-sized soccer field……OR NONE AT ALL. Anything less than a full-sized field is useless. a waste of space and money.
The Board has a plan to accommodate this field.
They’re soccer lovers. Unabashedly so am I. My sons played for Maccabi Hakoah, (one still does at 45). 2 of my grandsons currently also play for Maccabi . A full-sized soccer field will also be suitable for 4 Futsal fields. And countless other uses.