Letter to Mayor Tagliaferri re Freo Markets

FREMANTLE MARKETS
STALLHOLDERS ASSOCIATION (Inc)

Peter Tagliaferri
Mayor
The City of Fremantle
PO Box 807
Fremantle 6959
1st February 200

Dear Peter,
As you know the tenants at the Markets are gradually getting served with ridiculously high rent increases which are leaving most of them feeling sickened and sleep deprived. The recipients also feel bullied and intimidated by the demanding and threatening nature of the documents. It is obvious to us that morale of the stallholders is at an all time low and the jovial nature of the Markets stallholders is being sorely tested.

Fremantle Markets Pty Ltd (FMPL) recently presented a Marketing Plan to stallholders which contained the following information as a justification in support of their rental increases.

MARKETING
increase the average number of customers per weekend fromaround 40,000 to around 60,000 increase the average expenditure per customer as follows
fruit and vegetables – from $33 to $40 per visit
general merchandise – from $45 to $50 per visit

At a glance these figures may seem plausible but upon closer examination they are clearly erroneous.
According to the markets management, 40,000 people currently go through the markets each weekend.
If each person spent $40 then $1.6 million dollars would change hands - i.e. a weekend average turnover of $10,600 for each of the 150 stallholders or $550,000 pa. With the proposed increases in traffic and average spend to $45 this would in theory rise to $936,000 for each stallholder. The figures for both current average turnover and that projected are clearly ludicrous and bear no relationship to reality. Stallholders would be ecstatic if it were true and while undoubtedly some businesses are high turnover most are small owner operated family stalls with modest profits. The City must now be questioning their own head lease rental valuation of $550,000 when FMPL estimate this year’s annual stallholder’s turnover at $83 million.

It would be extremely interesting to discover on what survey information FMPL have established that current average expenditure is $33 for fruit and vegetables and $45 for general merchandise. To gain this information would require FMPL knowing the turnover of all the stallholders or have done extraordinarily detailed and costly customer surveys over a significant period of time.

We believe that David Paris from the Coffee Connection has contacted you with some relevant comparative information in relation to rental costs and traffic flow from some eastern states markets.
His research supports our belief that the rent increases will see Fremantle as the highest cost markets in Australia. This research and the ambitious marketing projections highlight the questionable quality of the information which has been used to justify the rent increases.

The Stallholders Association continues to question the validity and independence of the valuation used to establish “fair market rent” but accept that Fremantle Council has examined the valuation and endorsed it. Although the City increased the head rent by $60,000 or 12% (i.e. $400 per stall per annum), FMPL have passed on substantially greater increases. Some have already been over $7000, 18 times the increase in the head rent. . If FMPL continue to pursue their program and introduce unsustainable rental increases then the viability of many stalls will be brought into question. Many permanent stallholders who have signed an “Expression of Interest” are now reluctant to enter into new licence agreements and are evaluating their profitability. The number of stallholders genuinely contemplating leaving is alarming. A large number would like to sell but the current value and price of stalls has been eroded by the rent rises.

Through our lawyers we have offered to meet and negotiate the rent increases and the amendments to our Rules with FMPL but to no avail.

We would also like to raise the issue of the allocation of agreements to permanent stallholders. Throughout the head lease negotiations both yourself and Glen Dougall addressed stallholders at meetings and reassured them that “all stallholders” would be offered an agreement. It has come to our attention that one of our members has not been offered a new agreement and has been given a termination notice instead. Jamie Murdoch told the December “Working Group” meeting with stallholders, which Glen attended, that up to 10% of stallholders would not be offered agreements.
At this stage approximately only 40% of permanent stallholder agreements have been issued. This deviation from council’s position has our members concerned and we seek clarity as to where we stand.


The Stallholder’s Association is seriously concerned for the future of the current stallholders and the erosion of confidence in the trading environment at the markets especially in light of the present world economic situation. FMPL’s actions would appear ill conceived when leaders in industry and government across the country are calling for restraint and at the same time stallholders are subjected to rent increases far in excess of reasonable.

To date we have sought to redress this draconian treatment of stallholders and the imposition of unjustifiable rental increases by discussion and negotiation, however if this continues to be unsuccessful we are concerned that some stallholders will initiate more damaging media coverage on television and in the press.

We would like to meet with you and Graeme Mackenzie at your earliest convenience to discuss these and other issues pertinent to the future of the markets.


Yours sincerely,

Colin Wright
Secretary
Fremantle Markets Stallholders Association.



Cc: Graeme Mackenzie
Glen Dougall


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