Pinjarra's Exchange Hotel redevelopment on hold indefinitely

The company submitted a proposal last year to reinvigorate the historic site with a new entertainment and dining precinct.

The proposal included the re-establishment of a hotel as well as speciality shops, George Street frontage alfresco area and playground, building expansions to accommodate a front lounge, dining and back of house activities, a rear beer garden overlooking the foreshore precinct and provisions for pop-up markets.

Contract of sale negotiations have been ongoing since October 2019, however, at a council meeting in April, the latest counter offer was rejected by elected members.

Strzelecki Group director Jay Poland said the company, which also developed Mandurah's Dolphin Quay, had asked for a drop in price and extension on the project timeline.

"The Exchange Hotel Pinjarra site has significant costs inherent with the project due to the requirement of the council in light of the heritage status needing to be retained, restored and maintained," he said.

"These inherent design obstacles contribute and substantially add to the operational long term costs.

"The Strzelecki Group further sought a reduction in the sale price - a reduction grossly less than proportionate to the loss of value for the end value of the project given today's economic climate, and the added expenses and risk now associated with the project.

"The Strzelecki Group had also sought a nine to 12 month extension for the project timelines, which unfortunately will now occur regardless, however, with no prospect for development in sight."

Shire president David Bolt said councillors did not consider the modified terms were in line with the community's best interests.

"The decision was especially prudent given the Murray River Square and Foreshore Redevelopment works currently underway, which, once complete, will offer a more holistic impression of the site's potential," he said.

"While disappointing, it is critical that a quality development outcome is achieved at the appropriate time in the future and the Shire will continue to work diligently to ensure that the right proponent - with a sustainable and befitting proposal - is approved to develop the key site in line with council and community expectations."

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Mr Poland said they were "extremely disappointed" councillors chose to reject the revised offer.

"The Strzelecki Group believes, with the predicted unemployment rate increase and reduction in both domestic and international tourists long term, all business activities will be impacted - a factor the council should take into consideration," he said.

"In consideration of the council's obligations to ratepayers, the fact remains that this site has remained vacant and undeveloped for some time regardless of previous expressions of interest processes.

"The proposed development would have added significantly to the vibrancy of the area, provided employment opportunities for locals, increased surrounding land values and ultimately increased rates for the council - which benefit all ratepayers of the area.

"Should the council reconsider the proposal, Strzelecki Group would be prepared to sign on to the project."

Construction on the redevelopment was originally anticipated to commence by 2021 with a completion date set for April 2022.

Marketing for the sale and redevelopment of the site will now be deferred until "greater economic certainty returns to the market", according to Cr Bolt.

"Council will continue to assess the way forward including ideas for activation, particularly ready for implementation following the current 'lockdown' period," he added.