The City of Fremantle has decided to give ‘co-operative’ land development a try. It’s not going to end pretty.

Even if you don’t live in Fremantle or Western Australia, you should still care about this – because if it’s not already happening in an area near you, it could well be soon enough.

Here’s the story:

A 1477sqm slice of land in Fremantle has been earmarked for a new type of housing project that will sideline developers.

The City of Fremantle-owned land will be sold to the group of people who can come up with the best plan for a new multi-home development for them to live in. [TMR: ‘best’ based on what I wonder?]

Based on the European “Baugruppen” housing model, it differs from traditional co-operative housing projects in that residents can choose to end up with their own strata title once the build is completed.

In what the council believes is a WA local government first, it will ask for expressions of interest for the site at 7 Quarry Street. The block, which is home to a run-down building deemed to have no heritage value, was last valued at $2.75 million in 2014.

Under the city’s guidelines the land should be bought be a co-operatively-owned venture controlled by the people who intend to live in the completed building.

The owners decide what the building looks like inside and out and whether they want communal spaces or shared green space. [TMR: I think they mean ‘garden’.]

There are no specific rules about how many units can be built but the building must comply with zoning for the site, for which a 25-unit development was previously approved.

Fremantle councillor Rachel Pemberton, who recently returned from a trip to Germany to study similar developments, said she thought “about 20 dwellings” would be appropriate.

“Rather than being built to maximise developer profits you actually take the developer out of the equation,” she said.

The city will take proposals until December 5 and come up with a short list.

Land developers are hardly saints. In fact, I’d say there’s probably about as many crooked developers as there are local government councilors and people in life generally.

That said, there’s a big natural benefit that comes with developers that local governments simply cannot compete with – something incredibly touted by more people these days as an evil: developers are motivated by profit and sustainable profit can only come with happy, paying customers. Those that aren’t properly motivated this way get weeded out.

When a developer takes on a project, they have to think about current trends and what people want (i.e. demand) in order to maximise their own gain. They also need to have extensive and reliable networks in the building and construction industry – so that things can be built reliably, on time and on budget.

Now let’s have a look at the alternative being proposed by the City of Fremantle…

Firstly, who is going to build the damn thing? It’s not as if our co-op green team is going to hold hands, sing in the garden green space, pour concrete and lay bricks together. They’ll obviously need professionals to come in and do the dirty work. In this respect, I wonder if the co-op crew will be able to negotiate better prices and have a better quality job done than a professional developer?

Secondly, building and construction is a tough game. Anyone who has built or renovated their own home knows this. Which then leads to the next question: are the co-op crew going to manage the project themselves as owner-builders? That is, as non-professionals who know little about building and construction? Or are they going to have to hire some professional help to come in and manage things. Like… oh… I don’t know… A DEVELOPER! (FMB). Maybe one of the co-op team will ‘know someone’ that can help?

Or is it really the case that, instead of having an professional builder and developer improving the land with the customer in mind, a committee of 20 or so non-developers are really going to run things – with each motivated purely by self interest? (PS: I wonder if this includes profit?).

Needless to say, by the time the co-op crew have finished squabbling over the style of door knobs and toilet roll holders – and more important things they’re not qualified to make unexpected and day to day decisions on (they’re not developers after all) – the time and money wasted will be phenomenal. To truly appreciate this point, consider how hard it is to reach an agreement on something when you have three or four independently motivated parties (or even two!). Now ramp that up to 20.

What our socialist friends fail to realise is that money and profit don’t just simply disappear just because you remove a developer. This is because money is simply the product of human time and endeavour – and some peoples’ time will always be worth more than others based on how much demand there is for it. If you come across a socialist who thinks this is wrong, simply ask them if they think that a cleaner’s time should be worth every bit as much as a brain surgeon’s? Of course not.

In the case of the Fremantle land, it has value now and will have value when the development is finished. Money will be made along the way. The only question is by who?

It is fitting that we look to Venezuela’s recent co-op experience here:

Since Chávez was elected in 1998, over 100,000 worker-owned cooperatives—representing approximately 1.5 million people—were formed with the assistance of government start-up credit, technical training, and by giving preferential treatment to cooperatives in state purchases of goods and equipment… As of 2005, approximately 16% of Venezuela’s formally employed citizens were employed in a cooperative. However, a 2006 census showed that as many as 50% of the cooperatives were either functioning improperly, or were fraudulently created to gain access to public funds.

If you invite corruption and dysfunction, they will cheerfully show up – and won’t bother knocking when they do.

Would you like to make a bid? If so, start here. And would you look at that, it’s right on the water too!