Amazon fed up — could pull plug on new Cape Town headquarters

Amazon is running out of patience with delays to the R4.6-billion River Club multi-purpose complex in Cape Town. Should it withdraw, the developer would have to scrap the entire project.

The Sunday Times reports developer Liesbeek Leisure Property Trust (LLPT) filed an affidavit in the Supreme Court of Appeal this week with the warning.

Any further work stoppages at the River Club construction site would likely lead to the Amazon Development Centre (ADC) terminating the developer agreement, the affidavit alleges.

In March 2022, the Western Cape High Court ordered all work at the construction site be stopped because LLPT had not conducted meaningful consultation with impacted First Nations people, who regard the development area as sacred land.

The developer subsequently applied for leave to appeal, but the High Court dismissed the application in a May 2022 ruling.

It is now approaching the Supreme Court of Appeal (SCA) to overturn the order.

In an affidavit from spokesperson and trustee for LLPT, James Tannenberger, the developers said they had been advised that further delays could push the work back between 12 to 24 months.

“Any such delay would almost certainly see ADC terminating the development agreement and the lease agreements, as it would be entitled to do. Indeed, even a reduced delay of six months will result in termination by ADC,” said Tannenberger.

He explained that ADC had already agreed to reset the practical completion date and lease commencement date, reducing its own tight tenant works programme.

“In the negotiations to adjust these dates, ADC has made it clear that it cannot and will not tolerate any further significant delay,” said Tannenberger.

Failing to complete construction and lease commencement by the agreed-upon dates could result in a delay penalty of R450,000 payable to Amazon per day that the project is behind schedule.

Tannenberger added that LLPT would also be liable for R23 million in penalties to Rand Merchant Bank for cancelled loan agreements and R115 million for standing time to contractor WBHO.

An impression of the proposed River Club development contained in the Basic Assessment Report, a public document produced by SRK Consulting

LLPT disputed claims that they did not conduct meaningful consultation with affected First Nations groups.

It said the Goringhaicona Khoi Khoin Traditional Council (GKKTC) and Observatory Civic Association have no legitimate claim over the intangible heritage of the broader Two Rivers area in which the River Club development was built.

They also have no standing within the First Nations community, LLPT stated.

Despite this, LLPT afforded them the opportunity to submit comments during the approval process.

“Their comments were responded to and considered by the relevant authorities, who approved the project,” LLPT said.

The developer also maintains the opponents had failed to demonstrate any intangible cultural heritage resource that decision-makers in the development’s approval had not identified and assessed.

In addition, they failed to show the inadequacy of the wide-ranging protection mechanisms included in the respective conditions of approval.

As part of the negotiations with the groups that LLPT have recognised and gained support from, the developer will be building a Heritage, Cultural and Media Centre in the redevelopment, which will be operated and managed by them.

LLPT said the suspension of construction would cost 6,000 direct jobs and 19,000 indirect jobs.

The broader community would also lose out on socio-economic and environmental benefits such as developer-subsidised housing for people that otherwise couldn’t afford to live in the suburb, extensive upgrades to surrounding roads, and public green parks and gardens.

“Remedial” work continues

Meanwhile, LLPT has continued with what it calls “remedial” work at the site, an issue which has drawn a contempt of court challenge by the development’s opponents.

The contempt of court matter was postponed until 27 July 2022.

On the day of the first court hearing on the matter, one of the groups in support of the development — Western Cape First Nations Collective — clashed with the opponents, calling them traitors and brandishing posters with slogans such as “The River Club Supports Khoi Heritage” and “Khoi Welcome Amazon”.

The development has also received the backing of the City of Cape Town and the Western Cape provincial government, both of which are applying to the SCA for leave to appeal the halting of construction.

Now read: What Amazon in South Africa could mean for Takealot

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Amazon fed up — could pull plug on new Cape Town headquarters