The two godowns, which are located on the corner of Victoria Street and Acheen Street Ghaut, were marked by the state government to be turned into spaces for international animation firms.
The legal problems came to light after heritage activists asked about the two godowns which have been boarded up for close to five years now.
Today, Chief Minister Chow Kon Yeow said the Penang government had wanted to turn the godowns into “a heritage learning centre” and the owner of the properties had been compensated as per the law.
He said the owner, however, later challenged the Penang government’s acquisition through the Land Acquisition Act 1960.
Chow said the High Court ruled in favour of the owners. He did not specify when this case had been initiated or when this decision was delivered.
He said the owner had argued in court that the Penang government had no right to acquire the property for educational purposes as all education matters fell under the federal government’s purview under the Federal Constitution.
Chow said that since there had been no decision by the courts, PDC had started restoring the building and spent about RM1 million in repairs.
The work began on March 27, 2017, and was scheduled for completion on Sept 26, 2018.
“When the court decision was finally delivered, PDC ordered all work to stop, and a deal to mutually terminate the contract was reached with the contractor.
“PDC paid for whatever work was done at the time and there were no liabilities,” he said at a press conference in Komtar today.
PDC or Penang Development Corporation is the state’s development arm.
Chow said the state government would appeal the High Court decision. He also said the property owners had recently offered an out-of-court settlement via their lawyers.
“We will consider the options put forth by them, but that does not stop us from considering an appeal,” he said.
When asked why the Penang government had gone ahead and carried out work when the decision by the court had yet to be delivered, Chow said: “There was no injunction from the court to stop us from going to the site.”
Former Penang chief minister Lim Guan Eng had announced in 2017, that the godowns, located on Lot 161 and Lot 165 Victoria Street, would serve as rentable areas for animation studios.
He said Penang’s traditional traders would also be offered spaces in the renovated warehouses at subsidised and reasonable rates, as part of the state’s Creative Animation Triggers (CAT).
The two godowns sit on a 13,168 sq ft parcel of land. After the renovation, it would have had 21,548 sq ft of floor space.
InvestPenang stated in 2014 that the CAT is a state initiative within the George Town World Heritage Site. It is supposed to be a collection of three heritage building spaces to spearhead the creative multimedia industry.
“These are buildings over 100 years old which will be retro-fitted with world-class infrastructure and amenities while still maintaining their character and old-world charm,” the file on CAT read.
One CAT is at Wisma Yeap Chor Ee, Church Street Ghaut. It is already up and running and was leased out by owners, Wawasan Open University, to PDC on June 29, 2014. According to the Penang government website, the lease runs for 30 years and costs over RM14 million, or RM40,402 per month.
The other CATs are supposed to be the Victoria Street godowns and at the Sia Boey site on Magazine Road. The Sia Boey site is currently under construction.