Mark Whitehead 15 August 2018

Council accused of 'putting public money at risk' over shopping centre investment

A district council has been accused of putting public money at risk in a 35-year deal to lease a shopping centre from a commercial development company.

North Somerset Council is the latest local authority to strike a deal with a private sector partner involving retail property.

It has agreed to pay an initial £717,696 a year to Legal & General Real Assets which bought the Sovereign Shopping Centre in Weston-super-Mare for £21m.

The annual fee will rise in line with inflation, with a 4% year-on-year cap, and the council will keep any surplus generated by income from tenants at the centre which it will be able to invest in services.

The council told LocalGov it has made no upfront payments and due diligence was undertaken by the professional consultants who 'took a very prudent approach to the future financial position of the centre.'

According to global investment managers BNP Paribas Real Estate, UK local authorities accounted for nearly 70% of all shopping centre investment in the first quarter of this year, spending a record £255.15m in the three-month period.

Conservative-run North Somerset Council says its deal is part of an 'exciting new commercial investment strategy' that will produce more than £1m a year income to help regenerate the town centre and mitigate government funding cuts totalling £90m since 2010.

But the council's Independent leader of the opposition Donald Davies told LocalGov: 'This is putting very large amounts of public money at risk.

'The income stream is very unclear and the only thing we can be sure of is that the cost to the council will increase every year for the next 35 years.

'It may be a wonderful deal but I don't think the council is capable of making that judgment in a very competitive commercial world.'

Photo: © Rob Newman

SIGN UP
For your free daily news bulletin
Highways jobs

Chief Executive

Leicestershire County Council
Up to £234,171
This is a rare opportunity to lead a council with both strength and ambition at a time of change. Leicestershire
Recuriter: Leicestershire County Council

Director of Adults and Integrated Commissioning

Kent County Council
up to £129,530 per annum
A career-defining role at the heart of adult social care transformation. Kent
Recuriter: Kent County Council

Part Time Finance Administrator

Essex County Council
Up to £25081.00 per annum + Pro Rata
Part Time Finance AdministratorPermanent, Part Time£25,081 per annum, full time equivalentLocation
Recuriter: Essex County Council

Senior Customer Services Adviser (Housing Repairs

Mansfield District Council
£28,598 - £33,699 per annum
Mansfield is a town of towns at the centre of things in Nottinghamshire - a place of many strong connections Mansfield, Nottinghamshire
Recuriter: Mansfield District Council

No Wrong Door Deputy Manager

North Yorkshire Council
From £47,181 up to £51,356 per annum pro rata
We’re looking for a passionate, driven, and dynamic professional to join our management team within our innovative No Wrong Door (NWD) service. Scarborough, North Yorkshire
Recuriter: North Yorkshire Council
Linkedin Banner