One of the properties owned by the Council which has remained empty and unused for a long period of time – 29 Castlegate – looks like it will remain so indefinitely. Budget provision to upgrade the property – which occupies a key position next to Fairfax House – is being taken out of this year’s programme.
Apparently a decision, on the future of the building, will be taken at a meeting next month.
The property, which most recently accommodated a youth support centre, was to have been sold, with the York Civic Trust the most likely occupant. That deal fell through amidst claims that the Council were not getting “best value” for the property.
The Council now says that the refurbishment work cannot start until the next financial year. £270,000 has been allocated for repairs to the building
It remains unclear why the Council did not try to sell the property on the open market and why no attempt has been made to find at least a temporary use for what is a prime site.
One of the reports least likely to be subject to detailed scrutiny, as the York Council prepares its budget for next year, is the upward trend in interest charge commitments
By 2022, the amount borrowed by the Council is set to escalate to over £178 million a year. Total debt will reach over £1/2 billion the following year.
This is by far the largest liability the Council has had since it became a unitary authority over 20 years ago.
With interest rates on borrowing by Councils now standing at around 3.5%, it means that, within the next 5 years, the proportion of the Council Tax collected in the City, and used to service debt charges, will increase for 12% this year to 23%. That figure assumes that there will be no increase in interest rates.
In practice the trend means that there will be less money available to spend on street level public services.
So, should we be worried?
At one level, no.
The forecast expenditure, although much closer to the legal borrowing limit, will still be within the ceiling in 2024.
But there is more to it than that.
It is not just principal and interest repayments which erode the flexibility available on the Councils revenue account. New services often bring additional running costs. The Council has forecast zero net expenditure on some high risk investments (e.g. the commercial office space at the Community Stadium, the “business club” being set up at the Guildhall and the Castle Mills development). If it got any of these decision wrong, then taxpayers face a big hit.
What is the additional investment big spent on.
A list of new items being considered tomorrow (Thursday) can be found by clicking here. There are dozens of other items which have already been agreed.
So, is that the extent of the risk?
Unfortunately no. There are several investments that the Council wants to make but for which it has not yet made full financial provision. By far the largest is the York Central project. This could add tens of millions to the programme depending on what financial backing central government decides to offer.
The dualling of the northern by pass is also still not fully funded. Such plans as have been published omit, for example, flyovers at key junctions and across the river. Both could add tens of millions to the costs.
Could we make savings?
29 Castlegate – £1/4 million repair bill
Certainly. The Council has taken on the risk at several developments which the private sector considers to be nonviable. This started when the Council underwrote the office development at Monks Cross, a similar logic was applied to the £20 million Guildhall scheme and most recently we saw the £44 million Castle Piccadilly project brought “in house”. A similar decision was taken on the housing development at Lowfields.
This year £270,000 will be spent on repairing and remodelling 29 Castlegate – an obvious project on which to seek a commercial partner.
Successive generations will end up paying the additional annual £2.8 million interest charges on this year’s new project list unless a more prudent approach is adopted by Councillors.
The new Executive is expected to review the affordability of a £20 million scheme at the Guildhall which would see the creation of a “business club” there. If the project goes ahead, work will start in the autumn with reoccupation expected in 2021.
The estimated total value of the assets is put at between £30/40 million.
Little attempt has been made to secure short term lets for the properties which include prime sites like 29 Castlegate, the former youth advisory HQ.
Most of the properties have been exempt from paying business rates. Had they been occupied then Council taxpayers would have benefited from an additional £200,000 a year in income.
To this would be added rental income of around £400,000 a year or a substantial capital receipt.
The Castlegate property was to have been purchased by the York Conservation Trust with the York Civic Trust hoping to subsequently lease the building as part of its expansion plans for the adjacent Fairfax House.
The agreed purchase price of £430,000 was criticised at the time as being “too low” for a building in such a prime site.
29 Castlegate
Now the Council says that it was notified on 21st May that the Conservation Trust would not be purchasing the building. However, the York Civic Trust had been told the same at their AGM last year. The Council say that they are now “reviewing” the position.
No public reports have been made on asset utilisation issues at the York Council this year.
The Council is spending around £80,000 a year on maintaining
and securing the properties.
Only one of the properties has a temporary occupant (20 Piccadilly)
The table does not include underused assets like 19/21 Piccadilly (Spark)or land with a development potential. The latter includes land purchased in 2008 to accommodate an extension to Acomb Explore Library and which has been unused ever since.
19/21 Piccadilly
The Council says that it has only one Council house, at Glen
Lodge, which has been empty for longer than 6 months.
The Council Housing department has been criticised in the past for allowing some of itsestate garages to remain empty for extended periods of time.
The revelations have led to calls for a more proactive approach by the Council in the use of its assets. The new Council leadership has been advised to reintroduce a 6 monthly public report on empty property issues.
It may be that the time has come for the York Council to seek outside help in managing its huge commercial building portfolio
This is by far the largest liability the Council has had since it became a unitary authority over 20 years ago.
