York Council debts mounting as housing borrowing plan pushes finances to the brink

By the end of the year the York Council will have debts of over £318.2 million, up £52 million compared to 12 months earlier.

Nearly 14% of taxes paid to the authority now go on interest and principal repayments on loans.

The authority owes £139 million in historic debt on Council housing programmes.

The overall exposure is partly offset by investment balances which stand at £75.7 million (down from £91.6 million in 2017)

Debts have increased because of several projects. One of the most expensive is York’s share of the Allerton Park waste processing plant. Money has also been borrowed to fund aspects of the York Central development.

The financial assessment is due to be discussed at a meeting later this week.

The same meeting will consider the Council’s policy on funding new housing.

Included in the plan is a proposal which would see the Council borrowing £10 million to fund the development of the Lowfields site. This means the Council will have housing debts of £145 million, close to the legal debt cap of £146 million.

The Lowfields proposal involves building on a sports field which will be controversial and may lead to legal challenges. A promised “start on site” early in 2019 looks optimistic.

There is also the problem of development expertise in the Council. It has a woeful recent project management record with cost escalations on several major projects including the Community Stadium and the refurbishment of the Guildhall.

Lowfields – Plan to build on sports pitches

There are some good features in the new housing plan, but the Council will be sailing very close to the financial wind if it accepts the officer recommendations without amendment.

The report fails to address the problem of unlocking disused Council land like the site behind the Acomb Library or private sector “land banks” like the prime location next to the Barbican.

It would be more than ironic if the planning committee was bullied into accepting the Lowfields plans which, green space provision aside, feature straight geometric lines of 3 bed semis – a discredited  layout abandoned by other Councils over 50 years ago

York Economic Development strategy report – the unanswered questions

A new economic strategy report is being discussed later this week. It is something of a curate’s egg of a document ranging from an awkward preamble about which of two scenarios we may see over the next 20 years (neither as it happens) followed by a series of rather familiar statements many of which have previously been trailed by the discredited “Big City” lobby.

Sadly, it is another document which is City Centre focused with little comment on the suburbs or indeed most of the existing major employers (retail, tourism, social care, education)

The strategy is right in several areas.City debt

York does need a higher proportion of well paid jobs. It needs “ambassadors” to promote what the City has to offer to the business world. It would be good news if more – well qualified and entrepreneurial –  students from local Universities remained in the City after graduation.

It is also time that progress was made on the York Central development (albeit not at the expense of local taxpayers).

A useful analysis of the present York economy is included.

The report is short on the consequences of what is a, faintly disguised, “Big City “ mind-set.  It says nothing about the assumptions made on the numbers of replacement and the number of additional jobs that need to be generated in the City.

These are the numbers that drive the Local Plan land allocations, not least in satisfying any demand for additional housing, as well as the impact that growth will have on transport and other infrastructure.

The report strategy is over reliant on borrowing money for investment (by the Council) which, it claims, would be repaid from the additional Business Rates generated by the new developments. This strategy conveniently forgets that successive governments have tinkered with the proportion of Business Rates that they allow local authorities to retain. There is no reason to assume that there would be a consistent approach over the next 20 years.

Local taxpayers could be left with an impossible debt burden (currently already circa £300 million)

It seems irresponsible to agree a new economic strategy just days before a new Draft Local Plan is due to be published.

Both complement each other and should be considered together.

Economic Strategy 2016

York Council’s debts still a cause for concern

The latest finance figures released by the York Council show that over 13% of the annual Council Tax paid by York residents is being used to pay interest charges on the Councils borrowings.

Debts Nov 2915

This equates to payments of £20.25 per person per year.

The worrying trend is in the net debts level of the Council.

This is forecast to increase from £245 million this year to £285 million in 2018.

 This figure which is concerning and reflects the fact that the present Council has yet to scrap some of the more extreme commitments that it inherited from the last Labour administration (e.g. the new swimming pool at Monks Cross, the “in house” development of the Guildhall annex site and the “bridge to nowhere” access for the York central site).

Crunch time for Council as officials recommend borrowing £7 million to spend on Guildhall project

Heritage Lottery Fund refuses financial help

Senior York Councillors are being recommended to let York taxpayers bear the bulk of the risk in a  new Guildhall office project.

click to enlarge

click to enlarge

Although the redevelopment has shed its pretentious “media centre” label – attached by the last Labour administration as they adopted a £9 million development scheme – the new project seems to be a case of the “Mayors new clothes”.

Little has changed as the rookie administration is asked to plunge the City further into debt. Each York residents already owes £1326 each  following previous Council decisions.

The Council have clearly failed to find a public sector partner who was willing to bear the financial risks involved in converting the complex into a “serviced office venue with virtual office and business club facilities”.

There is welcome news that the Councils traditional civic headquarters – the Guildhall itself and adjacent Council chamber – will continue to be publicly accessible.  Officials project income of £80,000 a year from these facilities although this is likely to be dwarfed by ongoing maintenance, energy and caretaking costs.

The project also incorporates a restaurant and café/bar.

The main criticism, of the new Council approach is likely to be that it has failed to test the market for the site. While for many,  retaining the historic building in public ownership was a “given”, the so called review process undertaken in the summer turned out to be little more than a cosmetic exercise. Despite the obvious access difficulties for commercial use, alternatives such as hotels or residential were neglected.

York Guildhall

York Guildhall

Apartments in the City centre are fetching astronomical prices and the offer of a river view would be irresistible for many. In Clifton Moor the owners of offices have found it impossible to let them. Ironically, many are now being converted into flats.

If the Council has to borrow £7 million to fund the scheme, then debt repayment costs of around £600k a year – for 30 years – will have to be paid. The recommended scheme generates only an estimated £362k in annual rental income and that assumes a high occupancy level.

The Heritage Lottery Fund has now formally turned down a request for a grant so that is one source of funding which has disappeared.

So York residents will be hoping that subsidies from the LEP and similar bodies will offset the burden.

Without them – and a lot of luck – the project could be a burden on generations of York taxpayers for decades to come.