The North Somerset Council has planned to invest in a number of commercial properties at a time when it is set for the biggest council tax rise in several years
The North Somerset Council has borrowed £50 million to spend on commercial investment properties as part of an investment scheme to generate cash for its front line services. The cash-starved council which faces £11 million funding gap in its budget, will plough millions to buy a major commercial complex in the district as part of a number of investments the authority has planned over the coming years.
The cost of purchasing the site is being funded with cash from a Property Investment fund set up by authority leaders that will be managed by a Property Investment Board. The announcement regarding the purchase of the 11.8 acre commercial site in North Somerset which comprises of food retail, a petrol filling station, retail warehouses, retail shops, a pub and a car park, will be made by authority leaders. The whole site is let under a single 35 year lease which is due to expire in March 2024. However, the exact location of the complex as well as the amount the council has paid for the development have not been revealed yet, which are set to be declared to councilors in a closed doors meeting after a full meeting of council. The council refused to disclose further details about the location of the site until the legal process regarding the sale was completed. The council’s this year’s budget and new council tax levels will also be set at the meeting. In the biggest hike in several years, the council is poised to raise council tax by 5.99 per cent.
It is understood that the board appointed a team of expert investment and asset management consultants last year to seek out suitable commercial properties for the authority to invest in.
The council aims to generate enough revenue to cover the costs of the additional borrowing as well as bring in extra cash to help it balance its budgets and maintain services through the fund.
In a report to council, the board says that this proposal will create a revenue return, over the cost of borrowing, which will enable much needed resources to be redistributed towards front line services and corporate plan priorities. The acquisition will afford the council opportunities to influence and possibly regenerate the site and the mix of uses thus contributing to employment, amenities available to residents and businesses in the area as well as economic growth.
Negotiations for the site have already taken place. The deal needs to be sealed by March 3.
The council has already set itself a target of bringing in £400,000 in this year’s budget from its investment portfolio.
The report adds, in setting the 2018/19 revenue budget there is an income target of £400k that needs to be achieved through undertaking commercial investments. This acquisition will clearly contribute towards this target.
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