Council plans to sell off popular car parks and rent them back at an inflated cost have been slammed as “ridiculous” amid attempts to raise money for the local authority.
Earlier this year, Shropshire Council announced that it was £32.7million short of its target of raising £49.8million of capital receipts in the financial year.
However, as part of the new plans, the council is expected to sell 10 of its popular car parks across the county to investors, at a cost of around £30million.
A new agreement could see the private owners of the car parks lease them back to the local authority for an estimated price of £1.5million per year, although this figure could still change.
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The council said it was selling off the car parks to raise revenue
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Gwilym Butler, Conservative member for Cleobury Mortimer, commented on the proposals, saying the scheme was necessary to address financial woes, the Shropshire Star reported.
The Portfolio holder for finance, corporate resources and communities added: “I believe this represents a significant opportunity for both the fiscal health of our organisation and the long-term protection of assets in our community.
“With this proposal, we can seek the opportunity to leverage our assets in a way that is forward thinking and sound.”
The council will reportedly retain the money made from the car parking, although funds raised from motorists will be used to pay the annual charge.
The proposed “income strip” is expected to see the private companies purchase the car parks for a term of 125 years. After the end of the term, the council will be able to buy them back.
The agreement does include a buy-back option after 50 years, allowing the council to repurchase the leasehold interest for the “nominal sum” of just £1.
A report released by the council earlier this year stated that the income strip model would “unlock immediate capital while ensuring that these vital assets remain under public control”.
It added: “The selected car parks are crucial for local infrastructure, supporting economic activity, tourism, and public services.
“The development of an ‘income strip’ option… could yield a substantial receipt through an alternative approach to the treatment of car parks as an asset and surplus income relating to controlled parking.”
The proposals have been met with significant backlash from council leaders and motorists over the decision which could receive the green light soon.
Councillor Roger Evans, Group Leader for the Liberal Democrats, questioned what the council would have to show for the deal, saying that there would be a lack of assets which could potentially increase in value.
Similarly, Lib Dem Councillor Viv Parry for Ludlow said: “I think this is a daft idea, completely daft. My father said when I was a little ‘never sell things off when you need money’. Please don’t do it, it is ridiculous.”
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Frankwell Car Park in Shrewsbury is one of the most popular car parks in Shropshire
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A Labour councillor, Kevin Pardy, criticised the timing of the motion, saying: “I don’t understand it and I believe there will be other people voting today that don’t understand it – I am not being rude, sorry. To present this to me just a few days before voting on it is wrong.”
Supporters of the income strip model stated that the additional funding could be used to ensure the council is “modern, efficient and financially sustainable”.
Councillor Butler stated that the council had “carefully considered” the risks involved in the approach, adding that there was “still some way to go to complete due diligence”.