OLRG is calling for better scrutiny and changes to the Council's Constitution because of concerns about how Tandridge District Council is making commercial property investment decisions with large sums of borrowed money underwritten by Council taxpayers.
The Department for Communities and Local Government is warning all Councils about the potential risks of such investments because, if things go wrong, it is the Council taxpayer who pays the price with cuts to services and/or raised taxes.
The Council's first investment was the purchase, on 25 September 2017, of a freehold shop premises in Maidstone. The purchase money of £3.42m was borrowed from the Public Works Loan Board at a rate of 2.46% pa. The shop is let to a womenswear branch of Marks & Spencer in Week Street.
We are concerned about the purchase because the remaining lease is for only 4 years and 9 months and there has been concern expressed that this is a Marks & Spencer store earmarked for closure and that the lease will not be renewed.
A fortnight after the Council bought it, the following article appeared in the press saying that Marks & Spencer was opening a new superstore in Maidstone's new business park and therefore likely to close the womenswear branch in Week Street when the lease runs out click here
Our worry is that if the store is left empty the Council will be stuck with substantial loan repayments while not receiving any rent, and will also be liable for business rates and for what may be significant costs of maintaining and securing the property.
Previous to the Council's purchase, the problems Marks & Spencer were having with their womenswear sales had been well documented in both the retail and national press.
Under the Council's current Constitution, the decision to make this purchase, and any others up to the property investment fund limit of £50 million, is taken solely by the Chief Executive, Louise Round, and two Councillors - the Leader, Councillor Martin Fisher (or his deputy) and the Chairman of the Resources Committee, Councillor Simon Ainsworth (or his deputy).
We consider this is a wholly unsatisfactory position. If the Council is to pursue a policy of borrowing to invest in commercial property, we believe the full Council should be making the decisions rather than a handful of people. The current arrangements seem unsafe and to lack accountability and transparency.
OLRG, together with the Caterham and Lingfield Independent Councillors, are pressing for the Constitution to be changed to this effect.
A number of residents have already been in touch with their concerns over this issue. We would be very grateful to hear your views.