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Heated exchange as Councillor says Castle Quay development has shrunk in value by £90m
22/03/2024
Questions continue as to whether the shopping centre was purchased as an investment or for regeneration
Questions over the falling value of the Castle Quay Shopping Centre and Waterside developments in Banbury, and the original reason for purchasing the shopping centre, has led to a heated exchange between two Councillors.
During an Audit, Accounts and Risk Committee meeting this week Green Councillor and Deputy Leader of the Opposition Ian Middleton pointed to a fall of £4.2m in the value of both developments in the last year. He said this meant the project overall was now worth 67.5 percent less than the £130m invested since 2018 – a loss of £89.8m.
Councillor Middleton questioned why these figures had not been published as part of the draft accounts for 2022/23 or in the completed accounts of 2021/22, even though they had previously been included in the 2020/21 accounts.
He also pushed for answers as to why Castle Quay had originally been viewed at a meeting in July 2018 as an “opportunity to invest in property for commercial purposes” which was “principally as an investment”, but had now been re-classified solely as a regeneration project.
In response the Portfolio Holder for Finance, Councillor Adam Nell, highlighted that the completed accounts for 2021/22 had been audited externally and the auditors had been satisfied they were compliant.
Councillor Nell robustly defended the decision to purchase the shopping centre as part of the ongoing regeneration of Banbury town centre. He noted any value in loss was only a paper loss in the asset value and did not affect Council Tax payers.
Councillor Nell said: “The value of that transaction, I believe in the eyes of many Members, was that it preserved Banbury town centre as a place to do business.
“Without the regeneration spending which we committed to Banbury town centre – and continue to commit to Banbury town centre – Banbury town centre would become, sadly as many other small towns in Britain have become, a place with very few shops or amenities indeed.”
But Councillor Middleton did not accept Councillor Nell’s points.
Following the meeting he said: “Considering I’ve been told for the past several years that the purchase of Castle Quay wasn’t a commercial investment, despite clear evidence to the contrary, it’s interesting that it’s now been re-classified as only a regeneration project. But to be re-classified it must have previously been classified as something else, and it was – it was classified as an investment likely to produce a return which is how it was described to the council and residents at the time it was purchased.
“Re-classifying it now is a tacit admission by the council that its original strategy was a mistake in view of the fact that it’s now lost over 67 percent of its combined value and can’t demonstrate a return on investment for council-tax payers on a day to day basis. The council didn’t need to buy the centre and could have worked with the original landlords rather than risking public money on an investment they clearly didn’t understand the implications of.
“Essentially the council has saddled itself with nearly £90m of negative equity using borrowed money underwritten by council-tax payers. Cllr Nell’s blasé dismissal of that as nothing to be concerned about quite frankly beggars belief. What else could the council have done with that £90m rather than blowing it on an investment they couldn’t afford and didn’t need to make and have now admitted in a roundabout way was a mistake?
“This may explain why the council has chosen not to include the current valuation of the centre and the waterside development in the current statement of accounts or in last year’s statement despite having done so in the previous year. I had to search through 20 appendices to find the figures buried at the end of the agenda item for budget setting at the full council meeting in February. It’s concerning that these figures have not been made available in the same place as they have in previous years and one has to ask why.”
Published: by Banbury FM Newsteam