Local services to benefit from new investment03 October 2018
District services could benefit to the tune of £28,000 per year thanks to a new commercial investment by Wyre Forest District Council.
Changes in the way local councils are financed mean authorities are looking for new ways to pay for much-needed services. Wyre Forest District Council – like many other councils - is doing this by investing in commercial property using capital resources funded from borrowing. This is a legitimate way to generate income to support local services using money that cannot be used to pay for day-to-day services.
The council’s latest investment is a £1.6m office development in Bromsgrove. Number 1 The Courtyard, Buntsford Gate, Bromsgrove, is a 8,515 sq ft two storey office building with a prominent frontage to the A38, immediately adjacent to Morrison’s supermarket. The £1.6m purchase, inclusive of acquisition costs, was completed on Monday 1 October, after councillors gave it the go ahead at a meeting on 2 May.
This is the third purchase made by the Council this year as part of its plans to acquire assets that support local economic recovery and generate income streams. It follows the purchase of retail units in Kidderminster in June and a major office development in Solihull at the end of September.
Councillor Nathan Desmond, Cabinet Member for Resources, said “The council has to close a £1.6m funding gap over the next few years. If we don’t do what many any other councils are doing and invest in property to produce a return, councillors will have to take difficult decisions such as making even deeper cuts in services that local people value.
“This acquisition in Bromsgrove will generate an estimated net income of more than £28,000 per year over a four year average, which will be used to support council services in Wyre Forest. The returns we will achieve are modest but that is because we have to borrow the money to buy the properties and meet the costs of repaying the borrowing from the rental income. Under the legal rules on council expenditure, we can borrow only for capital expenditure such as purchasing properties and land. I am sure that residents would rather see the council generate income from property than have to cut services or increase fees and charges including council tax.”
Councillor Marcus Hart, Leader of the Council added: “This latest acquisition reaffirms the council’s commitment to North Worcestershire which is reflected in the North Worcestershire Economic Development and Regeneration shared service which we host and as a partner with Bromsgrove and Redditch councils in the Greater Birmingham and Solihull Local Enterprise Partnership.
“We are deliberately building a portfolio that is mixed both by property type and by geography, in order to build the best balance of risk. There are several further investments in Wyre Forest that have been approved and we will announce them when purchases have been completed or contracts signed.”