Taxpayers have stumped up £153m for the flagship ‘Heart of the City II’ project so far, new figures show.
Sheffield City Council has paid constructor BAM £70m, spent £55m buying property and paid out millions to architects, project managers, advisers and surveyors.
The authority took over in 2013 after private sector developer Hammerson worked on a previous scheme for 10 fruitless years.
Since then an £80m headquarters for HSBC has gone up and land on Wellington Street has been sold for flats.
The full HOC2 scheme is set to cost £470m, paid for with cash from the government’s Public Works Loan Board.
Nalin Seneviratne, director of city centre development, said it should be repaid by 2038.
But the project was already regenerating the city centre, creating jobs and boosting council coffers, which had received “millions” from the land sale and would receive rent from HSBC when staff move in this summer.
He added: “This is an investment, it’s not dead money and ultimately we will get a return.
Sign up to our daily newsletter
“We are borrowing to deliver. To pay it off we will either sell the buildings or retain them if the income exceeds the borrowing costs.”
The risk of failing to find occupiers was being mitigated by taking a block-by-block approach, he added.
But interest was high, the first retailer for the HSBC building had been signed, an office pre-let - where a company agrees to occupy a building before it is constructed - was “in legals” and the council had received several bids for an office on Carver Street.
“We are talking about the centre of one of Britain’s biggest cities and although it is affected by short term economic cycles, long term you can’t go wrong.
“What we are spending won’t necessarily make a profit tomorrow but should see us run a surprlus after 2038. Short term we are turning up the dial on the economy and creating jobs.”
Mr Seneviratne said acting as developer was not part of a council’s remit – but regeneration was.
“When we took over there had been complete and utter market failure to deliver what people wanted in the city centre. We could have waited for someone to do something but it was not going anywhere so we stepped in.”