Profit margin vanishes at Barnsley's new Glass Works centerpiece
Barnsley's flagship Glass Works regeneration project will no longer make the profit councillors were told to expect when they approved the multi-million pound scheme, officials have admitted.
Barnsley Council is bankrolling the work to redesign the old Metropolitan Centre and other improvements at a total cost of around Â£180m, after previous attempts at partnership deals with the private sector stalled during the financial crisis.
When councillors signed up to the project, they were told the '˜yield' from the developmentÂ '“ the council's income from rents and business ratesÂ '“ would cover the cost of repaying loans and leave some cash on top.
But officers have now confirmed a double whammy of increased building costs and a projected income lower than previously expected mean the prospect of any profits have vanished.
Financial officer Neil Copley told a meeting of the council's scrutiny boardÂ '“ which monitors the authority's performanceÂ '“ 'It will not turn a profit, it is about regenerating the town centre.'
They have now agreed to set up a '˜task and finishing group', a body of councillors who will oversee details of the development more closely.
Coun Wayne Johnson questioned the accuracy of earlier financial forecasts and was told the situation where statistics suggested a small return had now been 'reversed'.
Mr Copley said: 'There has been an increase in cost in building the development and that is funded through borrowing.
'The yield is not as high as we thought it would be three years ago.'
However, David Shepherd, the council's director for economic regeneration, said prospects were promising, with leasing deals on course to provide the income to cover the costs of the work.
'We are quite pleased with the deals we have done so far,' he said.
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'We want to make sure we get the best deals for Barnsley and that when we announce people (new tenants) they will be market leaders. There will be more to come.
'They allow us to ensure we have enough to cover the costs of running the scheme,' he said.
The meeting was told there was a recent upturn in '˜footfall', or visitor numbers, to the town centre of 11 per centÂ '“ a positive indicator for the scheme and Coun Roy Miller, the Cabinet's spokesman for Place, said he was encouraged by the success of the development to date and said: 'This council made a brave decision to bring it on ourselves and that is what we have done.
'We have delivered on our promises. We have opened the new market.
'I have been in town and it is busy. I have spoken to four stallholders who said they have never done such good business.
'Barnsley is set in its ways, it has kept its market. We are moving forward, it is a fantastic result,' he said.
The council is now working to bring other elements into the town centre, including more leisure activities to draw in visitors, to counter the weaker retail situation brought on by internet shopping.
Talks are already going on with The Civic about how that can be better utilised alongside the new developments to make the town centre stronger.
There are already ten new restaurants in town and the council is keen to attract those who are currently taking their money elsewhere in the region, as well as attracting in outside visitors and persuading them to make return visits.
Part of that involves working towards '˜Purple Flag' statusÂ '“ similar to Green Flag status for parksÂ '“ which would set standards of what visitors could expect for both the day and night economies of the town centre, a way of tackling fears over issues such as anti social behaviour, which may leave some potential visitors feeling daunted.