Thanet Council £3M loss in Property Speculation

In response to questions at Thursday’s Thanet Council meeting from myself as Labour’s Finance spokesperson, the Leader of Thanet Council, Cllr Ezekiel has been forced to admit a £3M loss over the old Marks and Spencer Building in Margate High Street.

In March 2006, TDC entered into an agreement with SEEDA (South East Regional Development Agency) to purchase the old Margate Marks a Spencer site, along with two areas of land. The purchase was completed on 30th March 2006. TDC agreed to purchase the sites using a SEEDA loan at a cost of £4.9M whilst contributing various holding and running costs for the forthcoming period.
Should no agreement be reached between the Council and SEEDA, the Council has to repay the grant to SEEDA and would probably need to sell the site to finance this.

As a member of the Council’s Audit committee, I have been unable so far to get a full picture of TDC’s liabilities over this building. Cllr Ezekiel’s response was to say that the site was re-valued at £2.75M in May 2006. It is generally accepted that property values have dropped since then by about 20%, probably more in Margate. This means the Council has lost nearly £3M.”

Cllr Ezekiel also said that the Council was gaining no income from the use of the building by the Turner Contemporary Exhibition.

At the time of the loan agreement and purchase of the building in 2006, some of my Labour colleagues and I voted against, on the grounds that all the risk seemed to fall on Thanet Council. The extent of this exposure is quite a shock. £3M loss negates any income from the various controversial property disposals the Conservatives are pushing through at this time.

I am asking for further information on what it is costing to service the £4.9M loan and to insure and maintain the building.

This appears to be a reckless and expensive adventure, with no sign yet of any gain for Margate or Thanet.