Some have said the deal to sell The Innovation Centre is not value for money
The Innovation Centre on Oxford Street, Leicester(Image: Google Streetview )
A council-owned building in Leicester city centre is to be sold off to De Montfort University (DMU) – but concerns have been raised that it’s not a value-for-money deal for taxpayers.
Leicester City Council announced on Tuesday (April 28) on their executive decisions page they plan to dispose of The Innovation Centre, in Leicester’s Oxford Street.
The decision, signed off by City Mayor Sir Peter Soulsby, is set to make the council £2.2 million, although revenue income will subsequently be lost.
The centre has been leased to DMU since its construction in 1995, and functions as a hub for graduate start-ups and small businesses.
DMU’s lease lapsed in July last year, but they have remained under a short-term arrangement since then.
A termination notice was issued to the university on February 11.
The site was advertised for sealed bids on January 12, but the council opted to proceed with a direct sale.
Authorities are typically expected to dispose of assets on the open market, but on this occasion have made DMU a “special purchaser” considering their “vested interest” in the property.
Decision documents say internal and external valuations support the £2.2m price tag, meaning the decision is within the council’s legal obligations.
However, the same documents admit that without an open market exercise, officers “cannot be certain”, and there is the “potential risk” that a higher value could have been achieved.
Leader of the opposition to the labour-run council, Councillor Hemant Rae Bhatia, has previously criticised council deals on their value for money.
Leader of the Conservatives on Leicester City Council Hemant Rae Bhatia(Image: Leicester Conservatives)
Cllr Bhatia (Conservative) said: “What’s concerning is that the council is selling a proven asset without properly testing the market and even its own report admits that it can’t be sure it’s getting the best price at £2.2m.
“In addition to this agreed price, the council will also lose £630,000 of terminal schedule of dilapidation costs from DMU.
“To be clear, we are not opposed to the University acquiring the site in principle and there is a strong case for it, but the process must stand up to scrutiny.
“The other concern is around the financial trade-off as this sale brings a one-off capital receipt, but at the cost of losing a long-term income stream.
“So, my ask to the council is that if this is the right deal – as they clearly think it is – then they should have no hesitation in demonstrating this transparently and let everyone know why they didn’t go to the market first to get the best rate and then used that valuation to seek a better asking price from DMU. What was the rush?”
Documents say DMU is an “ideal candidate” to “maximise the future potential of the site” and “inspire innovation services” to the citizens of Leicester.
Under the agreement, the university is not allowed to use the space as accommodation.
The council budget sets out the ambition to sell £60m worth of property to offset planned borrowing.
Income from the lease which will be lost when the land is sold. However, the savings in borrowing costs are set to be greater.
More than £630,000 in repair costs have also been identified at the site, and council officers say these would only be pursued if the sale does not go through.