Council’s “sound investment” in Davis House costs £15m

Our Conservative-run council’s flawed policies of property speculation on the rates, which have put Croydon on course to have unsustainable debt of more than £1 billion, will be laid bare again in a report to the Tory councillors in the Town Hall cabinet tonight.

davis houseCroydon Council is writing off more than £15million on the value of a town centre office block which it first bought five years ago claiming it showed their “excellent business approach”.

According to tonight’s cabinet meeting report, Council Tax-payers have had to pay another £4 million to buy the property, Davis House, which it already part owns though its urban regeneration vehicle, the CCURV, the council’s failing property joint venture with builders John Laing.

It is the latest case of Croydon residents having to pay the multi-million pound cost of the Mike Fisher-led council’s rotten judgement and poor decisions.

CCURV was created in 2008, in great secrecy as far as the hard detail of the deal is concerned, with the council leadership promising that it would unlock the value of many of the borough’s publicly owned sites – land and buildings, especially in the town centre.

The project had the full support of council leader Fisher and the then chief executive, Jon Rouse. Also among the leading figures who gave a green light to the property speculation deal were the unctuous Gavin Barwell, now an MP, and Steve O’Connell, the London Assembly Member for Croydon and Sutton.

According to Tim Pollard, Croydon Council’s deputy leader, CCURV would all be worth it because John Laing was so much better than Croydon Council in doing developments. So giving away 50 per cent of the profits from the scheme would be worthwhile.

It never seemed to occur to the Croydon Tories’ brains trust of Fisher, Pollard, O’Connell or Barwell that it might not be such a great idea to enter into a multi-million property deal with public property at stake just as the world was descending into a global recession caused largely by… speculating on property values.

Last year, Inside Croydon reported how the Davis House deal had gone so badly that our council leaders had made a secret £1 million loan to try to keep it afloat, and failed to report it at any Town Hall meetings.

Tonight’s cabinet report shows that Croydon Council has paid out another £4 million of public money to buy the office buildings in October from CCURV.

Croydon Council's business "guru": Tim Pollard

Croydon Council’s business “guru”: Tim Pollard

This is the same Croydon Council which bought Davis House in September 2008 for nearly £19.2 million. The building was bought just days after Lehman Brothers went into bankruptcy, with our council describing the purchase as a “sound investment”.

At the time, Pollard told the Croydon Guardian that despite the global financial market meltdown, “to buy the building on favourable terms, without alerting competitors, is an excellent business approach that underpins the council’s determination to secure value for money in all it does”.

Pollard also said that “if the URV proceeds as expected then the financial exposure will be negligible”.

That “negligible exposure” has now been crystallised into a £15.2million write-off for the CCURV joint venture with John Laing.

While the CCURV contract has remained Croydon Town Hall’s most closely guarded secret, as details have emerged, bit-by-bit, they only serve to underline how John Laing appears to have by far the better of the deal, and all at public expense.

Another £2 million is lost to the Council Tax-payer to the private equity partner in the 50-50 joint venture from whom Davis House has been re-purchased.

Croydon Council has only recently moved its head office staff into the leaking roofed glass palace that is Fisher’s Folly – built as part of the CCURV deal, but costing Council Tax-payers another £140 million under their Tory-run administration.

The council’s cabinet report tonight issues a new boast about the £4 million payment for Davis House funded out of yet more borrowing towards the council’s growing mountain of debt: “Davis House was acquired by the Council at the end of October. The financing costs for the loan are covered off by the external income received from the rent received. Therefore there is no impact on the revenue position from this acquisition. Also given the asset is owned by the council the opportunity to gain from future appreciation of the asset exists.”

The marketing page to rent out an office at Davis House can be seen at http://www.davishousecroydon.co.uk/

So a Conservative-controlled local authority which claims not to have enough money to pay for basic services for residents – lollipop school road patrols, care homes for the elderly, street cleaning – has been going out and borrowing millions of pounds to play the commercial rental market. Is this an appropriate use of public money?

And what might the private sector office owners think of Croydon Council using public money to subsidise its  entry into the commercial property market when our town centre is festooned with “Office To Let” signs?


Coming to Croydon


    • Inside Croydon: Croydon’s only independent news source, based in the heart of the borough – 262,183 page views (Jan-Jun 2013)
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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
This entry was posted in 2014 council elections, Business, Care Homes, Croydon Council, Gavin Barwell, Jon Rouse, Mike Fisher, Property, Steve O'Connell, Tim Pollard, URV and tagged , , , , , , , . Bookmark the permalink.

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