York council faces £1.37m bill after stadium gamble fails

30 Nov 2020 @ 6.45 am
| News

York council is facing a potential £1.3 million shortfall after three restaurant units at the community stadium failed to attract tenants.

In 2017, City of York Council agreed to underwrite the construction of the units in the east stand.

The move was noted to be ‘a significant risk’ – but councillors agreed to go ahead in order to secure finance for the facility.

They granted L&G a 250-year lease of the units as part of a deal worth £4.4 million.

However, they agreed to accept liability of £1.375 million if L&G failed to find a tenant for any of the restaurants.

A report going to councillors today (Monday) reveals that none of the units have been let.

Three options

An aerial view of the stadium. Photograph: Town Pix / YouTube

The report, to the customer and corporate services scrutiny management committee, says the council has three options:

Option 1: accept the restaurants are not let and so miss out on the £1.375m from L&G. But that means the council must borrow that money to make up the shortfall.

Option 2: to agree that the council itself takes a 25-year lease on the units ‘on terms to be finalised’ with L&G – and therefore be responsible for repairs and maintenance.

Option 3: to take full ownership of the units, lose the full £4.4m from L&G, and earn revenues from them when eventually let.

“The options will all come with a cost to the council,” the report says.

“The borrowing will result in a fixed increased borrowing cost. The financial cost of leasing the units will depend on the rents paid to the landlord, the receipts of letting on and the levels of voids over the period of the agreement.”

The meeting takes place at 5.30pm today. You can watch it live on the City of York Council YouTube page.