OWNERSHIP of a leisure park earned a council just £2,430 in the last financial year – but income levels are expected to return to around half a million pounds by March next year.
Controversy has surrounded Monmouthshire County Council’s purchase of Newport Leisure Park as it took on £21 million debt to buy the site, which is outside the county boundary in Newport, but figures show it has earned the council £1.6 million over five years.
That figure is however below the council’s expectations when it took the decision to purchase the site to provide it with an additional income stream.
The Conservatives, who controlled the council when the deal was made in 2019 have defended the purchase, as has council chief executive Paul Matthews.
The council’s most recent financial report showed that for the 2022/23 financial year the authority received £109,000 less in income than expected from the site in the Spytty area of the city. That had prompted one councillor to question if the authority should sell off the site for as little as one pound.
In response to queries from the Local Democracy Reporting Service the council has clarified the £109,000 “reduced income” that was reported is against the amount it would have expected to have earned above its borrowing costs.
The council pays back £925,217 every year to cover the cost of the loan used to purchase the site and it has produced an income of just over £1 million a year, every year, since its first full year in council ownership in 2019/20.
But during the past financial year the council took a £333,656 hit on operational costs, which are normally just £2,768 a year, which was blamed on service charges, insurance and business rates relating to three vacant units and “debt write-off associated with tenant default”.
That meant that for 2022/23 the council’s net income from the site was just £2,430 from a gross income of £1,261,303, of which it had to pay out the £925,217 figure to meet its borrowing costs.
That would have left it with a net income of £336,086 but due to the higher than normal operational costs the centre produced just over £2,000 for the council.
In 2020/21 and 2021/22 the council reported a net income of £526,158 and £577,266, respectively after all borrowing and operational costs had been met.
A council spokeswoman said: “The net income will return to that of previous years in 23/24 following lettings to Magic Bean Company and Innoflate.”
In total, since purchase, the council has earned £5,705,207 in gross income from the leisure park and paid £3,700,868 in borrowing costs, which has produced an income of £2,004,339, which has been further reduced by operational costs of £343,771, the bulk of which occurred during the 2022/23 financial year.
That has left the council with a net income of £1,660,568 from the site since the 2018/19 financial year.
At present the former Pizza Hut unit is the only one of 11 that make up the park in the council’s ownership that is vacant.
At the council cabinet’s most recent July meeting Conservative opposition leader Richard John said it had been a “challenge” for the council in explaining why it had purchased the site.
He suggested a comment from Labour member, Jill Bond, during a scrutiny meeting that it should be sold for £1 suggested councillors also didn’t understand the purchase.
He asked if cabinet member for finance, Rachel Garrick, could “rule out” selling the site.
The Caldicot Castle Labour councillor replied: “It hasn’t quite met the two per cent target set for it, but we’re not going to sell it for a pound or even £2, you’ll be glad to know.”
The council also owns the Castlegate business park in Caldicot, which failed to make a positive return in 2022/23 which the council said was due to telecommunications supplier Mitel leaving the site in March 2022. The council bought the site for £7 million in 2018.
The council said the firm’s decision created a £1.7 million shortfall that was “largely offset by lettings and expansion of existing tenants”.
The spokeswoman said: “This has reduced the in year deficit after borrowing repayments and expenditure to £404,987. We remain confident of further lettings and the existing pressure is in part supported by the investment reserve which has been generated in previous financial years through surplus income from the asset.
“Allowing for the in year deficit, since acquisition the asset continues to contribute a net surplus after borrowing and operation costs of £583,491.”
