Sheila Oliver's Campaigning Website

Adults and Communities Meeting 13/3/13
Scrutiny Committee

This was all about Stockport Market place- strategic property acquisition.

The stated purpose of the report  was to outline strategy for the development of mainly specialist retail business in the market place, to set out the hoped-for results of the plan and stress the need to acquire the property - Corporate Resources, Adult Social Care Capital Resources, reallocate some PIF to fund work at the market place.  It should mention in the headline the ultimate source i.e., the already stretched council taxpayers.    They are being asked to take the risk of failure of a project whose in these hard times is far from likely to be positive.

Background - The Town Centre Development Prospectus (2011)

http://www.stockport.gov.uk/2013/2978/8803/12246/tcguidance/stcdevprospectus

"improve Stockport's market offer and promote greater use of the market place.....utilising vacant and underutilised buildings."

But, lo and behold, an opportunity arose to acquire another property . Surely, this wasn't the real aim all the time?  What of the vacant premises?  Meanwhile, the national economy had suffered -  effectively a triple dip recession - and the decline shows no sign of ending. Where are all these market shoppers to come from?  At this point, Portas'influence is mentioned - specialist shops re focussed.  Portas Pilots have been reviewed recently countrywide and have been given a universal thumbs down - frivolous mini-schemes, days out and other pipe dreams ventures.  The exception Stockport?

http://www.sheilaoliver.org/portas-pilot-stockport.html

 
Is Stockport Council' s record on capital project management really that good?

http://www.sheilaoliver.org/blackstone,-offerton.html

http://www.sheilaoliver.org/blackstone-gb-building-solutions.html

http://www.sheilaoliver.org/bridgefield-development.html

http://www.sheilaoliver.org/offerton-precinct.html

http://www.sheilaoliver.org/grand-central.html

Negotiations in many cases have been longwinded, costly and unsuccessful - often cause by inexperience of the real world on Stockport Metropolitan Borough Council's part and their poor choice of developers, consultants and other agents.

A Section Now On Vision - A slick word which belongs in novels, holy books and in the mushroom fields of Somerset and not in the reports of local governments. The Market Place will be "a lively atmosphere and animated street scene"; a market improvement consultant has started work on a plan of practical measures .....The Portas connection again?  The use of existing council owned buildings still gets a mention. The Market Place is to be a "fledgling creative hub." This phrase and the constant reference to "creative industries and specialist retail"  has to be further evidence of the Portas connection.  Other privately owned, vacant premises are to be approached. Growth intended in this hub - generally and from already established private businesses.

Property - The Council owns various properties in the area and is also in negotiation with Manchester Metropolitan University (Graduate Produce Hall).  However, the common thread running through all of these proposals is the need for refurbishment outside and in.  And the cost is to be borne by???  You guessed it!  At this point it comes as no surprise that "an opportunity has arisen to purchase another property in the market" - to support the Vision.

MMU will invest in the interior hall's requirements but (wait for it) only after Stockport Metropolitan Borough Council  has secured the exterior - enabling MMU to take on a full repairing lease.  Apparently this would lead to an increase in SMBC's asset - but to what end?  It's surely not going to be sold in the near future.  "Key Priority Theme" is  "supporting local businesses during challenging economic times."  Absurd!  This support would be needed for decades and would need continuing underwriting by SMBC.

Funding - Much reshuffling of previously earmarked funding (2011) - including PIF and "Stockport Business Challenge Fund."   Who would use the market place property?  There have been approaches by numerous creative enterprises - with no backing - but enthusiastic. The stated aim is attraction of more customers.  But again, have we accounted for the almost certainly to be continuing decline in the national economy?  However, there are two front runners ARC, Arts for Recovery in the Community - Gallery, Design Service, Commercial Social Enterprise - and No 2 Pure Radio. These are both charities and neither could pay "market" rent but given that, would hopefully succeed mainly by establishing a learning/employment centre and raised profile - again more than a hint of Portas. Also, SMBC as underwriters is a constant.

Property Acquistion (seems to have taken over the headlines from use of vacant council property).
Funds would be sought from SMBC (Adult Social Care) and grants - after refurbishment and fit-out.  The property would be leased  at below market rent - the funding would be complex and from numerous sources. It is difficult to see a deal without SMBC permanently underwriting this. If this scheme should fail, SMBC would accommodate the NO RISK users in the Market Place.

The whole strategy appears to have little chance of success and should be avoided - write off the costs thus far.

The winners will otherwise be consultants, advisers, selling/buying property agents and the losers will always be the Stockport taxpayers.

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http://blogging.sheilaoliver.org/#post24.

A mention here for my own favourite baddies - GVA Grimley. They advised councils, to the advantage of their other clients (e.g., Tossco), to site shopping centres out of town.  And now they are advising councils on how to deal with the mess of empty town centre retail units.  You couldn't make it up!

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Pure Innovations - Possible Involvement in Market Place Revival

Referance to summary financial statements 2007 to 2012

It is difficult to come to firm conclusions without knowing more about the Company's structure and business operation.  However, the following facts are known

The Company has charity status and profits are therefore tax free.  There is no indication of the grounds on which the status has been obtained/maintained.  What charities benefit?

Reference to volunteers running the operation - also to employees 125 in 2007 and rising to 187 in 2012 - who's who? There are 5 directors - it is not clear whether the payroll includes "employees".  If not, then the beneficiaries are the directors and "charitable status" is in question.

Costs other than payroll take roughly 20% of sales. Substantial longterm debt was taken on board in 2010 by £2.0 million and was partly used to restore cash balance and partly repaid by 2012, but the picture is not explained fully within the shareholder funds section or is out of view.  Payroll in 2011 decreased while sales were record high.  However. payroll was increased in 2012. Clearly, something odd in 2010, 2011 and 2012.  It is necessary to examine the full reason for raising debt against reasonable sales.

Some kind of payout/restructure of capital?  Who owns the company? Who put in the new debt? Why are such high cash balances needed?

Results of 2011 and 2012; turnover was more or less the same but profits were £831,982 and £58,659.  Why?

Costs other than payroll take roughly 20% of sales. Substantial longterm debt was taken on board in 2010 by £2.0 million and was partly used to restore cash balance.

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Therefore,
Turnover dropped marginally          (153,000)
Payroll increased - back to normal  (748,000)
However, other costs reduced         128,000
Reduction in net profit            (773,000)

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We need to clarify:-

How do they operate; what do they do?

Ownership? Equity, other? Council?

What made raising longterm debt necessary in 2010 but cut in half two years later?

Reshuffling of the pack?  How was the longterm debt secured?

What is the full account of the shareholders' funds?

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Net assets 2011 £1,910k 2012 £954k - why with similar turnover. This appears to hinge on what has been going on down below - c £1 million of longterm debt has been raised in 2012. Further information is required.

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