Virtual Lancaster

(Updated 12 November 2011): Lancaster Market looks set to close after group leaders for each political party and the independent groups on the city council issued a joint statement today.

Behind the scenes, it also appears the Council is trying to secure funding to negotiate a surrender on its lease with the Market building owners, Allied – although they will not confirm this – leaving the way clear for a major retailer to move into the building after the Market traders leave.

A catalogue of errors

The joint closure proposal, which will be discussed at full Council next week (Wednesday 16th November) will come as no surprise to all who have watched Lancaster City Council’s mis-management of the Market spriral out of control down the years, from the point at which the original Market burnt down and it was discovered to be under-insured, to its movement around the town while the new market was built, to a new market design that was condemned by many, leased under terms that were commercially unviable.

Finally, more recently, there was the proposal to hand it over to the dubious and now moribund and derided ASCO company, a decision which certain top level council staff and some now ousted councillors have successfully avoided being investigated for, despite concerns and complaints raised by market traders and local taxpayers.

The proposal to be discussed next week comes after a case hearing in October at the County Court which gave the council until 12th December to present it with firm proposals for the Market building’s future. Trader’s leases are now up for renewal and new leases being negotiated by the council include a disputed ‘break clause’ which could mean that traders could be turned out at short notice.

After the Council decided at its September meeting to defer decisions on the Market until its next meeting this November, traders went to court arguing under the Landlords and Tenants Act that the council’s vacillation and uncertainty over the Market’s future was creating an impossible business climate.

Now, many tenants seem resigned to the closure of the Market – with some already moving out – and we gather they are seeking compensation for the loss of premises.

“The Tenants are currently disputing the terms of the new lease we have been fighting for in court,” one market trader told us, “but when this proposal is passed Council will be forced to pull their argument from court and issue leases. This should in turn give the traders extra protection and greater leverage.”

This means that the way is open for the Council to offer tenants compensation for the loss of their tenancy, should the Market close.

“Each trader will be negotiated with individually,” virtual-lancaster has been informed. “The Council officers will then have to add up all amounts, to then report back to full Council for a vote as whether to pay the costs.

“This could be a bit of a drawn out process but I suppose it depends on how keen they are to relieve themselves of the market and also how keen [market building owners] Allied are for their payment in return for surrender of lease, so anything could happen.”

We have also been informed that the City Council is seeking to raise perhaps £8 million pounds to secure funding toward securing surrender terms – the equivalent of three years rent on the market. We wish to make it clear that the Council has chosen not to respond to our questions about this claims.

The Closure Proposal

Having fully considered the report and associated papers, the Labour, Green, Conservative and independent groups’ leaders decided on Thursday that they would be making the following joint proposition for consideration and full debate on the future of the Market by Members of Council:

1) In light of the options outlined in the report and the information contained in the financial appraisals appended to the report on Lancaster Indoor Market, Council cannot support in the long term the continuation of the indoor market operation.

2) Members therefore request that officers negotiate both the terms of a surrender with the Landlord and, considering the timescales for that surrender, undertake negotiations with traders to seek early surrender of trader tenancy agreements offering assistance with relocation and/or suitable compensation as appropriate.

3) A further report be brought to members to consider the progress of the above negotiations and to establish a financial framework to allow subsequent implementation of the proposals.

4) Should Council agree to this proposition then the intention would be for traders to be relocated to new trading premises and/or compensated, with a view to this being completed by the end of 2012.

Traders blame poor decision making for closure

The closure of the Market without any clear indication of a new site is, says Peter Corke, chair of the market traders “a sad day not just for the traders but for the people of Lancaster who use the Market.”

Lancaster City Council fell into a £567,000 deficit on Lancaster Market last year and this year’s budget projected costs of £553,400. However, uncertainty over the future of the building has led to more tenants leaving while new tenants are hard to find, and a report presented at the last Council meeting in September projected that this deficit might increase by a further £89,000.

“This all stems from the Council failing to carry out their own recomendations following the ASCO fiasco,” he told virtual-lancaster. “The council were actually going to give this ‘firm’ £1.5m when a chimpanzee with access to Google could have told tham this was not really a good idea!” (See previous story from 17th June 2010 – Asco: Council’s response on Cushman & Wakefield contract).

In 2010, the council voted to budget £150,000 for investigating ways that the Market could be made more profitable. virtual-lancaster asked the council how much of that budget remained unused, but they declined to comment.

“In March this year, due to the council’s or should I say council officers, not carrying out the resolution to improve the Market with the £150,000 set aside by the Council to do so, two core traders left directly because of the uncertainty caused,” Peter Corke reveals.

Traders were hoping that the Council would relocate all the stalls to the ground floor of the market and find a single trader to take on the entire upper floor. The council estimated the cost of moving the remaining stalls downstairs at £271,000 (see previous story) although the traders believed it could be done far more cheaply.

“Because the cost for this came back at £271,000 it took the decision out of the hands of the council’s Cabinet and it had to go to full Council,” Peter Corker explains. “Surprise, surprise – at that meeting there were numerous options to again close down the Market.

“I contacted a local firm of building contractors to give me a quote for the cost of these works and was quoted £98,700 – a third of the cost!” he tells us. “This would have kept the cost of the move within the exsisting budget and would not have had to be put before full Council, and the move would have gone ahead. Why did this happen when all the traders wanted was for the council, within its budget, to carry out what it had declared it would do in 2010?”

Market Hall owners set to benefit when traders move out and new retailer moves in

While the Market is a popular cause the building’s 99-year lease from Allied (Lancaster) Ltd is undoubtedly less popular. Although the terms under which the council leases the building from Allied are shrouded in secrecy we understand that the rent cannot ever be renegotiated downwards, only upwards.

No-one else appears to want to lease the building or part of it from the Council, and the recent financial instability of the arrangement has deterred traders, leaving the building half-empty. The building design is poor for its purpose, impeding foot passage rather than encouraging it, and the rents traders could pay, in the current economic climate, if they did fill it will not meet the cost of the lease.

As we noted above, virtual-lancaster asked the Council last week if it was making any investigation into buying its way out of the lease with Allied, which we speculate might cost between £7-8 million, but they declined to comment.

Although it now seems the Market will close, there are still several things that need to happen – not least being the actual level of compensaton the Council will offer traders.

“I have received assurances from the leaders of the Labour, Conservative and Green groups that all traders will be compensated fairly,” sasy Peter Corke, “and help and support will be given to relocate their businesses.”

“If the Council are going to be fair with traders for once, then the traders in the most will be fair to the Council,” one trader told virtual-lancaster. “That’s not to say this is a done deal though. I don’t think any of the traders will be prepared to walk away from their livelihoods for just any offer.

“I don’t mean that to sound greedy but the offers will have to be realistic, reasonable and reflect the value of each business individually, as we may find we’re better off staying put until 2015 (end of lease date) and fight for another lease renewal then (possibly into 2016).

“Some of the tenants have been in the Market for decades and some for a couple of years so it’s not going to be a walk in the park for the Council.”

As for the building itself, there are also rumours that Allied have already lined up a major clothes retailer to take on the lease. We’ll report further on this next week.

Report compiled by John Freeman and Satori