Agenda item

9.1

This paper sets out a proposal to review the service charge recharged to traders at Crystal Peaks Marketplace. The Council are tenants of the Crystal Peaks market under a Lease made between Albany Courtyard Investments Limited and the Council which was commenced on 29^th July 2005 (“the Superior Lease”). The Superior Lease provided that the Council’s landlord could recover a service charge from the Council for certain services that the provision of is managed by the landlord’s agent Workman LLP. Although the under leases made by the Council with market traders allows for this service charge to be recovered by the Council from the market traders there has not been an increase passed on to traders in several years. This is despite the operational cost of the market increasing substantially. There has also been increases to the Service Charge paid by Sheffield Council to Workman LLP that has never been passed on to the Traders within the Marketplace.

This report therefore sets-out the impact of under-recovery and proposes options in relation to service charges going forward

9.2

RESOLVED:

9.2.1

That the Waste and Street Scene Policy Committee approves an increase to the service charge currently charged to market traders of CPI+8% (an increase of 14.8%).

(NOTE: Councillors Sue Alston, Mike Chaplin, Tony Damms, Tim Huggan, Mark Jones, Joe Otten and Sioned-Mair Richards requested that their votes for recommendation be recorded.

Councillors Alexi Dimond and Maroof Raouf requested that their votes against the recommendation be recorded.)

9.2.2

That the Waste and Street Scene Policy Committee agrees a period of 12 weeks from the decision being taken to the implementation of the new service charge.

9.2.3

That the Waste and Street Scene Policy Committee agrees that a review should take place annually for officers to make proposals to the Committee for moving towards full cost recovery or if necessary, proposals will be brought to reduce the service charge.

9.3

Reasons for Decision

9.3.1

The option outlined in scenario 5 (CPI+8%) provides a reasonable increase to the service charge that enables the Council to move towards full cost recovery whilst allowing time to assess the impact of the increase on traders, given that the service charge has not been increased in a number of years.

9.3.2

The overall outcome should be a more sustainable market, maintaining its quality and service levels, and a high occupancy rate to continue the vibrant feel to the markets post pandemic.

9.4

Alternatives Considered and Rejected

9.4.1

The option to do nothing (scenario 1) has been rejected by officers due to the unsustainable nature of the increasing subsidy required on operational costs.

9.4.2

The option to move straight to full cost recovery (scenario 9) will be too much of an impact on the tenants. It’s likely to create significant cost pressures that are too large to pass straight on to customers and may increase the markets vacancy rate, which will negatively financially impact the budgets for service charges and rents. Overall, it could undermine the financial position rather than improve it.

9.4.3

Other models of recharging the service charge such as a service charge only tenancy agreement are options that require further work that has not been possible to complete in time to consider for this paper.

9.1

The Interim Operations Manager City Centre Maintenance and Sheffield Markets and Head of Street Scene Services presented a report that reviewed the service charge recharged to traders at Crystal Peaks Marketplace. The operational costs of the market and the service charge paid by the Council to the landlord of the Crystal Peaks Market had increased, however the increases had not been passed on to traders. The report explained the impact of under-recovery and set out proposed options in relation to service charges going forward.

9.2

Members noted that, in order to fund the required maintenance work, the service charge needed to be increased. The impact of any increase should be monitored closely and Members requested that an item be added to the Committee Work Programme to review the Market Strategy and explore ways that the Council could support traders.

9.3

In response to Member’s questions, officers agreed to provide information on the total amount of subsidy provided to the traders by the Council since 2009. Members also requested that, moving forward, reports on charges paid by traders be incorporated into one report rather than separate reports for each charge and Market.

9.4

It was moved by Councillor Joe Otten, and seconded by Councillor Mark Jones, that an increase to the service charge currently charged to market traders of CPI+8% (an increase of 14.8%) be approved. On being put to the vote, the motion was carried. Councillors Sue Alston, Mike Chaplin, Tony Damms, Tim Huggan, Mark Jones, Joe Otten and Sioned-Mair Richards requested that their votes for recommendation be recorded. Councillors Alexi Dimond and Maroof Raouf requested that their votes against the recommendation be recorded.

9.5

Councillors Alexi Dimond and Maroof Raouf requested that their support for the officer recommendation (an increase of CPI+22.26%) be recorded.

9.4.1

RESOLVED: That the Waste and Street Scene Policy Committee approves an increase to the service charge currently charged to market traders of CPI+8% (an increase of 14.8%).

(NOTE: The result of the vote on the resolution was FOR – 7 Members; AGAINST – 2 Members; ABSTENTIONS – 0 Members.)

9.4.2

RESOLVED UNANIMOUSLY: That the Waste and Street Scene Policy Committee agrees a period of 12 weeks from the decision being taken to the implementation of the new service charge.

9.4.3

RESOLVED UNANIMOUSLY: That the Waste and Street Scene Policy Committee agrees that a review should take place annually for officers to make proposals to the Committee for moving towards full cost recovery or if necessary, proposals will be brought to reduce the service charge.

9.5

Reasons for Decision

9.5.1

The option outlined in scenario 5 (CPI+8%) provides a reasonable increase to the service charge that enables the Council to move towards full cost recovery whilst allowing time to assess the impact of the increase on traders, given that the service charge has not been increased in a number of years.

9.5.2

The overall outcome should be a more sustainable market, maintaining its quality and service levels, and a high occupancy rate to continue the vibrant feel to the markets post pandemic.

9.6

Alternatives Considered and Rejected

9.6.1

The option to do nothing (scenario 1) has been rejected by officers due to the unsustainable nature of the increasing subsidy required on operational costs.

9.6.2

The option to move straight to full cost recovery (scenario 9) will be too much of an impact on the tenants. It’s likely to create significant cost pressures that are too large to pass straight on to customers and may increase the markets vacancy rate, which will negatively financially impact the budgets for service charges and rents. Overall, it could undermine the financial position rather than improve it.

9.6.3

Other models of recharging the service charge such as a service charge only tenancy agreement are options that require further work that has not been possible to complete in time to consider for this paper.