Decision details

10.1

The Interim Operations Manager City Centre Maintenance and Sheffield Markets introduced a report setting out a range of options regarding the recovery of utilities charges from Moor Market and Crystal Peaks Market tenants. Increases in utility charges had not been passed through to tenants since 2014 and energy prices had risen steeply in recent years. This created a significant under recovery between the charges paid by tenants and the cost to the council.

10.2

RESOLVED UNANIMOUSLY:

1.     That an increase in the current tariffs charged to tenants of 50% on electricity and gas be approved.

2.     That a period of 12 weeks from the decision being taking to the implementation of the new tariff be agreed.

3.     That a review takes place after 6 months to assess the impact of the changes and that proposals be made to the Committee for moving towards full cost recovery on utility costs over the next three years; any proposal to vary the tariff will be brought back to the Committee for decision.

10.3

Reasons for Decisions

10.3.1

The Committee rejected the option in 1.6.3 which proposed a 111% uplift on electricity and 107% uplift on gas in favour of the option outlined in 1.6.2 of increasing the current tariff by 50% in order to minimise the impact on business viability. This option would continue to move the charges towards the principle of full cost recovery of utilities costs, while allowing for some subsidy to support tenants to adjust to the increases, which will better allow them to manage costs and charges required to offset the impact on their businesses. This will reduce the potential of businesses needing to leave the market, which in turn reduced financial risk from lost rent or service charges.

10.3.2

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.

10.4

Alternatives Considered and Rejected

10.4.1

The option to do nothing (1.6.1) has been rejected due to the unsustainable nature of the increasing subsidy required.

10.4.2

The option to move straight to full cost recovery 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.