(Updated 26/5/12): Yesterday's meeting of Lancaster City Council agreed to compensate Lancaster Market traders in order to empty and close Lancaster's Indoor Market. Whether the Council will continue its lease on the building or surrender it will depend on the terms.
Press and public were excluded from the meeting, but we understand from an unconfirmed source that that the up front surrender cost of the remaining 83 years of the lease to Allied Lancaster, who own the building, could be around £16 million. (The Morecambe Visitor reports £20 million). However, terms of any potential surrender are still under negotiation with Allied.
The estimated saving to the Council over the next 83 years is thought to be around £22 million, on the assumption that the future impact of inflation would be neutral.
The City Council's annual budget is around £20 million, and so to spread the pain, if acceptable surrender terms are reached, the council would have to apply for a local government loan to be repaid over 15 - 20 years.
The total claim for compensation from the City Council by market traders who must vacate the building was agreed at £1 million.
"We are very happy that the council has settled our future," stallholder Zoe Caldicott told Virtual-Lancaster. "At last the uncertainty is over, we know where we stand and can begin making plans for a fresh start."
The future of the Market has been a long and difficult decision process for the council and has raised a great deal of feeling locally, as we have noted in many previous reports. However, the revenue from the Market cannot cover the rent, and the lease conditions stipulate that the rent can only be raised and not lowered, regardless of trading conditions, leading to an annual deficit of over £600k and rising.
This is a problem of affecting the entire retail sector, as many private retail landlords nationally refuse to freeze or reduce rents despite the downturn, leaving many shops standing empty, and the cost of renting them far beyond the reach of potential local retailers and start-ups.
Lancaster's prominent market building needs intensive use if it is to function as a retail anchor for the North West end of the city centre, and requires sustainable occupancy. Years of wishful thinking have, as far as we know, only produced Asco as a proposed alternative single retail tenant for the City Council, a plan that soured as soon as it was aired (see previous stories).
Lancaster's loss of its Indoor Market after 120 years is a very bitter pill to swallow but the terms that made it inevitable were written into the original lease on the new building. This was agreed by the then City Council and Allied Lancaster in the late 1980s after the old market burned down.
Harder still, we understand, although it has not been confirmed by the present city council, is that the estimated surrender cost of the lease has almost doubled over the past year. At the same time, long-running uncertainty over the future of the market has made it insecure as a trading base for local stallholders, many of whom have already either closed down or moved to new premises, leaving the building half empty.
A 2011 proposal to rehouse the Market in the City Museum building was found unworkable, as was a proposal to refurbish the building. Current proposals in the air may include the possibility of refurbishing and extending the market building to incorporate the adjacent walkway and row of shops, a development that might make the premises more attractive to a major retailer. However until the lease negotiations are concluded, it's not known whether such an option might fall to the City Council or to Allied to take forward.
Updated 25/5/12: Lancaster City Council has issued a statement of the recommendations agreed at yesterday's meeting:
(1) "That Council agrees to compensate Lancaster Indoor Market traders on the basis set out in the report, as an initial step in resolving the market building’s future, and delegates to the Chief Executive authority to finalise the terms and conditions of the agreement(s) to be entered into with the traders.
(2) "That Council authorises officers to work with Lambert Smith Hampton to continue negotiations with Allied to achieve the best possible terms for the Council in respect of the market building, and that the appropriate details are referred back to Council for consideration in due course, together with proposed financing arrangements.
(3) "That it be noted that should the outcome of (2) above result in subsequent redevelopment of the market building, the costs of compensating traders under (1) above would fall as capital expenditure but until such time as this is confirmed, the Lancaster Market Reserve and Invest to Save reserve be earmarked to provide cover for such costs."