Payment Holiday For Me…

With fresh Tier 3 restrictions placed on North Yorkshire, those who are self-employed as well as local tourism and hospitality businesses are screaming for help. Those that haven’t closed down or gone under are in severe financial difficulties and need urgent intervention to survive. With central government lining up a seemingly endless series of lockdowns for the next few months there appears to be no help in sight.

The situation is very different for businesses with a different relationship with those running the public sector. They get payment holidays, they get let off their leases and they receive subsidies, but small businesses are sent demands for payment and offered little real help.

Let’s take Benchmark Leisure Ltd as an example. The North Bay Water Park was opened to the public in 2016. The build was funded with a £9million loan from the Borough taxpayer to be repaid over 20 years. As first reported on the Enquirer, the council’s legal eagles failed to secure the loan which could leave the local taxpayer picking up pennies on the pound if bankruptcy ensues.

On Wednesday 30th December SBC’s Labour leader, Cllr Steve Siddons, gave relief to Benchmark in an urgent decision. Siddons extended the term of the loan from 20 to 35 years. Revealed in the documentation was the fact that Benchmark had repaid £500,000 of the £9million loan in the past four years.

Documentation obtained from a councillor shows I am not the only party interested in finding out exactly what proportion of the Benchmark loan has been repaid. Councillors have long sought this information, but it has been kept from councillors by Senior Officers and has been referred to as privileged information known only to the few.

The reply to Mr Corrigan states that £580,000 was repaid on 9th April 2019 as part of a £861,996 payment to SBC by Benchmark. As you can see from the payment breakdown information provided by S151 Officer Nick Edwards, the payment of bond has reduced the outstanding loan balance which appears unusual.

• £580,000 – payment of bond, the receipt reduced the outstanding balance on the loan account.
• £40,000 – Section 106 payment.
• £850 – Section 106 monitoring fee.
• £132,000 – payment of invoice relating to quarterly rental.
• £30,414 – payment of invoice relating to car parking income share.
• £29,732 – payment of invoices relating to improvement sums due.
• £49,000 – land drawn down payment received in accordance with the Development Agreement.

The minutes of the Audit Committee Meeting on Thursday 31st January 2019 make it clear that the construction of the Premier Inn at the Water Park will only commence if all monies owed to the council are paid in full.

Other legal requirements prior to the grant of the lease of the hotel phase include ensuring all other payments due and owing by Benchmark to the Council are up to date such as rent/loan payments and sub lease guarantee payment.

Further information from the Audit Committee states SBC Officers will monitor loan repayments.

Regular meetings to be maintained with Benchmark to assure progress including regular loan repayments.

The reply to Mr Corrigan states that no further loan repayments have been received by SBC since 9th April 2019. In these very difficult times it appears that the council may have given Benchmark a payment holiday.

The purpose of the urgent decision was not to extend the term of the Water Park loan, but to extend the term of the Sands Development Agreement which was due to expire today. Siddons agreed to extend the development agreement by six weeks giving Benchmark time to put substantive proposals in front of councillors. One of the proposals indicated was the full repayment of the £8.5million outstanding on the Water Park loan in return for extending the Sands development agreement.

So Benchmark have the cash, but it isn’t being used for loan repayments. A pattern begins to emerge that Benchmark only hand over money to SBC when the ability to start a development or a new contract is on the line. That is not a good basis for entering into another agreement. Anyway, shouldn’t new contracts be put out to tender to ensure the Council receives “Best Value” when investing Borough taxpayer’s money?

Siddons’ reason for six week extension of the development agreement is to head off legal action initiated by Benchmark’s solicitors. Siddons stupidly predetermined he wouldn’t be nodding through any extension to the Sands development agreement (4 minutes 15 seconds) when he assumed the role of council leader in 2019.

In October Sheffield International Venues (SIV), who ran the Scarborough Spa and Whitby Pavillion, terminated its lease agreement with SBC. This was after they’d received rent holidays and subsidies from SBC.

Another pattern begins to emerge: Senior Officers at Scarborough Borough Council are totally incapable of drawing up contracts or legal agreements that can stand up to scrutiny from other solicitors.

So, if you’ve got a solicitor who can outwit the council, then its Payment Holiday For Me, But Not For Thee.