CIVIC leaders in Portsmouth have turned to car giant Mercedes-Benz to resolve the council’s cash problems and keep services afloat.
The city authority has spent £8.75m on a Mercedes showroom in Eastleigh as it continues its property-buying spree.
This is the fifth multi-million-pound property Conservative councillors have bought with our money, and not a single penny has been in Portsmouth.Councillor Gerald Vernon-Jackson, Portsmouth Lib Dem group leader
The council has been purchasing buildings outside Portsmouth from which it can take a yearly rent and put the cash back in its budget.
But political rivals have questioned why the council continues to ignore places in the city which are crying out for investment.
The deal for the 31,000sq ft purpose-built dealership, near Southampton International Airport, is the fifth property the council has bought in nine months – at a total of £51.8m.
Councillor Donna Jones, Tory leader of Portsmouth City Council, says the authority is expected to earn £3m a year from the investments it has made.
The council is bracing itself for £9m of cuts next year as the government continues to impose its austerity programme.
Cllr Jones said: ‘We are borrowing money cheaply, thanks to low interest rates across the UK on fixed rates, and then investing that money in long-term commercial purchases such as the freehold of the Mercedes dealership.
‘The rent that comes in pays our borrowing costs and provides us with a profit which we are using to pay for statutory and non-statutory council services.’
But Cllr Vernon-Jackson, Portsmouth Lib Dem group leader, condemned the latest purchase.
He said: ‘This is the fifth multimillion-pound property Conservative councillors have bought with our money, and not a single penny has been in Portsmouth. No wonder firms don’t have the confidence to invest here and create jobs.
‘And investments in Southampton instead – I don’t think that is a good idea.’
Cllr Jones added: ‘So far, since we created the property investment fund, we have created over £3m per year.
‘This has reduced the amount we have had to cut from council spending as a consequence of the austerity programme.
‘We made a commitment two years ago, when we took over the running of the council, that we would go out and create new income for the city.’
The council says plans for further property investments are already under way with more deals expected to be completed in the coming months.
Full breakdown of council property investment deals
PORTSMOUTH City Council’s Mercedes deal is the authority’s fifth property purchase in nine months.
In total, the council has spent £12.4m on a DHL parcel distribution warehouse near Birmingham, £8m on an industrial warehouse near Gloucester, £13m on a Waitrose supermarket in Somerset and £9.7m on a Matalan retail warehouse in Swindon.
The deals have been criticised – with rivals questioning why land at Tipner and the Northern Quarter have not benefited – but the council has said its putting cash where it stands to get ‘a good rental return to improve the council’s revenue stream.’