City Parking to get £500,000 bail-out from Glasgow council

COUNCIL bosses are handing out a £500,000 bail-out to the company responsible for parking in Glasgow.

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City Parking to get £500,000 bail-out from Glasgow council

They say the decision is sparked by the recession, which has resulted in usage of a car park being lower than anticipated.

In October 2009, councillors agreed to lease the 1150-space car park at Collegelands to City Parking – an arm's length company wholly owned by the council – for £1.3million a year.

As well as the car park, phase one of the Collegelands development included 100,000 sq ft of office space and student accommodation. A planned hotel has not yet been built.

Phase two is to provide a further 350,000 sq ft of offices and 400 flats but work has been delayed because of the recession.

Council bosses insist the car park is essential to support the £100million regeneration project between High Street and Bellgrove Street.

Richard Brown, executive director of development and regeneration, said: "The regeneration of Collegelands has stalled due to the recession.

"While demand is increasing, the pace of improvement is slower than projected, which is placing a significant financial pressure on City Parking's operations.

"The commercial viability of the car park was on the basis of the full Collegelands development being implemented. City Parking is bearing a significant proportion of the risk of non-completion of the regeneration programme."

As a result, councillors will be asked tomorrow to give City Parking a £500,000 rebate on the rent it pays for the car park.

Mr Brown added: "Despite the delay in the hotel and phase two, further developments by Glasgow Housing Association and Strathclyde University along George Street are under construction and the council is satisfied its decision to initiate the regeneration strategy at Collegelands will pay dividends in the medium to long term."

A spokesman said: "The council decided to take on the lease of the car park to help the development go ahead.That was a risk, but it was the right thing to do to support the £100m regeneration of Collegelands.

"However, the recession has been longer and deeper than had been anticipated. It is not right City Parking, as a commercial organisation, is now asked to bear that risk on behalf of the council."

vivienne.nicoll@ eveningtimes.co.uk

They say the decision is sparked by the recession, which has resulted in usage of a car park being lower than anticipated.

In October 2009, councillors agreed to lease the 1150-space car park at Collegelands to City Parking – an arm's length company wholly owned by the council – for £1.3million a year.

As well as the car park, phase one of the Collegelands development included 100,000 sq ft of office space and student accommodation. A planned hotel has not yet been built.

Phase two is to provide a further 350,000 sq ft of offices and 400 flats but work has been delayed because of the recession.

Council bosses insist the car park is essential to support the £100million regeneration project between High Street and Bellgrove Street.

Richard Brown, executive director of development and regeneration, said: "The regeneration of Collegelands has stalled due to the recession.

"While demand is increasing, the pace of improvement is slower than projected, which is placing a significant financial pressure on City Parking's operations.

"The commercial viability of the car park was on the basis of the full Collegelands development being implemented. City Parking is bearing a significant proportion of the risk of non-completion of the regeneration programme."

As a result, councillors will be asked tomorrow to give City Parking a £500,000 rebate on the rent it pays for the car park.

Mr Brown added: "Despite the delay in the hotel and phase two, further developments by Glasgow Housing Association and Strathclyde University along George Street are under construction and the council is satisfied its decision to initiate the regeneration strategy at Collegelands will pay dividends in the medium to long term."

A spokesman said: "The council decided to take on the lease of the car park to help the development go ahead.That was a risk, but it was the right thing to do to support the £100m regeneration of Collegelands.

"However, the recession has been longer and deeper than had been anticipated. It is not right City Parking, as a commercial organisation, is now asked to bear that risk on behalf of the council."

vivienne.nicoll@ eveningtimes.co.uk

RESCUE DEALS HAVE COST TOTAL OF £4m

City Parking has cost Glasgow £4million in bail-outs since it was set up as an arm's length organisation five years ago.

The business, which has never posted a profit, got £2m last year, including £750,000 to pay off its entire management team.

Earlier this year the council confirmed City Parking would need a cash injection of another £2m to help it renegotiate its overdraft facility.

City Parking is designed to save the local authority money.

It paid for a facelift of its off-street multi-storey car parks by mortgaging the assets just as the economic downturn hit the parking sector.

Council boss Gordon Matheson, left, continues to praise the "bold decision" by former leader Steven Purcell to create City Parking because it allowed the council to borrow money that would otherwise have been unavailable.

City Parking has still to file its 2011-12 accounts. But council figures suggest it ended last year more than £1m in the red.

The business is now officially valued as worth MINUS £4.3m, something industry sources stress would be unthinkable in the private parking sector.

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