Council could face £150m deficit on Perry Barr residential scheme
Birmingham City Council could remain £150m in the red on its Perry Barr residential scheme, despite plans to sell 755 apartments to a third party.
Plots 6, 7 and 8, which have been built but never occupied, have been recommended for sale by the council. The former Birmingham City University campus site was initially earmarked for the 6,500 athletes and officials set to arrive in Birmingham for the 2022 Commonwealth Games, but plans were scrapped as the village was not going to be ready in time.
£496.9m has been spent on the scheme up to the end of the 2023/24 financial year, of which, £325.7m is council funding and includes £291.8m that has been borrowed.
The council said in a report that it expects the planned disposals will bring in between £140-£150m, leaving £142-£152m of borrowing to remain unpaid. Not all plots and phases are currently being marketed, leaving phases 1-5 and 10-11.
The cost of repaying and servicing this debt over a 40-year period is expected to be around £8-9m per annum (interest and repayment) which will be an additional pressure on the already strained financial position of the council.
Commissioners have set the council the challenge of disposing £750m worth of assets from its £2.4bn investment property portfolio, to pay back £1.255bn in Exceptional Financial Support (EFS).
Funds generated may be used to either partially repay the borrowing undertaken for the scheme or contribute to the overall level of capital receipts available to meet costs associated with the EFS package.
1,146 homes, 268 extra care apartments, as well as commercial space and public realm, formed legacy plans approved in 2018, as part of a £700m regeneration project into Perry Barr by Birmingham City Council.
So far, phase one of the scheme has seen 968 homes built across four plots (6, 7 8 and 9). Plot 9 has recently been retained, with 213 newly built homes now set for council housing use.
Cllr Sharon Thompson, deputy leader and cabinet member for economy and skills said: “As someone who visits Perry Barr regularly, I know the area has been transformed in recent years and is now a destination of choice for visitors or for those wishing to relocate.
“The investment in Perry Barr has brought massive benefits locally with upgraded public transport links, the stunning redevelopment of the Alexander Stadium and this deal will now deliver better housing choices for local people.”
Birmingham City Council’s cabinet property committee will discuss the plans on Aug 8.
