Sutton Conservatives Call For Investigation Into Lodge Sale

Sutton Conservatives are calling for an investigation into the sale of the historic Lodge building in Carshalton following its sale for £1 million under the market rate to a company of which the Lib Dem MP Tom Brake is an unpaid director and trustee. We do not believe Tom Brake has made any financial gain. 

The Lodge was sold on a 125 year lease to EcoLocal for £600,000, around £1 million under it's estimated market value. We are calling on the Audit Committee to investigate the sale of the Lodge. It was not transparent and we do not believe that had this been a Conservative Council selling off a locally listed building to a company run by a Conservative MP, that the Lib Dems would be overly supportive of this. 

Conservative Councillors submitted an alternative proposal that would have provided better value for council tax payers while retaining all the community benefits of the EcoLocal proposals.

EcoLocal wants to develop The Lodge to create a thriving focal point for the community and to promote environmental initiatives in Carshalton for the long term. This is an admirable goal, and one the Conservatives welcome and support.

To finance this work, EcoLocal is proposing to develop and sell or rent residential flats in The Lodge – the kind of development that the local Lib Dems earlier this year said ‘would destroy the building’s historic past’ when proposed by the Conservatives. Like EcoLocal, we disagree with the Lib Dems, but we believe we have a better proposal.

A simple question: If the development plans are viable for EcoLocal, why are they not also viable for Sutton Council?

The simple answer is that the residential development plans are viable, and Sutton’s Lib Dem council should be undertaking this development itself. The long term financial return would far outstrip the short-term gain, which appears to unduly favour a small local charity of which the local Lib Dem MP, Tom Brake, is an unpaid director and trustee.

HERE’S HOW IT COULD HAVE WORKED

The Council owns The Lodge and land so there is no acquisition cost. The total development cost for the site, including the community facilities proposed by EcoLocal, is estimated at £1.7m.

If Sutton Council developed the flats itself and rented them at market rates, in a highly buoyant market, this investment could be recovered in as little as 15 years, with ongoing financial benefit for local residents for another 110 years compared to the current proposals. Meanwhile EcoLocal could concentrate on running a charity, its aims would be achieved, it could pay a peppercorn rent, and its long-term home would be assured.

Sutton Council must seriously consider this extremely practical and workable solution, which would be a great example of councils and charities working together for the common good, for the benefit of council tax payers and the wider community.

THE PITFALLS OF ECOLOCAL’S PLANS

We believe the financial base of the EcoLocal charity is not sufficiently robust to undertake such a project. Excluding unpredictable legacies, EcoLocal’s underlying income has fallen steadily over the past five years, from £276k in 2010 to just £149k in 2014. Of this £149k, over £100k was taken up by salaries. This leaves a net income of under £50k, but EcoLocal is trying to raise £2.2m in total. The figures simply do not add up.

EcoLocal does not have the infrastructure to undertake such a project. The charity has said its fundraising activities have been hindered by the time spent developing its Lodge proposals, so how will they cope with fundraising while moonlighting as a property developer?

The EcoLocal plan provides poor value for the Council and council tax payers.

The ‘consultation’ on the future of The Lodge was a sham, conducted by EcoLocal, not by Sutton Council. This non-independent questionnaire was biased towards a positive outcome for EcoLocal’s proposals. Phrases like ‘keeping The Lodge in community use’ are emotive and misleading, as The Lodge has only ever been in council use. Many residents and businesses have complained to us that they were not consulted at all.

The Heads of Terms are poorly drafted. There are many unclear and ‘flexible’ clauses, and the agreement even allows EcoLocal to reassign the lease to an unnamed third party.

SURELY IT’S NOT THE COUNCIL’S BUSINESS TO BE A DEVELOPER?

Since the introduction of The Localism Act in 2011, Sutton Council has set up Opportunity Sutton Ltd to take advantage of opportunities like this. A subsidiary company, Sutton Living Ltd, has been set up specifically to tackle housing projects. The Council also has a long-term asset management strategy that allows for investment.

We know Sutton Council understands the value of good investment. In February 2015 Sutton Council spent £7m buying the long term commercial lease of Cantium House at Wallington station, of which it already owned the freehold. Heralding a likely return of 8%, the Council described this a ‘smart investment’.

We believe strongly that using the Opportunity Sutton Ltd and Sutton Living Ltd vehicles to invest for the future in The Lodge – and in our other heritage buildings – is the ‘smart’ way forward for EcoLocal, for the Council, and for Sutton’s residents and tax payers.

The current proposal will not produce the best value for residents – and that’s a requirement of the law which could lead the Council to allegations of misfeasance.

Our proposal for The Lodge was simple, and secures a home for EcoLocal and its partners to undertake their valuable work. There was no dilution of EcoLocal’s aims, and Sutton Council – and therefore residents – would have received a better long-term financial return.