Nottingham City Council’s new target of raising £141m by selling property has been compared to “taking out a mortgage to do your weekly shopping” by its former leader.
As of last year, the Labour-run authority said it owned more than 3,000 properties with a combined value of over £1 billion.
The list includes current service buildings still in use, office space, land, and former local authority buildings no longer in use.
In a bid to reduce its overall debt, it has been selling off any properties it deems ‘surplus’.
The need to sell off property has now “significantly increased” following the declaration of effective bankruptcy in November last year.
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A Section 114 notice was issued because the council could not set a balanced budget, and it had to ask the Government for special permission to use money from asset sales to fund day-to-day running costs.
Money from asset sales is now also being used to ‘pay back’ up to £65m in Exceptional Financial Support (EFS), granted by the Government to help the council set a balanced budget in 2023/24 and 2024/25.
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To keep chipping away at debt and “pay off” the emergency support, the authority now has a new target to sell £141.4m worth of property assets between 2024 and 2028.
It has already sold £77.83 million worth of property between the financial years 2021/22 and 2023/24.
During a Housing and City Development Scrutiny Committee meeting on Monday (18 November), committee member and former leader of the council, Cllr David Mellen (Lab), said: “My question is about risk going forward.
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“You’ve got a target of about £33m for this financial year, you’ve got £13m already, that means you’ve got to get another £20m by March – so the stakes seem to get higher for you.
“Now it is not only to help us with our capital growth and paying off debt, it is also for the exceptional financial support. How are you going to be able to do it?
“We can’t go on running day-to-day expenditure on selling things because eventually, we will reach the end of the list.
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“It is not a good economic thing to do. You don’t take out a mortgage to do your weekly shopping, and that is effectively what we are doing. How much longer can we do this for?”
Nicki Jenkins, the director of economic development and property at the council, added: “[Cllr Mellen], you are very familiar with the targets we’ve had in the past and it is definitely a big jump. We have tried to address that by using auctions a lot more.
“In terms of when does it run out, there is still a considerable commercial portfolio, but we are getting into the difficult decisions now. Many of them have revenue implications, those are getting greater, so that’s the challenge we have to balance.
“There is still quite a bit to go at but it is getting more difficult and more complex.”
Councillors were told the authority was still “on track” to achieve its targets, despite recently losing two “very experienced” surveyors amid continuing staffing problems.
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