Council’s £265,000 rent for empty North Ness building

Shetland Islands Council has paid £264,834.50 in rent for its North Ness headquarters since evacuating the building on 20th September because of structural problems.

The figure, disclosed by the council under a freedom of information request from this paper, covers the council’s rent to Shetland Leasing and Property from 1st October till today. It does not include rent paid earlier that would cover the period from the evacuation in September until 1st October.

The council also explains its decision to lease the £7.3m building over 30 years at £467,000 per annum for a total cost of £14.01m plus inflation. According to the reply from legal team leader Susan Brunton the decision to lease was taken to avoid depleting the council’s reserves and also to benefit the community via Slap as a subsidiary of the charitable trust.

The reply says: “The lease arrangement was entered into by the council with Slap following consideration by the council of alternative funding models rather than committing large capital sums to building projects, which would have a detrimental impact on the council’s reserves. The council considered professional advice on the terms of the arrangement, which provides a benefit to the Shetland Community as Slap is a wholly owned subsidiary of the Shetland Charitable Trust.”

In effect, the democratically elected council is paying the arm’s length subsidiary of the non-elected trust almost twice the cost of the building in real terms, spread over a 30-year period. The lease deal was considered by the services committee and approved by the full council.

The “White House” as 8 North Ness is popularly known is insured by the SIC but the problems identified with the floors are not covered by insurance.

The lease for the building was drawn up by Slap and revised by the council’s legal staff before being signed by a council solicitor.

Although the council’s communication department said last month that there was no completion certificate for the building, Mrs Brunton’s reply states that temporary occupation for the building was granted from 19th April 2012 and acceptance of the completion certificate was received on 8th September 2012.

In all 21 questions were put to the council which replied to nine of them.

Others, on whether a settlement had been reached over the dispute and if so how much is to be paid and whether the council is totally liable for the cost of remedial works, went unanswered on the grounds that the SIC must maintain third-party confidentiality.

The same exemptions were invoked when the council declined to answer whether overloading of the floors had contributed to the problems, whether investigations are ongoing, the exact nature of the problems, what remedial work is needed, the timescale for this, council liability as project manager and when defects with the floor first emerged.

The council’s reply says: “In weighing up the public interest in disclosure
against the public interest in withholding the information, we recognise that there is clearly a general public interest in information being accessible and a local interest in this topic.

“However, there is in our view a stronger public interest in allowing us to obtain confidential information and utilise such information to fully inform our decision-making processes and procedures. Accordingly, we consider that the public interest in this case in disclosing the requested information is outweighed by the public interest in maintaining the exemption.”

The council also declined to say if any staff member had been disciplined over the White House fiasco on the grounds that would breach data protection rules.