West Wales News Review — analysis with a sustainability slant

Xcel Xamination: spending public money the best possible way?

£1.35 million is £7.37 for every man, woman and child living in Carmarthenshire. That’s approximately  the value of the land and money that the county council has so far provided to Towy Community Church  for the Xcel bowling alley development in Johnstown.  This is made up of £335,000 in grants, a £270,000 loan, and about £750,000 representing the value of the site.

The £750,000  is the money foregone by granting two 99-year leases to the church, at peppercorn rents, instead of selling the two-and-a-half acre site at its commercial value. The figure is included in a report to the council’s Executive Board dated December 7th 2011.

Ninety nine years is a long time to commit to peppercorn rents.


Sources of capital funding for Xcel phase 1, from the annual accounts of Towy Community Church, and from report to Carmarthenshire County Council Executive Board, December 7th 2011  

The project cost for phase 1 (bowling alley, furniture recycling and food bank) as reported to the Executive Board, excluding the land, was £2.778 million – capital costs of almost £1.971 million and revenue costs of £807,320.

It is too soon to see if the church is on track to meet its agreed contributions to revenue funding of £310,643 in the first two years of trading, or if volunteers gave the £119,864-worth of time promised,  because Xcel opened only in June 2013.

As for the county council’s commitment, apart from the exceedingly generous terms of the leases, the total in grants so far, for phase 1, is about £335,000 (see the chart, above), plus a loan of £270,000. Phase 2 has not entered the funding arena yet, but would include a 600-seat auditorium, a café, luncheon club, debt counselling centre and offices. The December 2011 report to the Executive Board said that phase 2 must be started within five years “or the property reverts back to the council”.

The £270,000 loan is interesting because it replaced a commercial bank loan that did not materialise, and the council has scant security for it, only a 3rd charge on the lease, in a queue after the bank which lent £300,000 and the National Lottery’s Big Lottery Community Asset Transfer Fund, the supplier of £500,000 for capital costs as well as £300,000 for revenue funding.

So as well as giving 99-leases at peppercorn rents, the council might have to redouble its generosity in the future — it could well lose its rights to recover the land if the bank and the National Lottery – let alone Her Majesty’s Revenue and Customs – need to make claims on Xcel.

To be able to make the loan, the Executive Board agreed a major change in the council’s Treasury Management Policy, which allowed loans to be made for up to three years only, because the £270,000 has been issued for 15 years. The interest rate is 2.5 percentage points above base rate (thus 3.0% currently).

The report to the Executive Board contains a troubling sentence: “Profits from use of the property can only be used for alternative community activities approved by the council or any surplus is payable as rent to the council”.  This is troubling because ‘community activities’ do not usually generate profits – indeed, the council is cutting community activities all over the place  because of their costs – and in my usual world of small and medium-sized enterprises, if there are no profits, loans cannot be repaid, and the enterprise is not sustainable.

The Xcel deals between Towy Community Church and Carmarthenshire County Council surely benefit the church more than the council, but the main question is about the wisdom of channelling so much money into a single project when the community activities in phase 1, furniture recycling and food bank, could be supported at lower cost using existing buildings in the county.

Pat Dodd Racher


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2 thoughts on “Xcel Xamination: spending public money the best possible way?

  1. Sian Caiach on said:

    I’m surprised about the bank loan. My understanding of the emergency large grant we were urged to give them was that their bank mysteriously declined to lend them money?

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