Rotherham Council is in discussions with its landlord over the £3.2m a year lease for its offices at Riverside House.
Landowner and developer, Evans Property Group, built the 172,000 sq ft civic headquarters on the Guest & Chrimes site on the edge of Rotherham town centre in 2011.
Having sold its former civic offices across town to enable the Tesco Extra to be developed, the Council entered into a 35 year lease, a commercial full repairing and insuring lease, with fixed rate five year rent reviews and no break clause.
A report to the authority's cabinet states that, with 28 years remaining, an opportunity has arisen via the landlord to restructure the lease.
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Jonathan Marriott, estates manager at Rotherham Council, said: "The Council approached the landlord [Evans] to discuss potential options for Riverside House. The discussions centred on issues such as permission to sub-let part of the building, potential to purchase the building and revised lease arrangements which would deliver annual revenue savings, along with an option to own the building at the end of the lease.
"The lease restructure will allow the Council more freedoms and flexibilities in the use of the building, along with full flexibility on sub-lease arrangements which would offer future income generation opportunities. The proposal will also deliver annual revenue savings to the Council."
Rothbiz reported last week that Rotherham Council was required to find savings of £15.2m for 2018/19, with further savings of £30m required over the period 2019/20 and 2020/21.
If approved by the Cabinet, discussions would continue over a restructured lease that would be extended by seven years to 35 years, with the Council becoming the owners of the property at the end of the term as opposed to ownership reverting back to the landlord in the current lease.
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An analysis of Council spending shows that it paid £823,497.69 in rent to Evans Regeneration Investments Ltd each quarter for the last year. Financial implications of the proposed restructured lease have not been disclosed.
The authority has already set aside £400,000 from its 2018/19 capital budget for a project called "Riverside House part lease." However, recent reports also show a pressure of £140k on the Regeneration and Environment Directorate's budget in respect of a saving to let office space at Riverside House, caused by the proposed tenant withdrawing.
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