Councillors will be asked to commit more than £325,000 of public cash for roof repairs at Dundee House, months after the council headquarters was sold to a Canadian insurance firm.
Dundee City Council agreed a £23.8 million “leaseback” deal which saw the property handed over to insurance giant Canada Life in August but faced criticism after it emerged the arrangement will cost the public significant rental payments for 40 years.
Finance chiefs argued the cost of renting will be “substantially less” than construction debts linked to the site, which the council was able to clear with the proceeds of the sale.
However, annual savings from the deal – which this year came in at £433,000 – are set to reduce due to rent increases of around £20,000 each year, meaning future administrations could be left with spiralling costs.
Now the deal has come under fresh scrutiny after Dundee City Council revealed plans for £327,692 roof repairs at Dundee House, just nine years since the building opened and months after Canada Life took ownership.
A spokesman for the authority confirmed the property was sold and leased back on “standard commercial terms”, so the responsibility to maintain and repair the building falls to the council as tenant.
Labour group leader Kevin Keenan said the arrangement “leaves a bitter taste in the mouth” given Dundee House was sold for “significantly less than it cost to build”.
“It seems to me the company got an absolute bargain and I think there are questions really I will need to ask of officers,” he said.
“There have been a lot of property deals that have not worked out well for the council – this might be another one.
“You would think when you spend £33 million on a building, the roof would last a bit longer. Instead, the council is spending money to maintain its original worth for someone else.”
GMB Scotland organiser Helen Meldrum, who led criticism of the leaseback deal when it was agreed last year, claimed the roof repair costs were evidence of financial mismanagement by the council.
“Yet again this council shows its sheer ineptitude at managing its finances,” she said.
“The administration’s proposed budget is looking to scrap school crossing patrollers and make cuts to school cleaning, yet they are going to have to use even more public money to pay for a private building they are leasing,”
City development convener Alan Ross described Mr Keenan’s position as “hypocritical” but did not comment on the statements made by Ms Meldrum.
He said: “The Labour Party not only supported the proposal to sell Dundee House to generate a saving, they actually had it in their own budget proposals.”
On Monday, Dundee City Council will ask elected members to approve awarding the tender to its own construction services division, which has been at the centre of an ongoing corporate fraud probe into a separate public contract awarded last year.
The works will involve the renewal of existing brown roof coverings and repairs at the fifth floor level, and are expected to get under way in the spring.
Under the leaseback agreement, Canada Life will return the property to public ownership at the end of the lease for a nominal sum of £1.
