Discussion in 'Brixton' started by editor, Mar 27, 2014.
Utter shit but no surprise really. My post from Oct 2015
And it hasn't even proved a success
And yet the team behind this colossal flop then get gifted Peckham Levels.
I expect Lambeth will say that it has proved a success, having provided what they consider "social value" at - assuming things work out according to the forecasts - minimal or zero cost to the council.
What the Lambeth report doesn't say is what rent they propose to charge as part of the lease extension deal. That number would seem rather significant in assessing the final cost/benefit of the scheme, and I would ask why it is missing from the report.
I'm so happy that the loss making Pop was able to provide a home to those wonderful property guardians people with zero connection to the area.
I found the Lambeth report quite interesting although there are a few areas which interest me because of the lack of information. It doesn't explain why the size of the development has doubled, or why the square meter build costs more than doubled - these figures just seem to have been accepted. I'd also expect to see a robust justification of the staggeringly high management costs rather than just a statement about security and public toilets. What were they expecting to have to provide? These would seem pretty obvious considerations. The paragraph about lost rent is unclear - is that the lost figure after the rent restructure, or the figure they are trying to mitigate?
Pop's response to their financial predicament seems to be sensible - they've increased the proportion of bars and restaurants and decreased the proportion of community uses which wouldn't pay as much; although this is likely to have a feedback effect on their management costs with more security and toilets. They're also introducing a sliding rent scale so the bars and restaurants pay higher rents and profit shares which will to some extent subsidise the rents of the community and startup units. That's sensible. Surely some community use is better than no community use, and if Lambeth can recover any money then that has to be better than no money.
Yes Pop appears to be running at a loss but that money is going somewhere be it to security companies, cleaners, builders etc. Normally people on here would be jumping up and down about excess profit. The plan still appears to be to try to generate some profit of which Lambeth will be entitled to half. Who is to say that the edible bus stop proposals would have been profitable. They may well have found themselves trying to find means of additional funding and subjected to the same vilification. Ultimately, if the regeneration masterplan has been put back 2 years then the options are to take pop down when the lease expires in October, then find a new use for the space for two years with all the associated setup costs and time lost, or renew Pop's lease and see if it can bring in some revenue.
Interestingly another thing missing from the report is a budget for the takedown cost. I wonder whether this has been factored in.
It's difficult to see where that huge lump of management costs mentioned in the Lambeth report appears in their accounts. They don't seem consistent. I wondered if there's an error in the arithmetic or even just a typo somewhere? It would be surprising for it not to be picked up upon if so though. But I'm no expert in understanding company accounts.
I was wondering that as well. It can't, in all seriousness, be £3m. As CH1 has already pointed out, that's a hell of a lot of library funding.
Given that they were so outrageously late in filing their accounts, you'd think that they'd had plenty of time to ensure that the numbers were correct and double checked. They certainly haven't issued any corrections.
How they managed to make a loss of half a million quid in a year (despite being given £192k from grants and loans) on a rent free site is something to be alarmed by. How can a place like that lose nearly £10k a week?
And if they are indeed trousering £3.2m for admin costs then looks very suspect about the whole thing.
Don't forget that they lost £266k the previous year, so this place is haemorrhaging more and more money, so to extend its lease in the hope of turning it into a profit looks to be the stuff of fairy tales.
The whole exercise has been an embarrassment for Lambeth and a cruel blow to the community who were promised so much.
It's not 3m (if it really is 3m) of Lambeth's money though. It's not money that would otherwise be spent on libraries. It's 3m that the company has/will spend and if they don't make it back by the end of the period it's them that lose it.
What CH1 was talking about was the rent that Lambeth could have got for the site had they simply let it out on a "normal" arrangement. Which Lambeth say would be around 40k a year.
Imagine how much money Lambeth could have made from this site if they'd handed it over to a competent local enterprise rather than this bunch of hapless chancers and the Mayfair based property development business 'who like to target ambitious young professionals.' Lambeth was supposed to take back some of the profits on the site, but with the place plunging ever further more massive debt, I'd say it's highly unlikely it's ever going to be anything other than a total disaster.
It's actually hard to think of any business that could do worse on a rent free site.
Still, I'm sure the NZ wine importing business and those property guardians are well chuffed.
Resding some of the previous posts can I remind people the Council regarded this as an experiment.
What concerned me from the recent Brixton Neighborhood Forum meeting was the Council's refusal to look at this project from a critical angle. Or even ask those at the Forum there opinion.
The Council report makes a lot of assertions about Pop delivering on its Service Level Agreement but provides no links to independent evidence that this is the case. As the Council report by officers is seeking extension of lease I would have thought this would be a serious issue.
Something else I noticed from reading the Council report. It says the SLA is being met. One example is that out of approximately 80 business 8 are getting affordable rent. At bottom of report is link to previous report from 2015 about justifying Pop getting funding bypassing the tendering process. In this early report in Pops life it says the aim was for 20% affordable. 8 of 80 is 10%. So what happened in the Service Level Agreement?
As you have decided to have a swipe at Brixton forum posters which ones are you talking about? Am I included?
Actually, no. Although we often disagree I've always found you to be well reasoned, well researched and you always put your point across very well. You're a hard person to argue against and you make me question my own opinions, which is important. It would be wonderful if all posters were like you.
What I struggle with is assumptions, reactionary invective and hatred. Extremist opinions and ignorance are always a bad thing.
From the Council report:
Another thing from the report is that the individual business have little rights with there landlord Pop. The Council made sure that they don't have security under the Landlord and Tenant Act.
Pop has decided to bring in its own profit share for the business its landlord of. Despite being unable to give Lambeth a profit share. Looks to me that Pop financial problems are being put onto the existing small business.
I find the paragraph above slightly unclear. The way I read it is that this "revenue share agreement" is on top of the set rent. As these business don't have security I wonder how much bargaining power they really have.
How the hell did this bunch of cash-losing clowns get to run Peckham Levels? They made a colossal fuck up of this rent free site and gave precisely fuck all back to the council, so why on earth would anyone give them another big place to run? Something smells veh fishy here.
It's an example of how Capitalism can work. I remember some one saying to me the Turner wanted to extend the Pop idea elsewhere. Pop was just a stepping stone. A business can go a long way without breaking even if it can persuade investors and lenders long term that it's business model is profitable.
I reckon that Turner, through extra " revenue generating" on his tenants on Pop may break even by the end. I think the Council report on lease extension doesn't look at scenario of no profit share. It's a glaring admission in the report. The section in the report on risks to the Council of refusing lease extension say that if extension of lease not granted and Pop fails financially then this will adversely affect the reputation of the Council. The way that I read this is that Pop is to big to fail now. The Council have invested so much political capital into it that they will do anything they can to stop it from failing.
None of this makes me think that Pop is a way of doing things that should be replicated.
What I want is proper discussion with local community of what they think of this model of marrying private entrepreneurship with social value.
Here is the risk section of the Council report on the lease extension.
It's also saying the Pop business model wasn't viable for the time period of the original lease.
And still isn't. Supposedly will break even in 2019. So profit share will only be for one year. If project ends in 2020.
None of this is surprising - it was intended to be a short term project so landlord and tenant rights would need to be waived. One of the points made in the report was that businesses wouldn't commit to another year without the certainty that pop would continue for that long. All understandable.
The profit share based on an open book approach is important, but I would like to see this open book approach being extended beyond the commercial tenancies to encompass the whole project. Given the failure to meet objectives Lambeth as landlord ought to have enough leverage to demand this. Some of the numbers being bandied about feel wrong and ought to be interrogated.
Just wanted to have a word about management fees/charges. BTW is there a link upthread to the accounts?
I have worked in charity accounts in the past, and management charges were usually a device to move money out of a funded project into a separate budget heading to pay core and staffing costs.
The problem is that it is not transparent - in fact it is designed not to be. In cases I've seen you might have say as charge of 7.5% of turnover.
In fact this 7.5% figure would be sufficient to pay the unfunded overhead but not sufficient to upset the funders.
I have not seen the actual Pop Brixton accounts -but all I can say is that the management charges might be build into the business model and agreed by the council in advance - or they might be a sign that Pop Brixton is being "milked" despite apparently running at a loss.
Pop Brixton is not a charity, though. It declares itself to be a " community initiative" showcasing "the most exciting independent businesses from Brixton and Lambeth."
I appreciate that - I was rather qualifying my own experience, i.e. I have never done the book-keeping in a "for profit" business.
But the accounting principle of "top slicing" to move money from one heading to another is surely the same.
I have now got the accounts from Companies house (below)
Firstly auditor is KPMG (the ones who had to stand down from the Grenfell Tower inquiry due to having their fingers in every possible pie).
The accounts are qualified - going concern basis. This actually means that if one of the people owed money pulled out it would NOT be a going concern.
Shareholders funds of -£747,444 is pretty dire for an outfit selling drinks and meals primarily.
To be honest this must rank as a rather poor council-backed enterprise. The social content is a bit new Labour/high Tory - providing catering jobs at minimum wage, security guards at minimum wage and helping low-tec start ups whose proprietors can be from any borough apparently.
The is no way (in my opinion) that Brixton Challenge would have funded this.
Final point - please note that certain "investors" got paid £98,797 (see note 3) This seems a bit outrageous, given that the firm has made a big loss. It all reeks of someone playing the same games as Sir Philip Green on a smaller scale.
Pop changed accountants from Lewis and Co to KPMG, who appear to be too large to be preparing accounts for such a relatively small enterprise. I wonder if this is the reason for the delay in signing off the accounts?
Smaller accountants tend to be a bit more ethical than the big four accountants as they are easier to sue. It may be that Lewis & Co wouldn’t sign off the company as a going concern, hence Pop Brixton went to KPMG, a company that will sign off just about anything when it comes to Lambeth Council.
Hate to tell people this, but Channel 4 news just now had a report from Pop Brixton to do with food preparation, the needs of disabled people and the menace of excess packaging.
The location is not very obvious, but the reporter, Symeon Brown announced the segment was coming from Pop Brixton and interviewed a guy from Smoke and Salt for a bit. He had to apologise to other interviewees that they were not broadcast
I supposed people very keen to catch it still have time on Channel 4 +1 when the bulletin is shown at 7.30 pm
Can't see it on the C4 news website.
Perhaps they wanted to highlight the amazeballs prep that goes into super trendy "seasonal plates of food that incorporate a variety of ancient techniques" in a failing hipster green oasis business park.
I can see why the tenancies are weak it explains why in the report. It does have the consequence that the tenants are in a weak position in relation to the landlord. The way I read the report is that the open book profit share with Pop is on top of existing rent. Be interested to know how Pop persuaded the existing business to sign up to this. It doesn't seem fair to me if that is the case. As far as I can gather Pop is charging market rents for most business.
Here's the Lambeth press release to explain the success story of Pop Brixton. It makes no reference to the lease being extended to give Pop the opportunity to make some money to pay back the Lambeth loan.
By not submitting any accounts until Peckham levels was a done deal ?
That must border on criminal, no?
Strange that it forgets to mention that the rent free land has lost half a million with the admin lot trousering £3.2m to run a pile of rusty old containers.
The link to the "evaluation report" in the Lambeth piece doesn't work for me - however I managed to download it here
Separate names with a comma.