Bosses at one of Lancaster’s flagship buildings are grappling with a financial crisis.
Tenants are quitting the Storey Creative Industries Centre because of a hike in service charges.
Companies occupying the building on Meeting House Lane were hit with a bill for £99,651 in additional charges late last year.
The demand went out soon after Lancaster City Council, which owns the building, baled out the centre with a £90,000 loan. Tenants, whose bills were effectively doubled, have refused to pay up.
The Storey’s finances have been shaky since April last year when it lost all of its grant funding.
In the year to March 31, 2011, it received public sector grants worth £73,113 but still made a £7,400 loss. One tenant, who asked not to be named, said: “You have to ask why this problem wasn’t tackled sooner. The Storey board and the city council knew the grant funding was going to be lost. Instead of cutting costs they just decided to charge the tenants whose rent keeps the place going. Now there is going to be an exodus.”
Another tenant, also speaking on condition of anonymity, said: “It’s scandalous. They rolled a grenade into the relationship with their tenants. We like the building but the way it is run needs to change.”
The building is leased and is run by the Storey Creative Industries Centre Ltd, which is independent of the city council and has its own board of directors headed by chairman Simon Ryder.
The Storey board told the Lancaster Guardian it was still in talks with tenants about the extra charges. It said that the tenancy agreement had a clause “allowing for additional costs to be charged to tenants if operating costs are higher than originally expected”.
Tenants say they are are still refusing to pay the additional charges and some plan to leave.
Mobile app developer Moshen, which rented the most expensive unit, has relocated to Church Street. Digital marketing agency Fat Media, the largest single tenant, is also moving.
The loss of the two largest tenants is a major blow to the Storey, which describes itself as “central to Lancaster’s artistic, technical and scientific innovation”.
Management accounts indicate that if the £99,651 bill for additional service charges remains unpaid, it will leave the Storey £63,000 in the red this year, but the Storey board said it did not expect to make a loss.
Lancaster City Council and the Storey board issued a joint statement yesterday which revealed that the council plans to step in and manage the building directly.
The statement, which makes no mention of Tom Clarke, the Storey’s chief executive, added: “The city council has great experience in running and managing facilities and this expertise will build on the success to date in attracting creative industries to the Storey institute.”
The statement said the Storey board would “continue to play a part in the future”.
Originally called The Storey Institute and designed in the Jacobean style by Paley and Austin in 1898, the building was bequeathed to the city by the family of oilcloth magnate Sir Thomas Storey, and remodelled as offices and an arts venue.
It is home to 16 organisations with a total of 110 employees.