Desperate small business owners in Sparkbrook have struck out after the council imposed a huge increase in charges – driving out at least one shopkeeper. The huge increase in quarterly service fees for tenants operating on the Montgomery Street commercial estate is ‘unprecedented’, say struggling traders.
They are now considering a legal challenge, saying the rise is part of a bid to get rid of tenants who could complicate a potential £1million sale of the estate. The board denies the allegations.
Alex McDonagh, a vegan food producer and one of five tenant business owners to set up a co-op to join forces, said the way businesses on the estate were treated was “appalling”. They say they believe that if they subjected the council to a judicial review of their treatment, they would win.
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Tom Thompson, 57, says the increased service charge – for his business an increase of nearly £500 per quarter – adds to the already rising cost of running his vegetable and fruit delivery business biological Vegetropolis. It finally shattered his resolve.
After nine years, he gives notice of resignation and fears that other companies in the dilapidated field will follow. “We have been fighting for almost three years to save this area from developers. We formed a co-op and wanted to buy the estate ourselves as soon as we heard it was going up for sale, to preserve it for other businesses in the future. said Tom.
“Now we feel like we’ve been ripped off again, with our service charges having gone up 123% in just one year. It makes no sense – why would a labor council, and one who claims to be part of the cooperative movement, wouldn’t it Whatever their intention, the result is that we suffer because of their actions.
The canal-side site is one of the council’s commercial assets, set to be sold to the highest bidder in hopes of attracting an industrial investor with the means to upgrade the estate – but with fears it will possibly part of a larger development plan. It first hit the market in 2019, when it appeared in an auction brochure without renters being told.
The business group approached the council and asked them to support their alternative vision of creating a not-for-profit, tenant-owned and managed business center, rather than selling it to a developer. They believed they had raised the money they would need to submit a viable new offer, based on the expected 2019 sale value of less than £500,000, Mr McDonagh said.
But last year they learned that the value of the site had soared to almost £1million, knocking them out of the picture. The board also told them it would ignore the “social value” of the co-op’s offer.
Sparkbrook Traders Fighting Back: How Birmingham Live shared their story
2019: Sparkbrook shopkeepers fear eviction in council’s Christmas sale plan
2021 : Defiant Sparkbrook traders fight over Slam Council’s £1m site sale plan
Estate-based traders include a pastry chef, vegan food producer, metal polisher, printer, Vespa scooter restorer, organic vegetable delivery business, laundry, youth training center and a chocolatier. In total, about 80 jobs are at stake.
Tom, a father of grown children, started his own vegetable business after years of helping out at a stall at the Birmingham Bullring market. He said the combined effects of the pandemic and the cost-of-living crisis, which led to a drop in the frequency of customer orders in addition to rising costs for energy, wholesale and delivery, were already difficult enough to manage.
“The impact on our health has been terrible. It’s affected our relationships, our well-being. It’s our lives and our livelihoods, and the council has kept us in limbo, not addressing our concerns, treating us disdainfully.
“I’m certain now that they want to drive us out, they want to sink us, for resisting them, for not wanting to become another sellout.
“The condition of the site is incredibly depressing and there has been a lack of affirmative action since Birmingham Property Services (the council’s specialist property investment arm) took over management. It has now started carrying out works around the estate, but only because it is relisted.”
Rotting window panes, crumbling masonry, a security gate damaged for five years, infrequent garbage collection and a lack of support are among the issues raised by traders. “Before, there was an office here, young entrepreneurs received advice and encouragement, there were courses and opportunities – now there is nothing, no support, no interest. It has all become a matter of money,” Tom said.
“We wanted to help this place thrive again as a community start-up, we defined how it would be zero carbon and raised funds, ready to make a fair offer for the site and take it over, but we had no encouragement.”
According to tenants, the recent increases in charges amount to a total of 123% in one year. For Tom, the most recent quarterly service charge bill was £1,471, up from £1,000 the previous quarter.
The tenants’ group have now lodged a complaint saying the council ‘failed to comply with the statutory requirement under the Landlords and Tenants Act 1985 to allow us as tenants access to inspect accounts , receipts and relevant documents associated with the service charge”.
Businesses operating from the Montgomery Street shopping area in Sparkbrook include start-ups, small food businesses and other specialists, all led by local entrepreneurs. The current companies are:
Beet the System, operating out of Unit 8b, a vegan food producer specializing in tempeh.
Just Good Food in Unit 2 is a private and corporate catering business that offers event and party food with a wow factor.
Tom Vegetropolis’ business, an organic fruit and vegetable delivery service, is in unit 8a.
CreamySu, maker of amazing Italian tiramisu desserts, is based in Unit 9
PeonyBakes creates traditional desserts and cakes for collection and delivery, from unit 3.
Delicious handmade chocolates with local ingredients with no added sugar or additives are made by Kneals Chocolates
Tayyib Asian Wedding Caterers offer authentic Bengali, Pakistani and classic Indian dishes for weddings and special events.
Vespa scooter restoration and repair is the specialist service offered by Rich Tyler in Unit 14.
Fruit and vegetable wholesaler Berry Fresh Produce is located in Unit 13.
Sunny Digital Prints, a digital printing and design service, employs people with disabilities, including the hearing impaired, in Unit 15.
Kelford Precision Grinding offers specialist engineering services, while Letterpress Printers is the city’s newest letterpress printing company. BB Polishing is a metal finishing company in Unit 8.
Togri Bakery prepares and delivers specialty cakes, brownies, cupcakes and traybakes throughout the city.
The CIC Youth and Training Center works to help marginalized people acquire new skills to enable them to integrate and find employment and business opportunities.
They have written directly to Ian Chaplin, the council’s agent responsible for investment and property management, for three months demanding more information about the charges, so far without receiving an explanation.
They say the council did not provide details of how service charges and utility bill payments were calculated. New questions are also being raised over a £20,000 annual bill for shared water rates which tenants are charged without any proof of the costs – the on-site laundry pays a separate bill, leaving tenants confused as to how the invoice is made up.
“Many of us have only barely managed to overcome the multiple lockdowns and disruptions to our businesses by the pandemic,” they wrote in a recent email. “We have supported each other as a business cooperative. However, we now face another unprecedented challenge, namely the evolving cost of living crisis.
“This is imposing additional costs on us and is already disrupting our supply chains and customer base. Footfall for many businesses has already been significantly impacted by this crisis.”
The issue was raised at a Birmingham City Council meeting before Christmas only to fall on deaf ears, they claim. The co-op also contributed to a City Council survey which focused on the negative experiences of contractors and community organizations working with Birmingham Property Services.
Tenants say they have conducted their own social asset review which shows they generate £2.2m in revenue, serving 500 local businesses and buying from hundreds more. About 80 people work there in companies.
In response today, Birmingham City Council confirmed the site was put on the open market in 2018 as an investment opportunity. Two subsequent offers from the Cooperative Group of Tenants in spring 2021 and again in March 2022 “failed to meet the council’s value expectations”.
The council also said that in terms of the center being a “start-up incubator” for new businesses, a number of them had been operating for over 10 years. They said a review of service fees imposed in previous years resulted in lower fees in 2020, and a subsequent review in 2021 found that some had in fact been undercharged.
“Due to the resolution of under-collection and the recognition of more recent expenses on site, service fees for tenants have increased more significantly this year than in previous years.”
We had also shared the tenants’ comments with the council, but the council chose not to respond to them.
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