North Bay Railway arrangement has ‘deficiencies’ according to Scarborough Council auditor

The auditor’s report has deemed the ongoing “long-standing property issue” with the owners of the North Bay Railway” to be a top risk to the authority’s finances if it is not resolved.

However, a senior cabinet member has approved a report which will allow the lease agreements to be finalised by the new authority replacing Scarborough Council on April 1.

The North Bay Railway is an “important historical tourist attraction” owned by the council and comprises the track, supporting buildings, rolling stock and locomotives, including two “unique heritage diesel hydraulic replica steam locomotives” built in 1931.

They are operated by the North Bay Railway Company following a competitive tender process in 2007.

However, it was not until 2018 that the Council finally agreed on the heads of terms for 22 years from 2017 to 2039.

Despite the absence of any agreed lease, the council has continued to receive rental based on a fixed fee and has received “significant and increased income each year”.

In 2021 the company changed ownership and the authority started “negotiations with the new owners”, though detailed terms for the operation are yet to be agreed upon.

According to the report, the detailed lease negotiation has proven to be complex “because the site was part of the Sands development so Benchmark the developer gave input to the form of the lease”.

A “disagreement” by the North Bay Railway about the proposed lease period and “attempts by NBR to renegotiate the rent” have also contributed to the leases not completing.

However, on Tuesday, March 21, Scarborough Council’s cabinet member for inclusive growth, Cllr Liz Colling, approved a report which notes the progress of the negotiations and that the new North Yorkshire Council will complete the lease agreements.

The report by Mazars also reveals that the auditor was informed “that the council had 46 unsigned leases or leases that were subject to negotiation, including the North Bay Railway, valued in excess of £400,000”.

The report will be discussed at an upcoming meeting of the audit committee on Thursday, March 23.