Council bosses have sold their new HQ to a Canadian insurance firm in a deal that will boost its short-term cash but is likely to cost more in the long-term.
The £23.8 million “leaseback” deal handing Dundee House to insurance giant Canada Life is set to cost the public six-figure sums in rental payments for 40 years.
The council has sold the building in order to balance its books for this financial year – but as a result its landmark building is now owned by the private sector.
Corporate services boss Greg Colgan has said the cost of renting will be “substantially less” – around £1m – than paying construction debts linked to the site. It has been able to pay those debts off with the proceeds of the sale.
However, while the saving this year is £433,000, Mr Colgan has admitted savings will reduce by around £20,000 each year because of an annual rent hike.
Analysis by the Tele suggests that the savings will be cancelled out 22 years into the arrangement.
Council bosses had considered selling to the Tayside Pension Fund, acknowledging that such an arrangement would “eventually exceed” the cost of keeping the building under public ownership.
Under the deal, Canada Life will return Dundee House to public ownership at the end of the lease for a nominal sum of £1.
The Tele understands the council has the option to buy the building back part-way through if it chooses.
Helen Meldrum, GMB Scotland organiser, said the deal “appears to be a con”, adding: “It seems as though in reality their sums just don’t add up.
“It will be future administrations who will be left to deal with the fallout of this dishonest deal.”
Dundee City Council has not declared how much it will pay the insurance firm in rent but a spokeswoman insisted an independent evaluation found the deal was the “best value” option.
She added: “The sale of Dundee House was the most prudent financial option for years to come.”