– Why haven’t we thought of this before? Mayor Odd Emil Ingebrigtsen (H) in Bodø looks up the floors of his own palace: the Town Hall. – There could probably be many reasons for that, adds the former fisheries minister. His office is way up there. It is likely that the mayor will keep it even after the sale of the town hall. Photo: Sondre Skjelvik / news Bodø municipality is in the same situation as a number of other municipalities in the country. The checkout is empty. But perhaps there are hidden values? – Yes, says Ingebrigtsen. Now almost half of everything they own is to be sold. Bodø municipality will sell a lot of exciting things. What would you buy? A fairly new town hall 👏 A brand new competition pool 🏊♀️ A huge cultural center in marble 🎤 The city’s library 📖 Neither part sounds like a particularly good investment! Show result Lower expectations for the municipality First, let’s summarize Bodø municipality’s finances extremely briefly: Large investments have been made in the last 10–15 years. Interest rates and prices have skyrocketed. In other words, they have both high debt and expensive services. The income is not enough either. Which means? It must be saved, it must be saved a lot. This year alone, we are talking just under NOK 400 million. A large number of services are at risk of closure or cuts. Ingebrigtsen says that he and the position have been working on a secret proposal for around half a year. Photo: Sondre Skjelvik / news – Residents and employees must lower their expectations of what the municipality can deliver, said municipal director Kjell Hugvik when he presented his plan on Monday. Among other things, two schools have been proposed to be closed, which have almost become the very symbol of the wretched economy. But: A little over a day later, mayor Odd Emil Ingebrigtsen calls a press conference in the town hall. He has good news with him; no schools shall be shut down on his watch. How on earth is that possible? The mayor and his position believe they can get between 2 and 4 billion by selling half of all purpose-built buildings. Photo: Sondre Skjelvik / news – Will certainly be criticized Ingebrigtsen’s plan is in a nutshell: The mayor wants to collect all municipal purpose-built buildings in one company. Sell 49 percent of the company. This proposal means, among many other things, that the town hall, the library, the swimming pool and the concert hall are for sale. In total, the position envisages bringing in between NOK 2 and 4 billion through this sale. – We will probably be criticized by some for selling the town hall, but we are only selling 49 per cent, points out the mayor. Whether the proposal is a good idea or not remains to be seen, but the mayor is probably right that there will be critical questions. Fredric Persson (Ap) is not entirely convinced. He also believes that the position should not cut property tax at a time when the municipality needs money. Photo: Raymond Engmark / Raymond Engmark Fredrik Persson (Ap) in the opposition says they will review the proposal, but at the same time points out that he is unsure whether the solution to an economic crisis is to sell everything you own. – There must be a buyer. We have to look at how realistic it is. It is a slightly too simple solution to a slightly more complicated problem, he argues and adds: – What will the municipality gain from this? We have to rent it back anyway. You simply move the expenditure items from an investment budget to an operating budget. However, the mayor believes that a long-term buyer has already been secured. – What is the alternative? asks Mayor Ingebrigtsen. Photo: Sondre Skjelvik / news Risk-free investment? So who is this buyer? Bodø Pension Fund. – I have been chairman of the pension fund in the past so I know that they depend on having different types of investments, Ingebrigtsen tells news and reveals that there has already been contact between the parties. – This is a risk-free investment. We think it’s a win-win situation for both us and them. Mayor Ingebrigtsen received criticism from children who said that the municipality should spend money on schools, not expensive town halls. Now he wants to sell half of the former. Photo: Sofie Retterstøl Olaisen / news Hans Petter Horsgaard, general manager of Bodø Pension Fund, confirms that there has already been contact between the parties. – We are now awaiting a formal inquiry from the municipality so that possible solutions can be investigated, he says to news. – Is Bodø Pensjonskasse interested in investing in this upcoming property company for Bodø municipality? – Bodø Pension Fund has a long-term investment strategy and considers that a municipal property company can be an interesting and beneficial investment. Property with long-term public contracts is considered to have low risk, the municipality is also a solid tenant, replies Horsgaard. Stormen library is one of the buildings that is now for sale. Photo: Simon Piera Paulsen / news Bodø pension fund does not have enough money to buy 49 percent of the new company alone. According to Horsgaard, this will in any case be an interesting opportunity for other pension funds. Does this mean that this is possible to implement? Demonstrations outside the town hall in Bodø in connection with proposals to close schools. Photo: Sofie Retterstøl Olaisen Area director for society, welfare and democracy in KS, Helge Eide, says Bodø Pension Fund is managed in accordance with the provisions of the Financial Enterprises Act and the Pension Fund Regulations. – It, and other pension funds, decide themselves through independent decisions which investments are made, within the investment strategy adopted by the board. Fine, but is that a good idea? – Haven’t heard of something similar – I haven’t heard of other municipalities that have done something similar. But there is perhaps a bit of a crisis atmosphere and a need to free up capital. So says social economist and senior researcher at the Center for Economic Research, Marianne Haraldsvik. – In the short term, the solution will free up capital by reducing the debt to the municipality, but it will also lead to an increase in rent in the long term. Then the question is whether, in the long term, it will be more expensive in rent than what you can run it for on your own. Marianne Haraldsvik is a senior researcher at the Center for Economic Research. Photo: NTNU Community Research Haraldsvik says many municipalities are facing changes in demographics. – This often means the downsizing of schools and kindergartens, and an increased capacity in care for the elderly. That change is uncomfortable, because it can involve unpopular changes. But it is the type of restructuring that will provide long-term gains to a greater extent than selling municipal property. Professor: – Skeptical – I am skeptical about what the motive might be. That’s what Christian Riis, professor of social economics at the Department of Social Economics at the Norwegian Business School BI, says. – Bodø municipality needs to free up funds, and the pension fund needs an attractive location. But it is not obvious that this is a construction that is in the interest of Bodø residents, he adds. Riis says the central question is whether the municipality gets the right price for the property shares they sell. – An obvious alternative has been to sell parts of the property stock in the market. Then they will probably get a lot more from the sale, which the residents benefit from. Is it a good shop for the pension fund? – How will Bodø Pensjonskasse be able to make money from this for its customers? – When buying property, it is normally the ongoing rental income and value increase on the property itself that will be able to provide a return. The return possibilities must be assessed more closely in each individual investment, replies Horsgaard in Bodø Pensjonskasse. news asks Christian Riis at BI what he thinks about the possibilities for the pension fund to make money from this. – It’s just a question of price. If the pension funds can negotiate a favorable price, they will of course be a good investment to secure future pensions. But it is not certain that the residents of Bodø will benefit from such a solution. They benefit from the municipality getting the most in return for the buildings. You get that through an open competition. In addition, Riis believes that a key question is how the municipal property company should be managed. Municipalities are not necessarily effective owners. – It is not part of the core tasks of the municipalities. Then it might be thought that one should rather sell these properties in an open market, he says, and uses Oslo as an example where they have begun a process of selling properties where they have not succeeded in creating anything. Still need for restructuring In addition, Riis believes that a central question is how the municipal property company should be managed. Municipalities are not necessarily effective owners. – It is not part of the core tasks of the municipalities. Then it might be thought that one should rather sell these properties in an open market, he says, and uses Oslo as an example where they have begun a process of selling properties where they have not succeeded in creating anything. – It was an interesting input, replies mayor Ingebrigtsen and adds: – The municipal director is now tasked with investigating this further. The new town hall was built into the old one and opened in 2019. It cost just under a billion kroner. Photo: Therese Bergersen / news – If the project is successful, does that mean that the economy has been saved? – There must still be restructuring in the municipality. We believe we must look at further downsizing. But this is fuel to develop the city further, says Mayor Ingebrigtsen. – Why is it better to sell than to own the properties? – We can’t just cut ourselves off from progress. We also have to focus on development, and then we need to release values, he concludes. Published 15.11.2024, at 13.22
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Will sell half the town hall to save the municipal economy – news Nordland
