HEREFORDSHIRE Council is preparing a near £2 million bid to buy the city’s Three Elms trading estate – with borrowed money.

Cabinet will consider the bid for approval next month. Much, if not all, of the purchase price would be met by prudential borrowing.

The Hereford Times understands that the cabinet report will outline both a business case and an option to purchase the estate at a market value  estimated in the region of £1.75 million - £1.85 million.

In a statement, the council defended the bid saying that, if purchased, and after the repayment of prudential borrowing, the council would have a site for “major economic development” with the potential to generate “significant surplus income” to contribute to the council’s overall budget position.

The 2.786 hectare 21 unit site - with just over a hectare of development land - is owned by the Homes and Communities Agency (HCA) which took ownership from Advantage West Midlands (AWM) the now defunct regional development agency.

AWM acquired the estate to re-locate businesses from the area of Hereford’s Edgar Street Grid/Hereford Futures project.

At the end of the last financial year the council’s total borrowing, including short term loans, stood at £168 million compared to £157 million as at the end of the 2012-13 financial year.

Of this sum, 12 million, relating to two potentially long-term bank loans is repayable within one year.

Net borrowing - after offsetting investments – was £144.7 million as at March 31 this year compared with £147 million as at March 31 2013.

Over 2013-14, the council did not take out any long term borrowing, but continued using short-term borrowing from other local authorities to cover liquidity requirements and capital spend.

As at March 31 this year some £31.5 million of short-term loans from other authorities were outstanding.