Sunday, 7 June 2009

Buyer beware!

With the money markets and banking so unstable there are probably lots of investors out there looking for an unusual place to park their wad and get a reasonable long-term return. So goes the story in today’s Mail on Sunday.

The Swinford toll bridge may not offer a lot of annual return for £1.65 million (the asking price) - about £100k a year, plus any capital gains, of course - but one thing’s for sure; the traffic using it ain’t going to get any lighter any time soon. A super chance to invest in congestion, perhaps?
But any potential buyer will have to consider the cost of repairing this historic monument and not least being hated by the residents of west Oxfordshire who use the bridge and hate the toll. Buyer beware! There are thousands of us.

However, if you have thick rhino-skin, no social conscience and don't care about profiteering from other people's misery, then maybe the bridge is for you!

For the complete avoidance of doubt I want to say it again: the rightful owner of this beautiful bridge should be Oxfordshire County Council.

Friday, 5 June 2009

An investor's cunning plan?

I had an email from someone this week. Let’s call him Mr X. He said:

“I am one of those greedy, higher-rate tax payers that was searching for a cash-cow investment and [found out about] the Swinford Toll Bridge."

You have to admire such honesty!

He proposed a very sensible idea (regular readers will know how much I like ‘sensible’ even if it is unfashionable):

“One idea might be to try and bring in an external investor, remove the toll booths and get the council to pay an agreed toll each year, based on what the expected traffic flow is likely to be. They could install a meter (that cars trigger when they drive over it) to confirm how many cars actually travel across the bridge each year, and then there could be a balancing up at the end of the 12 months. That way the Council would not have to stump up the cash upfront, but could amortise it over a number of years."

If I've understood Mr X's idea correctly, the advantage for Oxfordshire County Council is that they wouldn’t have to find £1.5 million quid as capital expense all in one go. A private investor, say Mr X, would stump up the initial cash and effectively lease it back to OCC. OCC gets control of the bridge and relieves the appalling congestion and frustration west Oxfordshire currently suffers. And the private bridge owner gets a return on his investment.

Cunning, eh! What do you think?

The drawback of this plan is, of course, OCC's willingness - or not - to do anything at all about the bridge and find a creative solution. Only time will tell.