King's Lynn Innovation Centre worth 'less than £2.75m loan'

King's Lynn Innovation Centre (Klic) is worth less than the £2.75m loans, it has emerged

A controversial innovation centre is worth less than the money loaned by a council to pay for it, a report said.

The district council used the Klic building in King's Lynn as security after enterprise agency Norfolk & Waveney Enterprise Services (NWES) defaulted on repayment.

A council report said it did not consider that the value of the building could be less than the £2.75m loans.

The council said it remained in "positive legal discussions with NWES".

A redacted version of King's Lynn and West Norfolk Borough Council's audit report last month raised serious questions over the deal after NWES failed to repay the money.

The council subsequently took possession of the King's Lynn Innovation Centre (Klic), which is used by a number of small businesses who rent space there.

But a complete version of the report, seen by the BBC and Eastern Daily Press, stated "the acquisition of the building does not cover the cost of the loan".

• Probe to be held over £2.75m council loan

• Council ignored 'conflicts of interest'

The report stated "it was not considered at any time throughout the project that the value of the Klic building could be less than the value of the loan".

A council spokeswoman said the council remained in "positive legal discussions with NWES regarding the recovery of the full loan amount and interest".

She said the council could not comment on the detail "until a final outcome is known".

The council said it remained in "positive legal discussions" with NWES

It was hoped there would be "a smooth transition with as little disruption to the occupants of Klic as possible", she added.

Almost £5m was spent on the project, most of which came from public funds.

It has also been revealed NWES was granted the leasehold on the Klic building almost rent-free until 2021.

The arrangement meant the enterprise agency avoided paying ground rent worth £90,000 for the first five years.

The council said it was to "give NWES a chance to break even in terms of achieving full occupancy".

Councillors have voted for an external investigation into what happened.

It is understood the Local Government Association will be approached to conduct the inquiry.