Council officials are backing a request for a £61,000 loan to save the Open Market in Brighton.
The money has been requested by the Open Market Community Interest Company (CIC).
The Open Market CIC board includes traders and representatives of Brighton and Hove City Council, the Ethical Property Company (EPC) and Hyde Housing.
Hyde redeveloped the site and represents people living around the market. Ethical runs the market on a five-year contract.
A report to the council’s Policy and Resources (P&R) Committee said that members could opt to do nothing but “this would result in the CIC becoming insolvent within the next two months”.
The market reopened in June last year but has had higher running costs than expected. These include a bigger bill for business rates which will be the subject of an appeal.
The report, by project manager Richard Davies, recommends that the council waives the Open Market’s business rates bill between now and March.
He said: “In certain limited situations, hardship relief can be granted to ratepayers.
“The council has agreed that exceptional circumstances apply in this case and that the conditions are met for some temporary help with hardship relief.
“The charge will be reduced to zero for the period October 2015 to March 2016.
“This is worth £15,530 (for the main liability of the temporary stalls), around half of which is funded by central government and the other half by the local authority.
“The Business Rates Team has stressed that this is exceptional, based on the merits of the individual case.
“Further, they say that the award is conditional upon the (CIC’s) Recovery Plan resulting in an ability to pay the rates from April 2016.
“One of the requirements for hardship relief is that making an award is in the interests of local council tax payers.
“And it would not be in their interest if there is no likelihood of recovery, and therefore self-sufficiency, in the near future.”
At the CIC’s annual general meeting on Monday (26 October) the board refused to sign off the annual report and accounts.
Criticisms were made of the Ethical Property Company and what it was doing under its contract to manage the market.
Traders pay almost £16,500 a month in rent – or almost £200,000 a year – and more for services. They questioned whether they were getting good value from Ethical.
The Recovery Plan includes measures to ensure “greater efficiency” from Ethical.
The plan said: “EPC will continue to review management costs to ensure that these are minimised while delivering all of its responsibilities in managing the market.”
It also said: “The CIC board to review existing management contract with EPC as part of the Recovery Plan.”
Councillor Kevin Allen, who stepped in as interim chair of the CIC board, said that the AGM had been an opportunity to clear the air and added: “I feel confident that we’ve turned a corner.”
He said that he was determined to open up the CIC so that there was greater transparency.
And he added that the CIC needed new independent directors, preferably with expertise in accountancy or marketing.
Councillor Allen asked the council leader Warren Morgan to include the loan request on the agenda for the Special P&R Committee meeting which is taking place at Portslade Town Hall on Wednesday (4 November).
Mr Davies, in his report to the committee, concluded: “The CIC is in the early stages of its operation as a new business.
“If the immediate cash flow problems can be addressed by way of the requested loan there is the opportunity to implement the Recovery Plan and improve the financial position of the CIC and the long-term future of the market.”
He recommended that the committee approve the loan.