Council tax payers may be saddled with hefty legal fees over a bitter row involving the former MG Rover car works at Longbridge.
Birmingham City Council could end up paying for the cost of a public inquiry to determine a planning application at the 300-acre site.
The three-day hearing saw landowners St Modwen, one of the UK’s biggest developers, pitted against the council planning department.
Two top barristers, regarded as among the country’s leading planning QCs, represented the both sides.
If St Modwen win, and overturn a refusal of planning permission for a suite of offices at the Longbridge Technology Park, the company will demand the council pay its legal costs in a dispute that has lasted more than a year.
The amount at stake has not yet been finalised, but according to people close to the case it is unlikely that the combined costs of the council and St Modwen will be less than £50,000.
The row involves the council’s insistence that St Modwen pay £145,000 towards the Longbridge Infrastructure Tariff – a pot of money designed to provide community and public transport improvements including upgrading Longbridge railway station.
St Modwen argue that the recession has made the offices, which have lain empty since being completed in 2007, unviable in the short term.
It has been unable to find tenants and says it cannot afford to make a payment.
Martin Kingston QC, representing St Modwen, said the council’s “dogmatic and inflexible” attitude put at risk the creation of 200 jobs at the offices and could threaten the long-term £700 million regeneration of Longbridge, which is predicted to deliver 10,000 jobs.
Anthony Crean QC, for the council, accused St Modwen of being “utterly unreasonable”.
He said the council had offered a compromise, where St Modwen would have paid £75,000 in five years time and £70,000 at a later date. But the deal was refused.
Mr Crean said the firm insisted on making a 20 per cent profit on the cost of building the offices before it would even consider making an infrastructure payment.
He added: “In other words, they are not prepared to pay a penny towards the Longbridge Infrastructure Tariff unless and until they have been fully compensated by a top line profit and they have supported that final offer with a sour threat to make the council pay their costs of attending this appeal.”
If St Modwen’s appeal is allowed by the Secretary of State, the council fears that the infrastructure tariff will become a “toothless tiger”.
Other developers would seek to avoid making payments and the infrastructure needed to deliver the huge Longbridge scheme would not be built, Mr Crean said.
He added: “This immense undertaking requires very substantial sums of money. There is some public money that will be made available but the vast majority will be paid by the private sector.”
Mr Crean added that private firms did not “operate in a paternalistic manner”, their sole purpose was to make a profit. There would be no way of forcing developers to contribute to the cost of public facilities without legally binding agreements such as the infrastructure tariff, he said.
“The outcome of this appeal goes far beyond the relatively trivial sums discussed in this inquiry. If the appeal is allowed, the Secretary of State will be confirming that Longbridge Infrastructure Tariff payments can be reduced to nil,” Mr Crean added.
He described St Modwen’s application for costs as “wholly without merit”.
The suggestion that the local authority had behaved unreasonably was an “insult to the officers of a public authority who have wrestled with energy and imagination to try to find an acceptable compromise”, he added.
However, Mr Kingston told inquiry chairman Andrew Jeyes that the council had made “unwarranted demands” on St Modwen, which involved costly and unnecessary work. By imposing restrictions on the type of occupants of the offices, ruling out financial and law firms, the council had made it impossible to find tenants for the building, he claimed.
The result of the planning appeal is expected later in the year.