The council expects to lose £1.6m in rents in 2021-22 – a similar figure to the shortfall from centre rents for the current financial year.
The council has had to make cuts and plan increases in a bid to find £4.4m to balance its books - a third of that being Castle Quay rents.
Even before the first lockdown, Marks and Spencer announced it was closing its Castle Quay branch in favour of its Banbury Gateway store.
Then Debenhams went into liquidation in April last year and is expected to vacate the Castle Quay store after its final closing down sale.
In December Happerley ended its licence for the Lock 29 traders’ market in part of the old BHS unit after just four months.
Cherwell already owned 15 per cent of Castle Quay but in 2017 bought the remaining 85 per cent for £63m. It also took on the plan to build Castle Quay 2 – now called Waterfront. This week the council said it believed in the long term the town will benefit from its investment.
Cllr Ian Middleton (Green, Kidlington East) is a retail analyst and columnist for Retail Week magazine, who was critical of the decision to risk council tax payers’ money by investing in a shopping centre that was ‘already starting to show signs of distress’. He said the rent projections do not take into account the £2m a year interest the council is paying on money borrowed to buy Castle Quay as these are accounted for elsewhere.
He said: “A reality for this council is its reliance on commercial investments which are also starting to unwind. One glaring example is the quite ludicrous decision to buy a shopping centre at the worst possible time, just as the retail economy was collapsing.
“Looking at the figures in this budget we can see that around a third of the financial pressures are a result of losses attributed to Castle Quay. Even if the council’s own optimistic predictions are correct, by the end of next year Castle Quay will have returned a loss of around £1.9m since the council took full ownership.
“The value of the centre is now around half what was paid for it, amounting to a whopping £30m loss of equity in an investment backed by council-tax payers’ money. Of course all this is now being blamed on the pandemic but that’s only part of the story.”
Cllr Barry Wood told the budget setting meeting he refused to accept criticism of Cherwell's purchase of Castle Quay.
"Yes we should have (bought it)," he said. "That was a decision that I recall was universally supported in the council chamber; purchasing Castle Quay... and making sure that Castle Quay 2 was developed in order that there can be a multi-screen cinema, a supermarket in the town centre and a hotel and we can turn our face on to the canal and we can build a night economy for the second largest settlement in Oxfordshire.
"That was a sound decision and remains a sound decision. Regeneration of downtown boundary is an important project and will remain an important project post Covid. You drive down to the Castle Quay area and seeing what's springing up out of the ground down there is a success story."
A spokesman for Cherwell District Council said: “While it is no secret that the pandemic has created financial pressures for commercial landlords and local councils up and down the country, Cherwell’s position remains that the town stands to benefit in the long term from the council’s involvement and support.
“Both the existing and the new developments will offer jobs, opportunities, and strengthen the town’s attractiveness to visitors.
“The council has always taken a proactive approach to securing tenants at the existing Castle Quay centre. We will be continuing that work in the coming year and we forecast that from the financial year 2022 to 2023, the centre will break even or make a surplus."