A Bath theatre will be passed to a non-for-profit company until 2120 after calls for more realistic terms were rejected.

Next Stage Theatre Company has committed to spend £110,000 to fix Mission Theatre's leaky roof and deliver public benefits worth nearly £460,000.

The limited company will see its £15,600 annual rent on the Grade II-listed former church reduced to a peppercorn for 99 years – a loss to Bath and North East Somerset Council of some £1.5million over the course of the lease.

Councillor Colin Blackburn said the existing lease had not stopped NSTC raising funds and warned that future generations would face the consequences of the "generous" deal.

He said the council had a poor record of monitoring delivery of community benefits – but scrutiny panel members said the theatre should not be punished for that failure.

Cllr Blackburn, whose call-in of the community asset transfer was backed by eight other councillors, told the panel on June 14: "NSTC have managed to secure significant donors throughout their 16 years in the building to invest in the building, which they duly have done. They have another £30,000 that they are sat on waiting to go.

"With a 10-year or a 20-year peppercorn rent lease they will continue to secure donations more than sufficient to continue their fantastic operations.

"There are mechanisms that don't have to go this far and tie us up for so long when we don't have our house in order to manage our assets and monitor the long-term social economic benefits and the physicality of the building."

Cllr Blackburn called for "more realistic" terms the council is not "tied for three generations by an emotional decision taken now".

Supporting the call-in, Cllr Eleanor Jackson said the asset transfer would set a precedent other council tenants would want to follow.

She added: "It seems to me that the council is outsourcing its responsibility for a property which in the overall post-Covid climate it can ill afford to do.

"It's all about power which the NSTC gains over its premises, with little accountability or scrutiny, or even a wider directorate outside one family."

NSTC founders Andrew and Ann Ellison opened the Mission Theatre in what was a derelict church in Corn Street 2005. It has a 150-seater auditorium downstairs and a 50-seat theatre upstairs.

The business plan says none of its shows have made a loss in the last 25 years, and in the last 16 years it has invested more than £180,000 in the historic building.

The company has already raised more than £30,000 towards fixing the roof but said the long lease was needed to win the support of donors like the Heritage Lottery Fund.

Mrs Ellison, the artistic director, said: "It is essential we try and protect this building and its role as a valued community venue into the future.

"There will always be the need for the magic and wonder of theatre in people's lives.

"Our lovely building would not be able to carry on providing these should it be forced to close.

"Please let us continue to look after and cherish the Mission Theatre by awarding Next Stage the community asset transfer it so desperately and deservedly needs."

Mr Ellison added: "A reduction in rent to a peppercorn will allow us to employ a youth coordinator to expand our youth and educational outreach work. A long lease will allow us to fundraise for badly needed repairs to the building.

"Every penny we have spent on the fabric of the building is a penny saved from the council's own repairing responsibilities.

"We have already far exceeded the strict limit of our contractual repairing liability but now wish to put the many previous years of neglect to rights."

Cllr Richard Samuel, the cabinet member for resources who signed off the decision, told the panel the asset transfer of the Mission Theatre was "not a random piece of policy making" and the policy had been followed "scrupulously".

"The issue at the heart of this matter is whether the council should use its powers to secure the use of the Mission Theatre to provide a home for the performing arts into the future," he said.

"Decisions such as this are not purely about money – they are about what the council can do to make the lives of as many of our citizens as full as possible."

Cllr Samuel described the asset transfer as "probably the least worst option" in the circumstances after years of neglect of the building, and said the council would have safeguards in place to intervene if necessary.

Proposing to reject the call-in, Cllr Mark Elliott said: "I don't see why we should punish Next Stage for the council's inability to follow through on its policy of allowing community asset transfers when they meet the policy objective.

"We need to get good at monitoring it and not and not just not decide not to do them – that seems crazy."

Cllr Andy Furse said: "it's too easy to put a cost and pure financial value on too many assets within the city who can be sold to the highest bidder without any understanding of community value. This is a building with huge amount of community value.

"If I had my way, the lease would be longer."

The call-in was rejected, with only Cllr Shaun Hughes abstaining from the vote.