Wednesday, December 5, 2018

News: More details on Forge Island deal

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Rotherham Council is planning to enter a head lease for the proposed multimillion leisure development on Forge Island in order to secure private sector funding for the majority of the works.

Having secured the land from Tesco, and surrounding land such as the law courts, the authority went out to the market earlier this year in an effort to realise its vision for a £60m leisure-led development on the key town centre site.

Muse Developments was chosen as the Council's preferred partner with a proposal that includes a cinema, food and drink outlets and a hotel. The leisure facilities will be set within an attractive public space and will include a new pedestrian bridge connecting to the rest of the town centre.

Discussion over legal agreements continue with the Council's cabinet now asked to approve the way forward.

The successful bid submitted by Muse included options for the delivery model such as the Council providing the capital funding for the scheme and a "head lease" approach.

The capital funding approach is being discounted as it would see the authority take on "significant additional borrowing" and taking on all of the development risk.

Members of the cabinet are being asked to approve the head lease approach which requires that the developer raises funding for the total development costs and builds out the scheme in return for the Council taking a head lease of the completed development over a fixed term.

The precise details of the development costs, head lease rent and income are not yet known but the first phase is expected to be a £35m project at current prices, which will be funded initially by the developer partner and their investors. Muse is part of the Morgan Sindall Group plc.

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Documents show that the Council would take on a head lease for the development for a 35 year term, with no break clause. At the end of that period the Council has the option to purchase the development for £1. The Council, as head lessor, will sublet to and collect rents from operators, which will generate an income stream to fund the head lease costs.

A paper to the Council's cabinet, states: "Based on current information and assumptions it is anticipated that the project will be self-financing over the 35 year period and the business rates growth should aid the wider economy."

Risks include the Council receiving income that would not be sufficient to cover costs if properties become empty through tenants taking break clauses or going into administration. The Council will also be responsible for the facilities management and repair and maintenance of the common areas of the development.

Under the proposal, the Council does not take on the head lease until the various phases of the development are completed and a sufficient number of sub-tenants have been secured and have entered in to lease agreements, thereby minimising the financial risk for the Council.

In order to de-risk the project further, the authority is also pushing ahead with multimillion pound flood defences for the site.

A draft timeline has Muse and the Council working towards a planning application for the leisure scheme being submitted early in 2019 after agreements over the lease are made. Work is set to begin later in 2019 with the first phase opening in 2020.

Muse Developments website
Forge Island website

Images: Muse / RMBC

5 comments:

Anonymous,  December 5, 2018 at 1:41 PM  

Can see this going "Belly up"meanwhile all other neighbourhoods town have theres built are watching films and eating popcorn!😖

Unknown December 5, 2018 at 3:04 PM  

Documents show that the Council would take on a head lease for the development for a 35 year term, with no break clause. At the end of that period the Council has the option to purchase the development for £1. The Council, as head lessor, will sublet to and collect rents from operators, which will generate an income stream to fund the head lease cost. (BOLLOCKS)!!!

Anonymous,  December 6, 2018 at 10:40 AM  

The whole scheme is a let down before it starts.I suggest looking at The Glassworks development in Barnsley.Forge Island as a 5 screen cinema planned,Yuppee,Barnsley's got 13 screens!!Rotherham is an absolute joke of a town,run by clowns,who in turn are elected by idiots!

Rod Laughton December 6, 2018 at 4:01 PM  

Sadly the above comments are too true. I recently moved back to Rotherham after 30 years down south. I’ve only been back since May but am looking to sell up and move on. The Councillors should hang their heads in shame at the sad state of the town in 2018. The town needs councillors who are competent and ambitious... or should we just merge with Sheffield...?

Anonymous,  December 7, 2018 at 2:15 PM  

I think tbe merger with Sheffield is the plan,Rotherham will become the Eastern part of Sheffield and as with many citys the "Eastern side"is the ghettos,the dumping ground,where already that now!

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