News: Funding for Forge Island redevelopment under review
Rotherham Council is looking at all the options for getting the Forge Island leisure scheme built in Rotherham town centre - even paying for the project from council coffers.
The council's cabinet has been asked to make approvals this month as there is a deadline for the already agreed prices and terms. Delays could put the project at risk and see deals for anchor tenants unravel.
Forge Island is a Council-owned site which sits between the River Don and South Yorkshire Navigation Canal. Led by Muse Developments, it will host a new leisure scheme with an 8-screen boutique style cinema, modern hotel, food and beverage (F&B) outlets and car parking. It is set to be completed in 2024.
A hybrid planning application was approved in 2020 and since then, major hotel brand, Travelodge, has signed up alongside boutique cinema operator, The Arc, to jointly anchor the scheme.
The last update to the council's cabinet in March 2022 was that Muse was looking to appoint a contractor with a negotiated price and that work to secure a funder for the scheme was also reported as being close.
Judith Badger. Strategic Director of Finance and Customer Services at Rotherham Council, updated councillors this week. She said: "We are getting very close to concluding on the Forge Island deal. All of the kind of pre-work is in place and we need to be signing and concluding on that deal very quickly if we are to maintain the prices that have been secured, the contractors that have been secured etc.
"One of the things that has come to light very recently, given the volatility in the financial markets and the gilt prices, is that the intended way of financing Forge Island was through an external funder linked in with the Muse contract, but there are some challenges around that market at the moment so we felt that it was appropriate for us, before we conclude the deal, to consider all the relevant and appropriate options for financing that deal in case we can't use the external financing or if the price is prohibitive. There are lot of complexities within the deal.
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"We want to bring a paper to cabinet which will enable us to conclude the deal and carry forward with the Forge island development but what we need to do is consider all the financing options that are available to us. Should one of those options be a greater contribution from the council, or an entire contribution - in other words, the council financing it rather than via a secondary deal - then we would need an item to go into the capital programme which has to be approved by council. But the timescales don't afford the time to come to cabinet in October and to council after that in November because we want to secure the prices and the contractors. And we've got tenants also secured and we don't want to lose that.
"It is really about making sure we have got best value for our taxpayers. We've got a legitimate scheme going forward that we can get on without any delay but the technicalities of, should that require any changes to the capital programme, we need council approval for that."
The council's cabinet agreed a recommendation so that a decision could be made at full council next month that would then enable the authority's officers and cabinet to work through and agree on the best way to finance the scheme.
In 2019, a 250 year lease with Muse was proposed. The agreement included an option for the developer to ask the Council to take an over-riding lease of the scheme. Reducing some of the risks for the developer, this would involve the authority subletting and collecting rents from operators, which would generate an income stream to fund the head lease costs.
Forge Island website
Images: Muse
The council's cabinet has been asked to make approvals this month as there is a deadline for the already agreed prices and terms. Delays could put the project at risk and see deals for anchor tenants unravel.
Forge Island is a Council-owned site which sits between the River Don and South Yorkshire Navigation Canal. Led by Muse Developments, it will host a new leisure scheme with an 8-screen boutique style cinema, modern hotel, food and beverage (F&B) outlets and car parking. It is set to be completed in 2024.
A hybrid planning application was approved in 2020 and since then, major hotel brand, Travelodge, has signed up alongside boutique cinema operator, The Arc, to jointly anchor the scheme.
The last update to the council's cabinet in March 2022 was that Muse was looking to appoint a contractor with a negotiated price and that work to secure a funder for the scheme was also reported as being close.
Judith Badger. Strategic Director of Finance and Customer Services at Rotherham Council, updated councillors this week. She said: "We are getting very close to concluding on the Forge Island deal. All of the kind of pre-work is in place and we need to be signing and concluding on that deal very quickly if we are to maintain the prices that have been secured, the contractors that have been secured etc.
"One of the things that has come to light very recently, given the volatility in the financial markets and the gilt prices, is that the intended way of financing Forge Island was through an external funder linked in with the Muse contract, but there are some challenges around that market at the moment so we felt that it was appropriate for us, before we conclude the deal, to consider all the relevant and appropriate options for financing that deal in case we can't use the external financing or if the price is prohibitive. There are lot of complexities within the deal.
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"We want to bring a paper to cabinet which will enable us to conclude the deal and carry forward with the Forge island development but what we need to do is consider all the financing options that are available to us. Should one of those options be a greater contribution from the council, or an entire contribution - in other words, the council financing it rather than via a secondary deal - then we would need an item to go into the capital programme which has to be approved by council. But the timescales don't afford the time to come to cabinet in October and to council after that in November because we want to secure the prices and the contractors. And we've got tenants also secured and we don't want to lose that.
"It is really about making sure we have got best value for our taxpayers. We've got a legitimate scheme going forward that we can get on without any delay but the technicalities of, should that require any changes to the capital programme, we need council approval for that."
The council's cabinet agreed a recommendation so that a decision could be made at full council next month that would then enable the authority's officers and cabinet to work through and agree on the best way to finance the scheme.
In 2019, a 250 year lease with Muse was proposed. The agreement included an option for the developer to ask the Council to take an over-riding lease of the scheme. Reducing some of the risks for the developer, this would involve the authority subletting and collecting rents from operators, which would generate an income stream to fund the head lease costs.
Forge Island website
Images: Muse
3 comments:
Wait a minute they have no funding, no builders contracted yet.
What have they been doing for past 3 years.
As most people say in Rotherham they will believe it when they see it.
Construction on the cinema was meant to begin in Autumn 2021 bit behind aren't we.
Wasn't the whole point of this development that Muse would be responsible for its development and associated costs? If they are now saying that the constructions costs are not viable then this has is quite a worrying development that is likely to throw the scheme into jeopardy.
Construction projects rarely run on time or within budget, especially when Local Authorities are involved and particularly if the name of the local authority begins with the letter R. So perhaps once again, the question needs to be asked who is being held to account over this?
Correct me if I'm wrong but wasn't Government money set aside through the Levelling up fund and towns renewal funds to allow RMBC to complete projects like this... and didn't RMBC instead squander the money making the pavements look pretty, buying the Charters Arms to knock down and demolishing Primark?
Said it many times before,but RMBC haven't got a clue how to run a large town size of Rotherham,they run it like a small parish,were the laughing stock of South Yorkshire,even Barnsleys town centre is modern with high rise building,on the the other hand Rotherham resembles a war torn ghetto ,burnt out buildings,most of town centre derilict,and don't get me started on the people down there...what country is Rotherham in,I need reminding!
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