News: Council's funding for Forge Island comes under scrutiny
Rotherham Council's cabinet has rubber-stamped a financial deal to fund the up front costs for the Forge Island regeneration scheme and award a £46.8m tender for the works.
Forge Island is a Council-owned site which sits between the River Don and South Yorkshire Navigation Canal in Rotherham town centre. 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.
Rothbiz has reported that the funding for the project was under review by the council after they were told that the funding available to its delivery partner, Muse, for the delivery of Forge Island "significantly reduced."
Cabinet approved an increase in the Council’s Capital Programme to cover the £46.8m costs which is expected to be covered by the authority's own borrowing and capital resources.
It is set to save nearly £50m compared to an externally funded deal drafted in 2018.
At the cabinet meeting this week, Cllr Chris Read, leader of Rotherham Council, said: "People that have followed this recently, the need for the council to step in to provide that upfront capital to ensure that the scheme goes ahead, and moves ahead quickly, will understand where that has come from. The fact that the private financier is no longer in a position to do that in light of the wider economic conditions.
"It is worth saying that it doesn't relate to anything to do with the Forge Island proposal. This is about the wider economic factors that we are facing, and that the whole economy is facing, rather than something specific to us. But, we are in a position where we can step in and fill that gap, thus ensuring that the scheme moves ahead. I think people have waited quite long enough for this kind of development in the middle of town."
Read revealed last week that he had seen council development papers from the 1960s, in which it had "Forge Island leisure development" highlighted and it is over 30 years since Rotherham had a cinema. Cannon, the last town centre cinema, closed in 1990. Previously the Rotherham Forge & Rolling Mills, the Forge Island site was fully cleared following the relocation of Tesco across town in 2014.
At a full council meeting, opposition councillors raised issues including the time taken for the development to reach this stage, reassurances around taxpayer's money, value for money, the impact of a potential recession on commercial schemes, the suitability and sustainability of cinemas, and communication and perception issues regarding the wider town centre.
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The finances have largely been kept private due to commercial sensitivities but on the issue, Cllr. Read said: "The proposal does save a substantial amount of money, tens of millions of pounds over the course of the life of the programme.
"These capital costs are provided up front but they will be repaid by the commercial income generated over the course of the scheme, actually, well over repaid if the projections are anything to go by.
"If we weren't in a position to move forward then we certainly would be losing ground, and we already have those commercial partners in place and contracts signed and we need to keep up our side of the bargain."
Replying to opposition members, Cllr. Read said: "I share in the frustration about the length of time that this has taken. All I can do, all any of us can do, is to act now to deliver the things that the people of Rotherham deserve.
"Part of the reason why we are so pleased to have secured the food and beverage retailers in the last few weeks is that it gives us confidence. They are modelling their finances, even given the forecast for the next couple of years, that they will be in a profitable position. And committing to long term contracts as well - these are not short-term, month by month contracts, they are ten year plus contracts that they are committing to, and that helps us in turn to mitigate those commercial risks.
"My shoulder is to the grindstone on making this happen as quickly, and cost-effectively, as it possibly can be."
Cllr. Denise Lelliott, Cabinet Member for Jobs and the Economy at Rotherham Council, added that she believed that, had the council not decided to step in, then Forge Island would not have been built out. She added: "“By incorporating the scheme into the Council’s capital programme, we can have contractors on site within weeks and begin to realise a commercial benefit for taxpayers directly and much sooner.”
Rotherham Council has also approved a plan to use some of its £17m Town Centre Investment Fund for enabling works on the site.
Works are due to start at the end of this month.
Forge Island website
Images: Muse / RMBC
Forge Island is a Council-owned site which sits between the River Don and South Yorkshire Navigation Canal in Rotherham town centre. 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.
Rothbiz has reported that the funding for the project was under review by the council after they were told that the funding available to its delivery partner, Muse, for the delivery of Forge Island "significantly reduced."
Cabinet approved an increase in the Council’s Capital Programme to cover the £46.8m costs which is expected to be covered by the authority's own borrowing and capital resources.
It is set to save nearly £50m compared to an externally funded deal drafted in 2018.
At the cabinet meeting this week, Cllr Chris Read, leader of Rotherham Council, said: "People that have followed this recently, the need for the council to step in to provide that upfront capital to ensure that the scheme goes ahead, and moves ahead quickly, will understand where that has come from. The fact that the private financier is no longer in a position to do that in light of the wider economic conditions.
"It is worth saying that it doesn't relate to anything to do with the Forge Island proposal. This is about the wider economic factors that we are facing, and that the whole economy is facing, rather than something specific to us. But, we are in a position where we can step in and fill that gap, thus ensuring that the scheme moves ahead. I think people have waited quite long enough for this kind of development in the middle of town."
Read revealed last week that he had seen council development papers from the 1960s, in which it had "Forge Island leisure development" highlighted and it is over 30 years since Rotherham had a cinema. Cannon, the last town centre cinema, closed in 1990. Previously the Rotherham Forge & Rolling Mills, the Forge Island site was fully cleared following the relocation of Tesco across town in 2014.
At a full council meeting, opposition councillors raised issues including the time taken for the development to reach this stage, reassurances around taxpayer's money, value for money, the impact of a potential recession on commercial schemes, the suitability and sustainability of cinemas, and communication and perception issues regarding the wider town centre.
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The finances have largely been kept private due to commercial sensitivities but on the issue, Cllr. Read said: "The proposal does save a substantial amount of money, tens of millions of pounds over the course of the life of the programme.
"These capital costs are provided up front but they will be repaid by the commercial income generated over the course of the scheme, actually, well over repaid if the projections are anything to go by.
"If we weren't in a position to move forward then we certainly would be losing ground, and we already have those commercial partners in place and contracts signed and we need to keep up our side of the bargain."
Replying to opposition members, Cllr. Read said: "I share in the frustration about the length of time that this has taken. All I can do, all any of us can do, is to act now to deliver the things that the people of Rotherham deserve.
"Part of the reason why we are so pleased to have secured the food and beverage retailers in the last few weeks is that it gives us confidence. They are modelling their finances, even given the forecast for the next couple of years, that they will be in a profitable position. And committing to long term contracts as well - these are not short-term, month by month contracts, they are ten year plus contracts that they are committing to, and that helps us in turn to mitigate those commercial risks.
"My shoulder is to the grindstone on making this happen as quickly, and cost-effectively, as it possibly can be."
Cllr. Denise Lelliott, Cabinet Member for Jobs and the Economy at Rotherham Council, added that she believed that, had the council not decided to step in, then Forge Island would not have been built out. She added: "“By incorporating the scheme into the Council’s capital programme, we can have contractors on site within weeks and begin to realise a commercial benefit for taxpayers directly and much sooner.”
Rotherham Council has also approved a plan to use some of its £17m Town Centre Investment Fund for enabling works on the site.
Works are due to start at the end of this month.
Forge Island website
Images: Muse / RMBC
3 comments:
Only doing what councils up and down country do to get projects moving, should've done it years ago ,maybe then Rotherham might have facilities like other towns.For once I support council,first time I've said that!
Sick of reading about this, just get on with it.
I wonder how much money the council has squirreled away in its capital programme? If it can pull nearly £50 million out of a hat, then why are there so many other unfinished projects in the town centre?
And why was private finance, which is obviously going to be a more expensive way of funding a project like this the first choice?
I'm no expert on local authority finance, but something doesn't quite stack up here.
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