Council agrees to fund Rotherham’s Forge Island project after private investors “cannot put in as much money”

Members of Rotherham Council have agreed a decision in principle that the authority will fund the town’s Forge Island project, after private investors were unable to put up as much cash as first thought.
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Chris Read, leader of the council, told Wednesday’s council meeting that works “starting in earnest” on the Forge Island development are just “weeks away”.

“We have a cinema, hotel, four food and beverage retailers all in place with contracts signed,” added Coun Read.

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“But they are time limited, and we all know that with inflation where it is today, if we delay and decision making we will end up costing more.

The Forge Island scheme, on the River Don, has already signed up Travelodge, the Arc Cinema and a number of food outlets to the flagship regeneration project.

“Throughout the development of the scheme, the assumption has been that the finance will be raised privately, that a private investor would bring forward the upfront capital sum required to put buildings in the ground, and that that would be paid for by the commercial rents paid by the operators, by the cinema etc.,” added Coun Read.

“That money coming to the council and the council paying down the debt incurred by that private investor.

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“Indeed, six months ago, when we last looked at that, that still looked like the easiest and most effective way of being able to fund that scheme.

“However, as we’ve got into the final stages of this with gilt prices rising, changes in the wider economy, and the wider economy I think it’s safe to say is not looking in a great state, the private investors have said we cannot put in as much money as we thought we were going to be able to do.

“That poses for the council some questions about what we then do, and how do we make up that shortfall.

“The options that present to us are that we could try to make up the shortfall in the funding from the private developer, but that has become quite a significant amount of money.

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“We could pay back more in revenue costs over the course of the lifetime of the contract, but that in turn turns out to be a more expensive option.

“Can the council put the capital sum up front in place, and does that get us into a position which delivers the scheme quicker.

“This is not about the council paying to build a cinema and just putting that money out there – this is a commercial scheme that will repay either the private investor in the original process, or indeed to the council.

“We can commit the money to this precisely because it is repaid at commercial rates over the course of the programme, and it pays for itself.

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Conservative councillor Timothy Baum Dixon added: “if we don’t support the cabinet w’re in danger of this project collapsing and the loss of public funds already pumped into the project and the loss of future jobs for the people of the town, and much needed rent and business rates for the council.

“This is not a blank cheque for the cabinet to preside over an ever overrunning project.”

RMBC’s cabinet will decide on a course of action from a number of options on October 17.