Funding for Forge Island redevelopment under review

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Rotherham Council is looking at all options to get the Forge Island leisure scheme built in Rotherham town center – even paying for the project from council coffers.

The consulting firm has been asked to give its approval this month because there is a deadline for prices and terms already agreed. Delays could put the project at risk and see agreements for anchor tenants unravel.

Forge Island is a Council-owned site which lies between the River Don and the South Yorkshire Shipping Channel. Led by Muse Developments, it will host a new leisure scheme with an 8-screen boutique-style cinema, modern hotel, food outlets and parking. It should be completed in 2024.

A hybrid planning application was approved in 2020 and since then major hotel brand, Travelodge, has engaged alongside boutique cinema operator, The Arc, to co-anchor the scheme.

The latest update from the consulting firm in March 2022 was that Muse was looking to appoint a contractor with a negotiated price and work to find a funder for the program was also reported to be close.

Judith Badger. Strategic Director of Finance and Client Services at Rotherham Council, updated councilors this week. She said: “We are very close to completing the Forge Island deal. All the groundwork is in place and we need to sign and complete this 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 mode of financing for Forge Island was through a tied external lender. to the Muse contract, but there are challenges around this market at the moment, so we felt it was appropriate for us, before entering into the agreement, to consider all relevant and appropriate options to finance this agreement in case we can’t use the external funding or the price was There are a lot of complexities in the deal.

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“We want to present a document to the cabinet that will allow us to complete the agreement and continue the development of Forge Island, but what we need to do is consider all the financing options available to us. If one of those options were to be a larger contribution from the board, or a full contribution – in other words, the board funding it rather than through a side deal – then we would need something to get into the capital program which has to be approved by the council. We don’t have time to come to the cabinet in October and then to the council in November because we want to secure the prices and the contractors. And we also have secure tenants and we don’t want to lose that.

“It’s really about making sure that we have the best value for our taxpayers. We have a legitimate plan that we can put in place without delay, but the technical details, if it requires changes to the program of capital assets, we need board approval for that.”

The cabinet of the council agreed on a recommendation so that a decision could be taken in plenary next month, which would then allow the officers and cabinet of the authority to work and agree on how best to fund the program.

In 2019, a 250-year lease with Muse was offered. The agreement included an option for the developer to ask Council to take a priority lease of the project. Reducing some of the risk to the developer, this would involve the authority sub-letting and collecting rents from operators, generating a revenue stream to fund the costs of the head lease.

Forge Island website

Muse images

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