Long and short of i360 tower saga You need a memory almost as long as the planned i360 tower is tall to recall every twist in the saga of the multi-million pound development on Brighton and Hove seafront.
The original plans were submitted by the husband and wife team of David Marks and Julia Barfield six years ago. They were approved by Brighton and Hove City Council in October 2006 and construction was expected to start in 2007.
The nation’s highest observation tower was conceived as an “enabling” project for the derelict West Pier, whose own chequered history has taken more turns than Jenson Button.
As visitors to the seafront will know, all that has come of the ambitious talk, so far, is a rather unsightly temporary building and the fading Victorian tollbooth. Soon the tollbooth will be taken down leaving only the temporary building to indicate that anything is happening at all.
But this week the project sparked into life yet again. The Coast to Capital enterprise partnership has agreed a £3 million loan to the project from its Growing Places fund.
Marks Barfield says it has £18 million of the required £35 million in place. The council proposes to step in and lend £14 million to the developer. If the plan goes ahead, a final decision could be made in July and the forlorn temporary building will be joined by construction equipment in autumn.
The council will borrow the money either from banks or from the public works loan fund.
A spokesman for the local authority said it was too early to say what the interest on the loan would be but insisted a profit would be made.
Regenerative effect
He said the interest received from the developer will be governed by state aid rules which mean it must reflect the commercial market. It is estimated the rate will be worth around £500,000 a year for the council.
Supporters of the seafront attraction say it will pull in up to 1,000,000 visitors a year, and generate upwards of £5 million a year in additional spending in the area.
Not least among the arguments in its favour is the regenerative effect on businesses in nearby Preston Street.
The developers say the construction of the tower will create at least 154 full-time equivalent operational and construction jobs including a minimum of three management training scheme apprenticeships.
The council’s economic development team says that more than 400 other spin-off jobs will also be created by the project.
That said, there is no shortage of infrastructure projects in search of funds in the city and their supporters will wonder why the i360 has been favoured.
The council says the advanced stage of the i360 project puts it ahead of the pack.
It points out that it is largely funded from other sources and has an audited business plan that will deliver a profit to repay the loan.
Crucially, the i360 has planning permission and, says the council, demonstrable benefits in terms of creating jobs and boosting the economy.
This is why councillors are considering lending our money when business owners can barely get their banker to sub them for a cup to tea.
Financial viability should be at the top of the council’s agenda.
The decision to proceed with the loan will not be made until July which gives plenty of time to examine the option. As the council points out, the institutions from whom it borrows will also want reassurance. So will taxpayers.
The council’s financial assumptions have been reviewed by the economics team at AECOM, a global professional technical and management support services firm.
They have examined attendance and financial projections conclude that the attraction should achieve just under 800,000 visitors in its first year of operation and an operating profit of approximately £6.7 million per annum.
They say the attendance forecasts vary between a high forecast of one million a year and a low of 600,000.
They have estimated the profit that would be achieved if visitor numbers and the amount each visitor will spend are lower than anticipated.
As an example, AECOM says, if visitor numbers are 10% fewer than expected at 720,000 and income per visitor is 10% lower than expected then the profit forecast will be £5.4 million in year one.
The i-360’s operating profit must meet the costs of the debt finance. These are estimated to be approximately £2.5 million in interest and provisions for loan repayment on a £17 million debt.
AECOM says operating profit is therefore sufficient to meet these costs even if visitor numbers fall significantly below the low forecast and income per visitor is 40% below expectations.
The debt interest and repayment charges will be met before any dividend is paid to the equity investors.
The council says that arch strengthening works are due to start on the site in October 2012 to the west side of the West Pier.
Arch strengthening to the east of the West Pier could take place toward the end of the current financial year in March.
If a funding solution is found for the i360 by July 2012, the authority believes work will be able to start on site at the same time as the planned construction works to the seafront arches.
By programming the i360 to start construction alongside these works, disruption on the seafront can be minimised and the most disruptive work for the public can take place in winter.
The fact that the stalled project might finally get off the ground must be welcomed. It is costing the city at least £5 million a year to go nowhere.
But hopes have been raised sky high before.
The council, the developers and their partners must not let us down with a bump this time.
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