The council is booking a further shortfall of almost £2.5 million from the Brighton i360, councillors were told at a meeting this week.
The sum “raised alarm bells”, Labour councillor Andrei Czolak said.
The figure was included in Brighton and Hove City Council’s draft statement of accounts and the extra sum took the “expected credit loss” from £9.2 million to £11.7 million.
Councillor Czolak asked if it would affect the £2.2 million a year set aside by the council for the next 20 years to cover repayments to the Public Works Loan Board (PWLB).
The council’s chief finance officer Nigel Manvell said that the “lifetime credit loss” reflected the difference between how much total interest the council had originally expected to receive on the i360 loan and how much it now expected to receive.
Mr Manvell said: “That (loan) agreement included a very considerable mark up on the interest rate charged to the i360 compared to the interest rate that the council itself is paying back to the PWLB.
“It is the fact the i360 performance is not enabling it to pay that mark up that is being recognised as a credit loss.
“It is not an actual loss to the council because the council is only having to pay PWLB a much lower rate.”
The i360 had also not been able to pay other “mark ups” to the council such as on ticketing which would have gone into a reserve fund.
Mr Manvell added: “In setting the budget for this year, a further assessment of the i360 situation was undertaken – and the income they are going to generate is going to be around £1.2 million short of even the minimum repayments so that has been budgeted for.
“That is the real cash impact on the council – the amount being charged to our revenue account.
“They (the expected credit losses) are accounting entries. The real loss is the fact the i360 is not generating the cash to make the repayments to the council that were planned.”
In February, councillors were told that the i360 owed the council almost £48 million, including interest, and had been told to make payments totalling at least £1 million this year.
At that time, the i360 had repaid £5.8 million. But under its original repayment schedule, it had been due to stump up almost £18 million, having borrowed £36 million through the council from the Public Works Loan Board.
Millions of pounds of repayments by the i360 have been missed because of bad weather, the coronavirus pandemic restrictions and visitor numbers falling short of forecasts.
Councillors agreed to a revised loan agreement last summer but the i360 did not sign the deal although it did hand over £700,000.
Last December, the i360 was due to pay at least £900,000 but failed to make any payment.
The owners were warned in February that if Labour won the local elections in May, as they did, they could look for a new operator if repayments kept being missed.
But this would almost certainly mean that the council would have to write off much or all of the i360’s debt while still owing millions of pounds to the government.
The situation came up at the council’s Audit and Standards Committee meeting at Hove Town Hall on Tuesday (26 September).
Independent councillor Peter Atkinson asked whether the Public Works Loan Board could call in the loan early.
Grant Thornton director Darren Wells said that he was unaware of the PWLB calling in a loan early but the council would be required to pay the loan when it matured.
I’d like to call Jason Kitcat to the dock, your honour.
Let’s summon him to the Magistrates Court for malfeasance in public office.
And Geoffrey Theobald as well.
It was Tory votes that helped hey this loan through.
Old fashioned wooden stocks, rotten eggs and tomatoes.
Charge £1 per item thrown, 75pence if you show a Brighton & Hove address.
Should make the cash back in no time.
To the scaffold you mean
There was meant to be public transport to take people direct to the i360, so it’s too far for away for some
There are other financial issues here including:-
1. What the £40.2 Million in loans COULD have been spent on (e.g. infrastructure and social rent homes).
2. It is a £36.2 Million loan plus another £4 Million which has been added on from the Coast to Capital Loan.
3. The Terms and Conditions have been changed by previous Council Administrations to favour i360Ltd.
4. i360 Ltd are supposed to be paying for seafront improvements and the full interest plus capital, aren’t they?
They OWE US MANY £MILLIONS! It is the Greens and Tories who voted for it!!
On 1 this loan was specifically for the i360 and the money coundn’t have been spent on anything else.
The Council could have applied for a P.W.L.B. Loan to fund other projects. They have done in the past and other Councils have also applied for funding for local infrastructure and housing.
The council will be very shy on doing that in future after being stung by the i360.
There are several PWLB funding streams but the one used by the council was to encourage commercial developments where the loan would be covered by profits.
It will for the further restoration stages of the Madeira Terraces
Thank you BHCC!
Thank yo Brighton Greens!
The big problem about this attraction is it’s overpriced and let’s face it, badly run.
You have a cafe in one of the old kiosks with an amazing terrace, that shuts at 6pm before the sun even sets, this could be a decent late night cocktail bar in the summer and be generating a shed load more money than it currently is.
The space under the i360 has a tiny conference room then a huge shop selling nothing in particular. The back end has an enormous beautiful office filled with overpaid staff doing not a lot clearly… It’s almost like the business plan was signed off by people who didn’t have a clue what they were doing, other than blowing cash on a fancy building…
Councils have never been a centre of excellence in major developments. They don’t have staff with the experience or skills. There should be a limit on what councils can spend on projects and I’d keep it in the thousands not millions.
Always has been a waste of money typical of the vouncil to waste money on it and guess what dtill a waste of money
There are also the admin costs to the Council, including the staff and other costs. Then there is the increasing maintenance and cleaning bill for the i360 plus a list of other expenses.
The i360 pays for its staff, maintenance and other expenses etc not the council.
The i360 appears to pay little for the increasing amounts spent on Council Meetings, Council Staff and Council Documents about this failed project.
The only person I have come across who liked the silver bagel was the fictional character from a Peter James crime novel.
I haven’t met a single Brighton and Hove person who likes it. I think it’s an eyesore personally
Normally when a proper loan can’t be repaid by the borrower, bailiffs come and collect the keys. Perhaps it’s time for the i360 to be renamed the B&H Sky Train – with a free lollipop for kids to boot!
Who the hell agreed to this idea! !! England is the only country without a proper water park by the sea. South Africa, Spain, Italy,Poland…and more ..all the countries have waterparks by the sea with spa and bars, slides for kids. We have a bloody dounut !!!
Greens.
Those of us that live locally could see this was obviously going to be a disaster. We were silenced and ridiculed. ‘Listen to advice from knowledgeable sources’ was the PR rhetoric we faced when we raised valid concerns about the inevitable failure of the i360, which is now proving to be a massive financial drain, just as anticipated. Everything about the i360 is utterly ridiculous.. the expensive lift to nowhere, the tacky motorway stop-in style restaurant/s and the new ‘cricket shipping containers’ (laughable). Hold those responsible to account!
Not only do we have a doughnut, but the person responsible for it is a doughnut. The problem with these fools who run the council both then and now are way out of their depth. They wouldn’t waste their own money on this nonsense so why waste ours.
Where is Mr Kitcat ?
So Kitcat is the doughnut?
No wonder Ms Lucas is leaving town after the financial chaos left by her political friends when they messed up everything they went near.
Make admission cheaper, and hold events on it. DJ sets etc.
Should be called i180 as council just turned back on all of us and spent what is not there’s. The greens have destroyed this city with poo investment and a worse pollution problem than when they came in to power. Wrap it in green and hide the cock up
I have asked this question before. Given that this looks very unlikely to ever make a profit when do we jump out ? Cut losses and stop rolling debt ahead.
A solution might be to fix a much larger stationary pod to the top that’s large enough to actually be used for something (cocktail bar, restaurant etc). The current moving pod would then be the ‘lift’ to the large top pod. It would need some extra support but it would be possible. Then it can be making money 24/7 instead of having to be dismantled. But ideas like this are swerved, instead, cricket shipping containers!
Can someone in Brighton council be brave enough to say this was a mistake, what’s done is done,pull it down,move on,no playing the blame game,bring it down and move on, maybe even sell it to another city.
Pulling it down would cost loads is the problem you have to contend with as well.
They’ll prefer to let it rust and fall down just like the West pier.
A ship of fools. Looking forward to it running aground. Unfortunately it will probably only be replaced by next ship of fools and so it goes on. I’ve truly had enough of this place. It’s time to jump ship .
It’s a building, not a boat.
Your very observant. I’m guessing one of the fools!!!
I’ve lived in this dirty old town for 60 years. All they had to do was come and ask me.
I would have told them there was not a hope in hell of making any money. Ever.
The i360 is more likely to fly to the moon than ever make a profit, or pay back its debts.
60 years, and you’ve yet to say anything insightful, ever, Captain Hindsight.
No sonny, I had the foresight, not hindsight.
Anyway, shouldn’t you be doing your homework, school tomorrow….
In which case we should wish it success and support it so that pays back the loan ?
That would be the ideal, if it could start generating enough to pay back its loans. How you do that…that is a very difficult question. One I don’t have an answer to, and evidently, no-one else does. Sixes was a weird idea, but it’s something, at least.
You sure you don’t have the answer, you have a opinion on just about everything lad.