The council is preparing to write off a debt of more than £51 million owed by the i360.
The move is aimed at clearing the way for a bidder to buy the viewing tower on Brighton seafront and reopen it.
The administrators of the i360 said that it would not be possible to sell the tourist attraction unless Brighton and Hove City Council writes off the money owed.
The council’s cabinet is expected to agree to wipe out the debt at a meeting next Thursday (23 January) but to ask for a percentage of future revenues.
A report to the cabinet said: “It is a condition of the preferred bidder’s offer that the assets they acquire are unencumbered.
“The city council retains the ability to decline releasing security on its loan if it does not feel this is the best offer available.
“This, however, would have the effect of making the asset unsellable and would result in blight on the seafront.”
The Labour cabinet also plans “to commission an external independent investigation to understand the circumstances of and lessons from the council’s original decision to loan public money to deliver the Brighton i360”.
Although the sum to be written off is more than £51 million, the amount that the council must repay to the government by 2041 is smaller.
The council brokered the loan from the Public Works Loan Board – and still owes £32 million or about £2.2 million a year over the next 16 years.
Despite hopes of a revenue-sharing arrangement, the council’s financial plans do not include any potential payments from the potential future operator.
The report to cabinet said that the directors of i360 Brighton Limited would “not benefit from the transaction”.
It added: “Shareholders have sunk equity and loans into the attraction that they will not recover.”
Three rounds of marketing have taken place. Two unnamed bidders have been in talks with the administrators but the debt is the stumbling block.
The report to the cabinet said: “The (preferred bidder) has been able to offer more assurance than the second bidder about their plans for the attraction, their experience of running large-scale leisure attractions and have more financial backing.
“This all assures the council that they are more likely to keep the attraction running, which is important given its prominent location on Brighton seafront, the employment involved and the impact on surrounding businesses.”
The administrators, Stephen Absolom and William Wright, both from specialist firm Interpath, took over the site on Friday 20 December and closed the business, with more than 100 staff losing their jobs.
The cabinet is due to meet at Hove Town Hall at 4.30pm next Thursday (23 January). The meeting is scheduled to be webcast on the council’s website.
Scandalous that the Council Tax Payers of Brighton and Hove are left with a massive DEBT from this, following the decision of the Green Party Councillors (with Tory support) to put £40.2 MILLION into this loss making scheme
There are so many useful projects where this money could have been invested, including the Madeira Arches/Terraces, essential infrastructure and much needed Social Rent homes.
Unfettered greedy boomerism.
The council money came from a government public works loan. They were encouraged to bring more visitors to the area, pushing up business income pushing up rates to the council coffers. This was after the Tory government changed the rules so council income wasn’t pooled nationally anymore (helping the rich get richer and the poor poorer)
There were stipulations on what the loan could be applied for and wouldn’t have been granted for Madeira drive.
Incorrect, the council had choices to either refurbish the terrace’s or Valley Gardens, it choose VG then tried getting funding for MD at a later date.
Vg3 is going to be a disaster! Once again bhcc didn’t listen to professional advice
Blah blah blah .. fact is it’s there and needs to reopen
Not if it costs the tax payers even more money.
And of course all this would be “managed” by the council, debt recovery has somehow appeared as a solution on future earnings ??? question is who would doing the accounts fir future i360 ?? bit niffy
If it’s that easy, why not just wipe all council debt out and start again? How shocking that a private company should get this privilege but not the public taxpayers, who are expected to suffer constant cuts to services, despite council tax hikes each year!
True always the tax payer suffering.
I imagine that the council likely sees this as a pragmatic way to prevent the i360 from becoming a total loss by attracting a new operator who can make it viable. Unfortunately, public finances don’t work the same way; councils can’t just erase debt without serious consequences, as their borrowing is tied to essential services.
That said, the i360 situation does highlight the need for greater accountability to avoid such costly mistakes in the first place. The Green administration is no longer in power, and I believe a big part of that was because of this. Shows the importance of voting.
Should have done this years ago when the debt was smaller. Now start saving for the demolition cost when the next company goes bankrupt
Looks like a win for everyone except the Council Tax payers of the City. All this for something most people never wanted in the first place. Disgusting!
To be fair the current status was predicted by many, in reality nobody has any real influence on the council once they’ve made their minds up to throw taxpayers money into the English Channel, or across it, French and Dutch material in that project.
The pole of steel cans is Dutch I believe. Spotted dumped in a yard there years before there was money to even put the i360 up as a going concern. What involved French material?
Typical of an incompetent council that can just dismiss £ 51,ooo.ooo.ooo million pounds it goes to to show that there is nothing as sacred as a local voter,the council at the time were told by the locals and those of authority it would be a white elephant,.THE HUSBAND AND WIFE TEAM,whom kept on about it,and made it happen ought to be accountable, as is always the case,,distance seems to be the answer here!!!Every council that has been in place,has wasted millions upon millions, councillor Morgan sold of the facility down grand Avenue for a mealy £12,million then spent all of that money on refurbishment of hove town hall ,and some!! dose nt anyone else think that’s like putting a square peg in a round hole where did it all go they certainly didn’t rip it and strip it,Mr Morgan may have been a descendant of black beard, someone,,the tax PAYER was definitely robbed up
51,000,000,000. Is 51 billion 51,000,000 is 51 million
So they’re wiping out the debts to re-run a project that never worked in the first place? Unbelievable!
And these clowns want to merge with East and West Sussex Councils under a mayor? As someone living in WSCC, I want to stay as far away from this parade of incompetent buffoons as I can, thank you very much!
No the idea is to wipe the debt so the thing can be sold off to a private buyer, who could then run it at their own costs.
You misunderstand what it means.
This is a total disgrace, I am not aware of anybody who wanted it , wants to keep it or thought it would be viable. There needs to be a public inquiry and the Greens and Torys held to account. Try to sell it to another city or country or sell it for scrap. We are only delaying the inevitable, a glass lift on the Sussex south coast is never going to make a profit
I think it’s great .. so there! And without massive interest payment to pay them of course it can be a viable commercial proposition, it can attract tourists and continue to be a vibrant part of the seafront
Labour gave i360 its planning consent 2006 which should’ve expired In 2009! It did not expire because BHCC deemed the scheme implemented because of spade went into the sea and pulled out Some metal ! Every political party had a role in this mega disaster.
Anď the idiott Brighton ratepayers will continue to vote Tory,Labour,Lib-Dem. Not very bright are they..
Strange I don’t recall seeing the Lib Dems having any say on the i360. The Greens (whom you ignore), Yes, but the Lib Dems, No. In fact the Lib Dems have always criticised the project being funded by a council loan as they never saw it as a good way of spending public money. The whole project was under capitalised from start to finish.
Latterly there were no LibDem cllrs! How did Libdems vote in 2006 at the planning cttee that gave it planning consent!!!
Peter Feltham
Says an obvious ‘Green’ supporter who has conveniently forgotten who voted for the huge loan…
Rather than wipe out the debt, why not just sell it to the highest bidder and take what you can. The highest bidder may be a case of dismantling it and setting it up elsewhere.
Finally, what would it raise for scrap?
Have you actually read the article? Your answers are already given.
Absolutely disgusting, schools in the area are understaffed , and there is a job freeze as no money ! The madeira terraces are falling apart and don’t get me started on the bailiffs that arrive when behind with Council tax !!
THIS IS DISGUSTING , ABSOLUTELY DISGUSTING THAT MONEY COULD HAVE BEEN PUT TO MORE CYCLE LANES AND ACCOMODATION FOR THE ILLEGALS 51 MILLION WRITTEN OFF BUT GET BEHIND WITH YOUR COUNCIL TAX PAYMENTS AND BHCC WILL PURSUE YOU TO THE ENDS OF THE EARTH
Probably shouldn’t get behind on your council tax then.
The infamous nil dough dildo strikes again!
Please just dismantle it!!!
You have an idea if the cost of that ? And it doesn’t make the debt magically disappear.
Why didn’t they rebuild West Pier. What incompetent fools with taxpayers money
I am a simpleton 5o odd million debt but if I’m behind a month on my council tax threats come in immediately
Debt itself isn’t bad, it’s the lack of movement of debt that’s bad. Really good book called the Creation of Money explains it pretty well.
Who wrote this, please?
Apologies, Benjamin, I meant who wrote the book The Creation of Money. Thank you.
Ludwig Von Mises, I got the name of the book a bit wrong. Good read though.
The council is hoping for a share of future revenue. What revenue would that be?
Future revenue.
John Keenan the journalist tried his upmost to get the financial details in the public realm.
It’s more likely than not that the council was strong armed into the loan due to decisions made around 2012.
Lies and secrecy under
“Exempt from public disclosure”
*Commercial confidentiality”
with the extra wrappings of Non Disclosure Agreements
With the limited companies in administration perhaps at least one of these three are no longer relevant and more of the truth will be obvious amongst the lies.
All these typical whingeing and moaning negative comments about the fact that it never should have been built blah blah is not going to help, fact is it was built and it’s there and it absolutely needs to reopen or this part of the seafront will deteriorate badly! If a private investor can turn it into a vibrant and attractive tourist attraction then this is fantastic news for Brighton, its tourist trade and for the seafront, if this can involve a share of revenue for the council then even better!
Agreed. Hindsight is 20/20 as they say. It’s how the issue is moved on which is the important point. Very well said, Andreas.
The reality is that a business and building are for sale.
Any purchasers will assess the value and offer what they think its worth.
They will NOT overpay.
Just because the previous owners made mistakes doesn’t mean they will.
What should happen ‘after the fact’ is that the Police should investigate the Council and i360 for evidence of fraud and corruption.
Totally agree with you. We can talk here whatever we want and the BHCC will not give a damn. There needs an investigation to be launched and it only can be done if enough of us who lives and cares for B&H will write to the institution so they can’t ignore it. Otherwise it will all be soon forgotten and the crooks will get away
Administraters say if £51m is written off, it’s possible to sell? But seems if say £50.5m is written off it’s impossible to sell? Seems odd this essentially random figure turns out to also be the exact figure for 360’s future?
Because you take on the debt as well. See Woolworths, which at one point could be brought for £1.
Maybe the council should run the business themselves. They could try and earn back the tax payers money. I believe that government funding was given for this as well. So not just tax payers in B&HA, but the whole country even those in Scotland, Northern Ireland who may never see it. Yet the new company will probably be as disastrous, and more money wasted. I read a few years ago that this i360 was a wrong choice but the council went ahead with it. Amazing that another council got something wrong. Paid servants who constantly get it wrong. These people would never survive in private companies. They are just failures and go into the government based areas like councils to start and fail. Embarrassment with B&HA council. With the ongoings of the council trying to cover up a migrant and how he took a young girl away etc. Time all these government building were audited and checked to see where all the money is going. And who will be held responsible for these errors.
W.T. actual F@#£ ?
You appear to be conflating several personal grievances, and that bit at the end is wildly unrelated. Mind giving that another go at putting together a cohesive thought, please?
Councils, like businesses have to make investment decisions, some will pay off, others may fail. It is easy to say something that didn’t happen would have been a better investment with no proof of would have been as it didn’t happen.
Also when projects are sold of to the private sector and become a success it’s easy to say in hindsight that somehow the council should have taken on the project, when they may not have the experience or backing to get the project complete.
As someone mentioned there are more benefits to the area than just income from the attraction, it is a destination point in Brighton and combined with others in the area keeps visitors coming and spending.
Most people use hindsight to try and show that they have incredible insights into subjects they know nothing about….as is the case with most of the comments on this thread. If they could all do better, why are they not trying to become Brighton Councillors?
NO ONE has been allowed to see the business case or CBA from the original proposal except the council committee and original operator.
That stinks….
It’s not unusual to not be entitled to see that though. Not liking that fact doesn’t mean it is corrupt, as you frequently assert. Although, I would certainly live to know the full details myself, so I share your curiosity.
The running costs of the viewing platform can not be covered by admission price, whoever the operator maybe.
Maybe look at removing the eyesore and pass the rest of the site to retailers.
Ok so I think it was a bad idea in the first place. I could along with many people here and have said it has no chance of being profitable. However now it is built and a buyer can be found which won’t cost the taxpayer anymore then that is good.Let the new owner see if they can make a profit which I still doubt but I would be happy if proven wrong. I do also think it is somewhat of an eyesore. It doesn’t look right in front of the grand seafront buildings. The Brighton Eye looked so much better and I think was more fun.
To the person calling everyone idiots for voting in the council whoever they voted for that is just insulting and has no reasoned thought or analysis behind it.
Indeed, challenge concepts, not attack people. Basics of articulated and reasoned debate. Well said.
It’s not enough to say we will write off the debt. It sounds as if the debt just disappears but money doesn’t just vanish – especially this much. So now we who already pay some of the highest council tax will need to pay for this complete disaster and mismanagement of funds. When basically a whole city says they don’t want something, then it should be acknowledged by those WE put into power and they should move on. I look forward to the inevitable documentary that publicises this gigantic financial debacle and highlights the absolute arrogance, unprofessionalism and lack of expertise in the people who made the decision on our behalf.
A write-off is quintessentially money vanishing though, and happens all the time, Em.
By the same token, money is created out of thin air as well. It’s why there is not enough money in the world to pay off the world’s debt.
#sendkitcatthebill
Despite the validity of all the comments/criticisms here, i360 exists and can never be sold unless the debt is written off. But I don’t believe the original scheme was ever financially viable – income was never going to exceed it’s operating costs. So how could anyone buy it now without some operating subsidy from the council?
So unless the council intends to run it at a loss then it should sell it for scrap, clean up the area and move on.
The debt is irrecoverable and the decision makers responsible for it are out of reach however disgusting and regrettable that may be.
Would it more viable without the loan repayments though?
?
The cost of dismantling it is so high that it would not be financially viable to buy it for scrap.
How can it take over 100 staff to operate this attraction? the wages alone will sink this project unless they are severely reduced.
Council does not own the i360 and cannot sell it. The debt is the only leverage it has. Writing off the debt clears the way for the Administrators of the i360 to sell it! Who gets the money from its sale? Apart from BHCC what other debt lisbilities need consideration?