Conflicting Issues: Future Spending
(Quoted from 'RE88: WATERFRONT REGENERATION PROJECT REVISED MASTERPLAN' of 'RECOMMENDATIONS TO CABINET ON 3RD FEBRUARY 2009 FROM THE REGENERATION AND ENVIRONMENT PANEL HELD ON 28TH JANUARY 2009', http://www.west-norfolk.gov.uk/pdf/RandERecs030209.pdf)
The Finance and Resources Manager drew Members attention to the detailed breakdown of estimated costs, attached at appendix 3a to the Cabinet Report. The estimated costs detailed the best, worst and likely case scenarios. It was explained that approximately £1.2m worth of value would be allocated to provide the transport route through the Regeneration site from the CIF funding, however this had not been included in the worst case scenario costs.
He informed Members that for the scheme to proceed, certain works would need to be carried out in advance of the land receipts being realised and details of costs and receipts were included in the Cash Flow statement attached as Appendix 3b to the Cabinet Report.
The Finance and Resources Manager explained that the net cost of the scheme was estimated to be £8.88m, although the exposure to costs was expected to peak at £17.824m in 2011/2012 before reducing back to £1.324m by 2014/15. These figures assumed that £3.604m of VAT Shelter receipts, resulting from the Housing Stock Transfer, was allocated to the scheme. In order to fund the cash flow projections it would also be necessary to use prudential borrowing which would peak in 2011/2012 at £17.8m. This was on the assumption that the Council could sell 2 acres of land by that time, realising a £3m receipt.
The Finance and Resources Manager explained that although the marina was expected to run at a profit in the longer term, it was likely to need support for the first three years, this would be discussed with the property consultants to determine the best way forward.
(xiv) Risk Assessment
The Finance and Resources Manager acknowledged that the
Waterfront Regeneration Project was by far the biggest capital
scheme that this Council had ever considered. It would involve
costs in the region of £30m and land sales of £18m, so obviously
there would be risks involved, especially in the current economic
climate.
He explained that at present the Council's capital programme for 2008/2012 fully committed all capital resources to the project up until 2014/2015. For any other capital schemes to be progressed in that period it would be necessary to produce additional capital receipts or replace schemes within the programme.
Further risks included the assumption that the economy and housing market would recover from the current economic crisis by 2011/2012 as it was anticipated that capital receipts for the housing development on site would commence in 2011/2012, if this was delayed the cost of the scheme could increase each year by up to £370,000.
(end of quote)