Princes Parade: Council recommend pausing current spending on project.

The Council have announced that a revised budget for Princes Parade in the order of some £47 to 49m is needed to deliver the project (£45.3m + £1.4m + 3% to 5% contingency).

The project was forecast to cost £45.3m in January 2022.

A report released today by the Council can be read by clicking on this blue link. It recommends pausing current spending on the project pending further officer recommendations on how to proceed.

The report goes onto say:

When Full Council and Cabinet considered the revised budget requirement for the scheme in January 2022, the revenue costs (£210k) of the associated borrowing required (£6.625m) at that time was based on the prevailing rates at 2%, and could be more than fully funded by the revenue impacts of closing Hythe Pool and the Management Fee income from the new Operator.

If the scheme costs were to be increased to £49m (based on a 5% contingency), the revenue implications of the capital financing (borrowing of £10.7m) would be £583k (based on current rates) per annum. This cost would need to be met from general fund revenue resources. In addition, as outlined in 2.2 and in the Cabinet paper in July, the operator costs are anticipated to move due to the rises in energy prices globally. Whilst the original position reported in January 2022 anticipated an annual income to the council from the operator (from year 2), this is now anticipated to be an annual cost to the Council (for the first ten years of operation).

The Council has incurred a significant sum on this project to date. Further work is required to estimate the final value but it is anticipated that if the project does not proceed, the Council will be required to write off revenue costs in the region of £4-5 million. These costs will need to be met from General Fund revenue resources and the write off will need to be made in year to comply with capital accounting requirements. If the decision is taken to re-evaluate the available options this will be more fully explored and considered as part of that picture

We anticipate the project may not even go ahead, and the report is the first step in a polite climb down, as costs will climb again and closer to the £67m anticipated by campaigners back in 2017.

The Shepway Vox Team

Dissent is NOT a Crime