Council set to borrow £90m to fund New Leisure Centre, Otterpool Park & FOLCA 2

Folkestone & Hythe District Council is set to borrow £90m on three capital projects which include £58m on Otterpool, £23m on a new lesiure centre and £7.5m on FOLCA 2.

According the Council Report C/24/75 – General Fund Medium Term Capital Programme 2025/26 to go before the Finance and Performance Scrutiny Sub-Committee tonight shows that over a five-year period ending 31 March 2029, the Council will need to borrow £90m over this period to fund the capital projects already mentioned.

Of this £90m worth of borrowing, £58,026m will be for Otterpool Park, meaning 64.5% of the borrowing will be on this capital project alone. Exactly on what it will be spent is not known, perhaps a new waste water treatment works!

The borrowing estimates for the delivery of Otterpool Park will be spread out over five years as follows:

However, as of May 2027, FHDC will cease to be, as all Local Authorities in Kent will merge into 3 or 4 unitary authorities, instead of the 14 individual council we currently have – KCC, Medway & 12 Local Authorities. Given this, all projections must be viewed with that in mind, as the Council cannot say with significant certainty what amount of borrowing for Otterpool will be after May 2027

The Council foresee a profit, or rather a net revenue benefit after taking interest costs into account. However, they do not say when this profit will be realised.

Now of course, if the Council borrow money they must pay back the money, regardless if they borrow it from the PWLB, or from other Local Authorities. This paying back of the money comes out of the money, residents pay to the Council via Council Tax, Business rates and is known as the minimum revenue provision (MRP). A simple way to understand the MRP is, the amount a council has to set aside from its day-to-day budget to repay the money it has borrowed. The estimated MRP for the next financial year 2025/26, is £2.5m. The more MRP the council pay means less money for services. We note the trend for the MRP over the last three years is an upward one, this is in part is due  interest rates; which have risen, and because the Council have taken on a major project – Otterpool Park. This can be seen in the MRP chart below.

Within the borrowing is £94,000 for Temporary Accommodation (TA). As we noted on Jan 22, TA costs are at there highest levels ever, and we suspect the costs for TA will break the £700,000 mark, as there is still three more months worth of data to be published.

As the council make clear, £7.5m of the borrowing will be FOLCA 2, and to date the Council have spent £296,143, on 15 consultants for Folca 1 & 2. FOLCA2 is the main art deco, Debenehams building (pictured), not the Edwardian part next door.

The property (Folca 1 & 2) has sat empty ever since the Council purchased it in May 2020, at a cost of £2,050,000. The borrowing for FOLCA 2 will happen, in the forthcoming financial year and the following 

The Council will borrow £23m for a new Leisure Centre Development. This is a new project and where and/or if the council have earmarked any land for this project is not known. Let’s hope this new project will not go the same way as Princes Parade which ended up costing the Council a lot of money and no new leisure centre.

Again, once the Council cease to be in May 2027, will the new unitary authority we become part of have the appetite, and inclination, to build a new leisure centre in the district? Also, one notes most of the spending will be in 2027/28 and 2028/29, but as we said, the Council will cease to be as of May 2027.

One must remember the timing of the Council’s capital programme budget is likely to be subject to some change over the medium-term. Factors including planning consents, procurement processes and external grant approvals, these and other matters can affect the timeframes to deliver capital projects. Lets not forget it took nine years to sell Biggins wood.

This level of capital investment will be a significant draw upon the Council’s available reserves and balances. The reserves are at there lowest levels since March 2017, so similair capital investment could not easily be repeated in the future, if at all.

The final General Fund Medium Term Capital Programme will go before the Cabinet on the 10 February, and  full council on 26 February 2025. It would appear little will change before then. Perhaps Cllrs will ask about the new leisure centre development and where it might go in the district. You as residents could email your Cllr requesting they ask such a question at Full Council, you could ask such a question yourself, or you could just roll with it.

The Shepway Vox Team

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