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Council to discuss further investment in economic recovery
The council’s cabinet will discuss plans to make a direct financial stake in the Seaway leisure development which will be anchored by Empire Cinemas, Hollywood Bowl and Travelodge. (Cabinet, item 4, Tuesday 2 November).
The council could invest up to £10m of its capital reserves to secure a much higher level of ownership with higher returns and to ensure the project is delivered with all its associated benefits, including over 500 new jobs, £50m of private investment, flagship new leisure facilities in central Southend, and £15m of associated spend in the area. The proposal would also secure a long-term sustainable income stream for the council.
The proposal for council investment comes as the traditional development funding model has changed significantly, and as with other similar scheme nationwide, needs public intervention. In this case that intervention proposed is through the council taking an annuity lease back to attract an institutional funder who would provide most of the capital funding needed for the construction. The Council will then run the scheme, receive all the car park income and the rents from the occupiers out of which it will pay a rent to the institutional fund. The Council will get to keep the difference during the annuity lease at the end of which, full ownership will then pass to the council. The council will also receive the business rates.
If agreed, it would mean the council would retain much more control and ownership of the site.
Cllr Ian Gilbert, leader of the council, says: “This proposal demonstrates another bold and confident move by the council in delivering on its promise to support and invest in the economic recovery of our place.
“The Seaway scheme plays a vital role in our regeneration story, and as we move forwards with projects that deliver the new housing we need, it is equally important that we create new jobs and exciting places where people want to visit and spend time and money locally.
“As we recover from COVID-19 it is also essential that we play a major role in encouraging private investment, create these new jobs and deliver ambitious regeneration schemes. We must also work towards financial self-sustainability and this proposal and scheme helps deliver on all these things.”
The report follows the council’s recent investment in the Victoria Centre, the approval of plans for the regeneration of central Southend through the Better Queensway project, approval of plans for a new stadium and housing at Fossetts Farm and Roots Hall, and the ongoing delivery of Airport Business Park Southend in partnership with Henry Boot development plc.
Cllr Paul Collins, cabinet member for corporate services and performance, says: “This proposal shows that the council has full confidence in our soon to be city, and is boldly and directly supporting its economic recovery and regeneration.
“This proposal is a move that we need to make – it will enable us to unlock a key council-owned asset, ensuring the delivery of a year-round all-weather leisure scheme that will attract both local people and those from further afield into the area, create local jobs and ensure the council has an ongoing and long-term yearly income, with the full income and value of the site fully passing to the council at the end of the income strip lease term. It is also really important that we keep pace with other regional centres in terms of the leisure offering here in Southend-on-Sea which will reduce the need for residents to leave the borough to get these types of facilities.”
The council’s capital budget is separate to its revenue budget which funds day to day services. Capital is used to finance one-off projects and developments. Using capital reserves would mean that the council will not have to pay any borrowing costs, further improving the financial rewards for the council.