Council agrees to fund Rotherham’s Forge Island project after private investors 'cannot put in as much money'

Chris Read, leader of the council, told Wednesday’s council meeting that works “starting in earnest” on the Forge Island development are just “weeks away”.

“We have a cinema, hotel, four food and beverage retailers all in place with contracts signed,” added Coun Read.

“With our development partners Muse, our tenders have procured and we have prices in place for works to commence on site.

“But they are time limited, and we all know that with inflation where it is today, if we delay and decision making we will end up costing more to deliver that scheme.”

It’s the latest blow to regeneration schemes in the town centre after it was revealed that the redevelopment of Rotherham Markets is on hold, whilst the council seeks to fill a funding gap of £9.8m.

The Forge Island scheme has already signed up Travelodge, the Arc Cinema and a number of food outlets to the flagship regeneration project.

Once complete, the scheme on the River Don will be transformed into a new leisure quarter for Rotherham Town Centre with a cinema, restaurants, hotel, car parking, and homes.

Preparation works have now been completed at the site, including demolitions, the construction of a fish pass and flood mitigation measures.

“Throughout the development of the scheme, the assumption has been that the finance will be raised privately, that a private investor would bring forward the upfront capital sum required to put buildings in the ground, and that that would be paid for by the commercial rents paid by the operators, by the cinema etc.,” added Coun Read.

“That money coming to the council and the council paying down the debt incurred by that private investor.

“Indeed, six months ago, when we last looked at that, that still looked like the easiest and most effective way of being able to fund that scheme.

“However, as we’ve got into the final stages of this with gilt prices rising, changes in the wider economy, and the wider economy I think it’s safe to say is not looking in a great state, the private investors have said we cannot put in as much money as we thought we were going to be able to do.

“That poses for the council some questions about what we then do, and how do we make up that shortfall.

“The options that present to us are that we could try to make up the shortfall in the funding from the private developer, but that has become quite a significant amount of money.

“We could pay back more in revenue costs over the course of the lifetime of the contract, but that in turn turns out to be a more expensive option and arguably one that is legally less sound and less safe for us.

“Can the council put the capital sum up front in place, and does that get us into a position which delivers the scheme quicker, but is also more legally sound in terms of ensuring that we are compliant with procurement rules that we need to follow.

“This is not about the council paying to build a cinema and just putting that money out there – this is a commercial scheme that will repay either the private investor in the original process, or indeed to the council.

“We can commit the money to this precisely because it is repaid at commercial rates over the course of the programme, and it pays for itself.

“The people of Rotherham have waited for this for a really long time – I was presented with development plans from the 1960s and in those papers it had Forge Island leisure development highlighted in it.”

Conservative Councillor Greg Reynolds however, asked why the project had taken so long, and added: “I suspect that now it’s too late, young people stream their media, people don’t go to the cinema any more.”

Conservative councillor Charlie Wooding added: “The economic conditions in place right now will continue to decline, we are facing a recession similar to 2008 owing to severe market conditions, the fall out of covid, the war in Ukraine – these factors are going to have serious impacts on the commercial enterprise, and the commercial properties that will be leased out.

And fellow Conservative councillor Timothy Baum Dixon added: “if we don’t support the cabinet we’re in danger of this project collapsing and the loss of public funds already pumped into the project and the loss of future jobs for the people of the town, and much needed rent and business rates for the council.

“This is not a blank cheque for the cabinet to preside over an ever overrunning project.”

Coun Baum Dixon also asked for assurance that a deal would only be done if it gave value for money for taxpayers, and that once the deal is done, that the deal will be fast tracked to scrutiny.

RMBC’s cabinet will decide on a course of action from a number of options on October 17.