UPDATED: i360 looking to delay £6 million of repayments

Brighton and Hove City Council currently receives £570,000 in interest repayments each June and December after securing the £36.2 million Government loan that made the creation of the seafront viewing tower possible.

But as visitor numbers have not been as high as predicted when the loan application was made, the tower is asking the council to reduce those £570,000 repayments to £25,000 until 2024 while they build the business.

Bosses are keen to assure residents that the close to £900,000 payments being made twice a year to pay off the loan will continue and only the interest repayments will be affected. But this could represent a delay in payments totalling £6 million up until 2024, when bosses would restore full payments and repay the deferred amount.

They stress that the council would receive the full amount within the same 25-year agreed period and that they will try to increase repayments before 2024.

Dick Russell i360 shareholder and legal adviser, said: “We paid everything in our first year and all was well.

“Our visitor numbers are lower but we are still making an operating profit. The difficulty is that we will not make enough profit this year to fund all the payments we need to make.”

Mr Russell said there is “no question of any shareholders taking any money out of the business until payments are up to date”.

He said: “But we are now in a position where we are not going to be able to make the end of June payment of the margin of £570,000.

“We’ve not generally made enough money as visitor numbers have been down.

“Our costs last year were more than they should have been.

“We had some unexpected high liabilities like the higher business rates which we’ve dealt with but which cost quite a lot of money to deal with.

“Our net revenues have been down. They’ve also been down because from July we’ve had very bad weather at the most important times. Last July and August were bleak. And we’ve also had a very dismal March and April.

“So we’ve ended up with less money than we need and we need to put a bit more money in to fund the basic payment to the council at the end of June and clearly what we need is a more satisfactory way going forward.

“And that’s what we have proposed to the council.

The tower wants to use the money it will save from the loan interest repayments to pay back £4 million from a separate Government loan gained through the Coast To Capital local enterprise partnership, as this has a higher interest and will therefore cost more to pay off in the longer term if it is not addressed.

This is only a proposal being put to the council at this stage. But with visitor numbers at 370,000 per year and bosses hoping to increase that to £450,000, the attraction needs the proposal to be agreed.

Background to the story

In MARCH 2014 Brighton and Hove City Council announced a Government loan had been agreed that would enable the construction of the city’s new viewing tower.

The council then borrowed £36.2 million from the Government to enable the i360 to commence construction and to “spur the wider renewal and regeneration of the city’s seafront”.

It was built by the team who created the hugely successful London Eye, the most visited paid-for attraction in the UK.

The loan would not come from council funds or from council tax but from the Public Works Loans Board (PWLB) – a Government funding agency which makes loans available to major building projects.

The council said the interest on the loan would earn it more than £21 million in interest payments and fees which could be ploughed into crucial infrastructure such as repairing seafront arches, structures, sea defences and retaining walls, currently facing repair bills up to £70 million.

Under the plan, the council borrowed and loaned to the project £36.2 million for a scheme now estimated to cost £46.2 million.

The rest came from the Marks Barfield family and other shareholders (£6 million) and the Coast to Capital local enterprise partnership (£4 million). Additional costs during construction and since opening, totalling £3.75 million to date, have also been met by the Marks Barfield family.

The i360 was projected to earn three times more than it needed to cover its loan repayments.

A council report said the scheme would boost visitors to the city by 165,000 to 305,000 and inject between £13 million and £25 million into the local economy annually.

The council itself was also predicted to earn about £1 million a year for 25 years in interest and other fees which would be reinvested in improvements or other council services.

It was envisaged the tower would provide a catalyst for regenerating the seafront, draw crowds into places such as Preston Street, generate rents from seafront properties and increase parking revenues and business rates – a further direct income to the council of an estimated £0.9 million.

It was set to create between 170 to 400 spin-off jobs and bring higher spenders to the city in the form of an estimated 50,000 overnight visitors every year to support hotels and restaurants.

External auditors said the loan could be repaid “even if the attraction only gets half of its projected visitors”.

A council spokesman said: “Funding received from the i360 has already been earmarked for seafront regeneration projects, including £1.1 million for the Madeira Terrace restoration, and this will not change. Future income has not yet been allocated to specific projects so no plans would be affected.”

Positives for the i360

BOSSES at the i360 are keen to stress the attraction is running at an operating profit.

The accounts running up to June 30 last year showed net liabilities of £3,661,981.

But chief executive Steve Bax said the statutory accounts recently submitted to Companies House “are for our first 11 months of trading up to June 30 2017”.

He said: “In our first full year of operations, the i360 welcomed more than 500,000 visitors, we met all our financial obligations to Brighton and Hove City Council and made a trading profit.

“The ‘profit and loss’ figure shown is statutory and takes into account depreciation of assets and accrued but unpaid interest.”

The i360 opened in August 2016 with 700,000 customers targeted in the 2013 business case put forward to convince councillors to support its construction with public funds.

The attraction’s bosses said the number was a great achievement for a venue that was starting from scratch and that the figure still fell within their target parameters.

It has created more than 100 jobs, all paying the Living Wage, with 72 per cent of the workforce living within five miles of the attraction So far £2.5 million has been paid to Brighton and Hove City Council; these funds have been used to develop the area around the attraction.

A further £33 million will accrue over the next 25 years.

Bosses say the i360 has raised the profile of the city nationally and internationally through events such as the royal opening with the Duke of Edinburgh, charity events and international media coverage.

The attraction says it has given nearly 40,000 free tickets to the city’s state school children and enabled more than 40,000 city residents to benefit from half-price tickets.

The tower has supported numerous charity events across the city, including the iDrop charity abseil which raised more than £40,000 for sick children’s charity Rockinghorse.

It was predicted that there would be between 165,000 and 305,000 additional visitors to Brighton and Hove in the first year of the i360’s operation, relative to the previous year.

Brighton and Hove City Council figures indicate that the city received 11,234,000 visitors in the i360’s opening year (2016), an increase of 718,988 (6.4 per cent) compared to the previous year.

This result was achieved despite the wider South East region experiencing a drop in visitors of two per cent compared with the previous year.

Tourist revenues to Brighton and Hove were predicted to increase by between £13.9 million and £25.4 million in the first year of the i360’s operation, relative to the previous year.

City council figures indicate that tourist revenues in the opening year (2016), were £885.9 million, an increase of £28.3 million (3.2 per cent) compared with the previous year.

It was also predicted that there would be between 27,000 and 49,000 additional overnight stays in the city in the first year of the i360’s operation, relative to the previous year.

City council figures indicate that there were 1,607,000 overnight stays, an increase of 160,000 (ten per cent) compared with the previous year.

The i360 has directly created more than 100 jobs on site.

This includes the attraction itself, together with the restaurant, souvenir photography and other contractors.