Brighton council explains why it didn't take on i360 itself following administration
The authority's admitted the financial pressures would've been too great
Councillors have been told that taking on the i360 even just to appoint a new operator would put too much financial pressure on Brighton and Hove City Council.
Green councillor Ollie Sykes asked what the liabilities would be if the council “exercises its rights” as a creditor.
He put his question to the council’s Audit, Standards and General Purposes Committee at a meeting at Hove Town Hall yesterday (Tuesday 28 January).
The i360 ceased trading last month when the company filed for administration, leaving more than 100 people jobless.
The company that ran the viewing tower went bust owing £51 million after the council brokered a loan from the Public Works Loan Board.
The figure includes interest but the council still has to pay back £32 million at a rate of £2.2 million a year until 2041.
Green councillor Pete West, who chairs the audit committee, said that the council had already started setting aside £1.2 million a year because of missed payments by the i360. But now an extra £1 million would need to be found.
Councillor West said that the council chose not to step in and take on a new operator or run the attraction itself because the cost would be too great.
No operator was willing to take on the i360 with its debt to the council.
Cabinet members agreed to write off the debt last Thursday (23 January) to allow the administrators to sell the viewing tower.
If the council had appointed a new operator or taken on the i360 itself then it would have taken on the liability for staff redundancy costs, legal costs, and payments to other creditors, including for taxes.
The council would also have lost out on business rates. And additional costs would have included bringing in a commercially experienced management team to remodel the business.
Councillor West said: “The venue needs significant investment to change the business model and remodel the venue but again with no guarantee of success.
“The i360 company was not able to raise further commercial finance and the council has felt to not be in the financial position to not take on the financial challenges.
“The council has had to make savings of £175 million since 2014. The i360 debt is not therefore a substantial driver of the council’s financial challenges which have been caused by reducing government grant funding and significant growth in social care and homeless demands.
“The main advantage of sale in administration is the hope that a new operator will purchase the business unencumbered by debt and therefore willing and able to invest directly or raise finance for investment to make the site a success for the area in the city.”
When the cabinet agreed to write off the i360’s debt to allow the sale, councillors were advised that to demolish the attraction would add to the council’s costs, would still leave the loan in place and would result in part of the seafront becoming derelict.
The Labour leader of the council Bella Sankey said: “If the i360 can operate again then it can help bring in business rates.
“And if we proceed with the recommended buyer that has come forward, the city council will get a small share of future revenues.”