Months of negotiations into buying the Venture Quays site in East Cowes could go down the drain due to coronavirus.
The Isle of Wight Council has been negotiating with Homes England for the building and land that make up the former Venture Quays site on East Cowes waterfront, hoping to save marine manufacturing jobs, but now a report to Cabinet says this could all be at risk due to the financial position of the council after the pandemic.
The £1 million acquisition of the site, which has been the subject of talks with Homes England since July 2019, could be too much for the precarious position of the Isle of Wight Council’s finances, which currently have an estimated funding gap of almost £10 million.
It will be down to the council’s cabinet next week, on July 9, to decide whether to not purchase the site, delay the purchase until the council’s finances are better, proceed with the acquisition once support from government over the costs is confirmed or, the preferred choice, let the leader of the council, Cllr Dave Stewart, and Cllr Wayne Whittle, cabinet member for regeneration and business development, with advice from the director of finance, make the overall decision to purchase the site.
Homes England has extended the deadline of discussions with the council — but only until the end of the month, July 30.
In a report from the director of regeneration, Chris Ashman, and Cllr Whittle, the risks of acquiring the site and considerations the council must take are laid out — including the ‘new economic climate’, a potential but ‘likely’ recession lasting one to three years and implementing a delivery strategy.
It says when negotiations concluded in March, the financial impact of the Covid-19 pandemic to the council ‘were beginning to become evident’.
However, it also says ‘the development opportunities in East Cowes have a strategic significance in terms of economic development and regeneration’ and will allow further growth of the marine sector on the Island.
The site had been the subject of significant regeneration plans by Venture Quays, including a marina, hotel and residential development, but following their withdrawal, progress of the original masterplan has relied on improvements proposed by Red Funnel.
Now, the council says by acquiring the land, in the short them, the council will be able to secure the businesses and jobs in the Columbine building and build affordable houses on Albany Road and Maresfield Road.
In relation to the funding gap, the council is developing a deficit recovery strategy which will allow the council to continue to operate without having to consider spending controls or service reductions.
However, the report stresses the importance of ‘reasonable surety’ that buying the site ‘does not place an ongoing financial burden on the council’ and that it is ‘adequately protected’ against financial risk.
The cost of buying the site and essential building works, mainly to the Columbine building, is expected to amount to £1.3 million.
A timeframe has been set by Homes England for the council to implement a delivery strategy for the housing elements of the scheme within four years — planning permission in place by March 2022 and building works to have started by March 2024. If the conditions are not met, Homes England will be able to acquire the sites back for £1.
The report does say it is possible for the council to cover its costs but if a deeper level of recession arises than is thought, then it predicts the council would make a financial loss.
Although, it also describes the housing proposition as ‘extremely challenging’ — with the impact of any recession turning the viability of the proposed general housing scheme, pre-Covid-19, to one of significant loss.
Despite being a challenge, the council is positive there ‘remain opportunities to investigate’ to turn the housing around — which is thought could cost anywhere between £15 and £20 million to deliver.
You can read the full report here: https://www.iow.gov.uk/Meetings/committees/cabinet/9-7-20/PAPERCReportEastCowesFinalV3.pdf