The minimum amount the i360 is due to pay back the council each month is set to be slashed – but it will have to hand over nearly all its profits on top of that.
More than five years after it first opened, the amount the seafront attraction owes Brighton and Hove City Council has increased from £36.2 million to £42.871 million after years of missed payments.
Low visitor numbers were initially blamed on unreliable train services and poor weather, and covid has hit takings even harder.
The council borrowed the money from the government’s Public Works Loan Board (PWLB), at an interest rate of 2.78 per cent.
When the loan was agreed, the i360 agreed to repay the money to the council at a rate of 6.53 per cent, allowing the council to invest about £1 million a year in regenerating the seafront.
But only a handful of repayments at this rate were made before the i360 started to default on the loan in June 2018.
The council is now being asked to agree a restructured loan repayment, slashing the interest rate to 3 per cent.
A minimum repayment schedule has been drawn up over 25 years, with the first six-monthly payment set at £900,000 in December, and £600,000 in June next year.
However, every six months the council will be able to take all the spare money from the i360’s bank account in a “cash sweep”, leaving only enough funds to cover cash flow.
When it first opened, it was paying the council about £1.47 million every six months.
The proposed restructure is detailed in a report due to go before Thursday’s policy and resources committee, which was published this morning.
The report says: “(Councillors have) expressed a clear desire that first and foremost the city council protects the public purse and gets back the money it has borrowed from the PWLB, plus the interest payable by the council on that loan, and that it does this as quickly as possible.
“Doing this quickly minimises exposure to risk, and so the desire to recover the council’s position as quickly as possible is prioritised over and above the city council receiving the ‘margin’ it was expecting to receive on the loan.”
It adds that the “cash sweep” would continue for five years, but if the i360 was doing well after that, it would be able to keep more of its profits, providing an incentive for it to boost performance.
Another £4 million loan made to the i360 by the Coast to Capital LEP, which has now been transferred to the council at no cost, will be repaid once the PWLB debt has been cleared. No interest will be charged on this.
A note at the top of the report says it was published late – less than five working days before the meeting – because discussions with the i360 had continued yesterday.
Within minutes of it being put online, the council issued a press release saying the restructure would “balance the books and secure a sustainable future”.
It quoted an anonymous council spokesperson saying: “The i360 has proved to be a popular visitor attraction and contributes to the city’s year-round visitor economy.
“It has brought with it a number of benefits to what is now a vastly improved and regenerated part of the city’s central seafront.
“The loan restructure is designed to improve the stability of the i360 so it may succeed into the future, as an employer and an important part of the city’s tourism offer.”
Quoted by an anonymous council spokesperson: “The i360 has proved to be a popular visitor attraction and contributes to the city’s year-round visitor economy”
So popular it can’t meet the repayments.
The only thing it’s contributes to the economy is higher council taxes.
lol this person must be a green or labour no wonder the people of Brighton & Hove is being ripped off due to their mistakes
“The loan restructure is designed to improve the stability of the i360” why is it going to topple over?
We can but hope.
approx 460000 council taxes – probably more, spent on the ‘Cocktower’. Heads should roll but won’t.
njust how many drugs were the councillours on who looked at the business plan for this artic bright elephant?
Your four spelling errors prompt a similar question.
Will they never face the fact that this has been a disaster and always will be? Unfortunately it is not just expensive and wasteful, and a burden on the tax payer. It is also one of the most hideous and oppressive structures in the country. Time it was demolished, and the council with it.
I live opposite the i360 even before it opened local residents said it would not attract the numbers of visitors predicted.
Come 6pm every night earlier in the winter the i360 is in darkness, it should be a nighttime attraction to so it becomes viable. How about including some trendy bars and a nightclub. The pod itself could become a cocktail bar at night. Or even make i360 a Star wars attraction.
Basically when the venue is not being used around the clock its impossible to make a profit.
Some good thoughts there, the Star Wars idea could work well. They just need more imagination, though it should never have been built with public money.
There is only a bucket in a tent at the side of the bar to offer the punter in need of a loo break. It is not feasible to drag the pod up and down the pod endlessly like the elevator lift it is to ferry people in and out and to ground floor toilets. Night use is constrained.
It is extraordinary that this was not taken into consideration in the original brief and at the planning stage. The council should stop lying to the public and taxpayers, and admit that it is a total failure.
It would be quite simple to put a portably loo in, there is already a nice bar so putting a unisex loo in would be easy.
The single question councillors MUST determine is where to draw the line when loss making looms regardless of ever deeper cutting concessions. This Marks Barfield failure was incapable of attracting the finance to erect it after its owner got the cans for the column built and storaged in Holland!
This was KNOWN to be uber-risky & the council went for the kamikaze option of taking on the total liability. Had the planning consent been judged expired, this nightmare future liability for taxpayers would not be looming.
25 years to repay. Will it be standing in 25 years?
And as for the idea that the council will sweep up the profits? What profits?
As usual with Brighton / Hove Council they always leave out those “unimportant” calculations such as Maintenance. The i360 (The Big Lift!) is getting older everyday. Things wear out, motors stop, parts require replacements etc……Ask any lift engineer, Who’s in charge when a lift breaks down?
Mind you, when you look around …….. the council has never really been that concerned about upkeep and maintenance.
Why would they start now???
Those of us that have lived close by for some time could see that this was a terrible idea and not a suitable place to build it.
It might work in London, with all the amazing history and architecture, but not here in Brighton.
Unfortunately, we were sneered at and dismissed as ‘being negative’. “Leave it to the experts” we were smugly advised.
So, now it’s clear the i360 is haemorrhaging money; I would like to advise a solution (one I have always advised since before construction).
The main problem is that it’s an expensive lift to nowhere and it’s too small to be used for anything that generates revenue. Instead, the pod should be the lift to a new, much larger pod which would be permanently fixed to the top. The i360 could then actually be used. There would still be a small charge for the lift but we would be going up there for ‘something’ instead of ‘nothing’. It would be the coolest restaurant/bar in Brighton and would be making money day and night. If the structure isn’t strong enough to support the extra weight, then a couple of support ‘legs’ could be added – tripod from war of the worlds!
A foolish decision by the Green and Tory Councillors to put £40M of PUBLIC MONEY into this structure. The Council are owed £10M already, though the Council documents don’t make this clear. Extending the loan just extends the misery really and increases the amount that will have to be paid. The i360 haven’t paid the Council any money for about 3 Years now. This is scandalous. Also, the administration costs involved with the time and money spent on Councillors/Officer/Reports/Meetings must be large and I doubt whether the i360 are paying these in full!