An urgent review of the i360’s debt is under way after the tourist attraction failed to make its recent loan repayment.
Brighton and Hove City Council’s external auditor Grant Thornton supported the urgent review in a report to the council’s Audit and Standards Committee yesterday (Tuesday 24 January).
In the annual external auditor’s report, Grant Thornton said that, despite restructuring the loan last year, the i360 could not make its £900,000 December payment.
This suggested that the loan cost was a more significant risk and could affect the council’s finances over the medium to long term.
Grant Thornton said: “Until the council has fully reviewed options open to it, the likely financial impact over the medium to long term view remains unclear.
“We emphasise the importance for the council’s urgent review of options, and review of the current structure of the loan, to come to a realistic view of what repayment the council is likely to recoup on its investment and, therefore, to be able to include some accurate forecast of the impact of this on the council’s financial sustainability.”
The auditor said that the current arrangements to monitor the business were “sufficient”. These included a cross-party “member working group” which includes councillors, officials, the Brighton i360 and council-appointed business advisers. Council finance officials also attended i360 finance meetings.
Independent councillor Peter Atkinson said that he was concerned about the potential “realistic view” of repayments.
Council finance chief Nigel Manvell said that the i360 would feature in papers prepared for the next Policy and Resources Committee meeting and the annual budget meeting of the full council next month.
He said: “It will need to recognise the situation with the i360 and make some judgment about what the future financial position of the i360 will be.”
Green councillor Siriol Hugh-Jones said that the i360 board also met yesterday (Tuesday) – and a cross-party working group was due to meet on Monday 6 February to discuss the effect of the i360 finances on the council’s budget.
In 2014, the council agreed to borrow £36.2 million from the Public Works Loan Board to lend to i360 Ltd. Interest has pushed the figure to £43 million.
The loan proposal was supported by the former Green council leader Jason Kitcat and the former Conservative opposition leader Geoffrey Theobald.
At the time, the Labour minority leader Warren Morgan said that his group was “not prepared” to support the loan.
From 2019 to 2021, £6 million in repayments were deferred because of the coronavirus pandemic restrictions. A payment that was due in 2019 was deferred because of “bad weather”.
Proposals to restructure the loan were under way in 2018 because visitor numbers fell short of forecasts.
Last year the council agreed to restructure the loan, with plans to undertake “cash sweeps” twice a year, leaving the business with a working balance. The i360 did not sign the deal.
The restructure assumed higher visitors from 2026 onwards, with the council then receiving £1 million every six months.
However, the only payment received last year was £700,000 in June.