Question
The ongoing Wokingham town regeneration and other developments means that Council borrowing is set to balloon from £28 or £29 million we owe at present to around £271 million by 2019 / 2020.
The Council’s plans include knocking down a relatively new sports centre and moving out of a relatively new, purpose built library into another new-built building.
The plans also appear to rely on us being able to find tenants for the new shops which are being built – despite the fact that many of Wokingham’s high street shop spaces are filled with charity shops and cafes.
A debt of £271 million for the Council means a debt of around £4,200 for every household in Wokingham.
What are the Council’s plans for paying this debt back, including how long will it take?
Minutes:
Question
The ongoing Wokingham town regeneration and other developments means that Council borrowing is set to balloon from £28 or £29 million we owe at present to around £271 million by 2019 / 2020.
The Council’s plans include knocking down a relatively new sports centre and moving out of a relatively new, purpose built library into another new-built building.
The plans also appear to rely on us being able to find tenants for the new shops which are being built – despite the fact that many of Wokingham’s high street shop spaces are filled with charity shops and cafes.
A debt of £271 million for the Council means a debt of around £4,200 for every household in Wokingham.
What are the Council’s plans for paying this debt back, including how long will it take?
Answer
The decision to replace the existing leisure centre and library I think are financially sound and they provide best value for local residents. They create a far improved facility co-located and the facilities will be more flexible and can be used by the wider community. They will also benefit from lower operating costs due to the co-location and the greater sustainability, such as the inclusion of solar panels and improved insulation and sound protection.
You asked about the regeneration. Residents will not have to pick up the cost of the regeneration. Wokingham town centre regeneration is being run as a commercial project and it does not rely on tax payer funding at all. Income from the scheme will be used to offset the costs of delivery and borrowings. So in fact it is a win win and is a very good scheme all round.
The town centre development is set to secure an annual commercial rental income in excess of £4m a year once the development is completed. This will enable the outstanding debt to be repaid and serviced and will also allow an additional income of £3m per year; which will come back to the Council and will be used to fund services and projects across the Borough.
Whilst there will always be a risk when it comes to securing tenants, which is one of your points, the Council has a proven track record of finding tenants for their buildings and we have already secured 65% of the total income for Elms Field and are in active discussions with businesses interested in coming to the town centre. As Peach Place does not open until December 2018 it is in its early stages and you cannot expect to have tenants lining up at this stage. But we have had conversations with both national and local business and independent retailers who are interested in coming here which gives us confidence in the scheme.
Your last point was about the debt. Our treasury management strategy for 2017/18 forecasts external borrowing to increase from £150.1m at the end of 2016/17 to £271.2m by 2019/2; which I think is the figure you mentioned. This is to fund our capital programme which invests in schools, the town centre regeneration, Council owned properties, and invest to save schemes. Some of this borrowing is to invest in our local infrastructure such as highways, bridges and crash barriers. This is charged to the council tax payer.
Other elements are run more commercially, with capital investment funded by borrowing until the borrowing can be repaid and the asset provide a financial contribution to the Council, thus reducing charges to residents and tax payers.
This borrowing is funded by future receipts into the capital programme from developers and the Council is only borrowing short term to invest in infrastructure prior to funding from developers being received.
So the Council will also receive its investment in local authority companies as their loans are repaid and this will be in addition to the interest payments and dividends the Council will receive. And as I mentioned before the borrowing is also funded by receipts from the sale of the town centre assets as the regeneration goes forward.
So you can see that the vast majority of this is not down to the rate payers to pay it back but from specific sources of repayment. Our capital investment seeks to provide revenue savings, and in these cases some of the revenue savings are set aside to pay back the borrowing on initial investments, and it is planned that with the current approved levels of planned borrowing and repayment it will be possible to repay all of this additional borrowing between 2017/18 and 2019/20 in nine years’ time.
Supplementary Question
With those projections of income what account have you taken of the recent opening of the Lexicon in Bracknell and the rapid increase in on-line shopping both of which will severely impact future footfall and revenue in Wokingham?
Supplementary Answer
We have taken that into account. I do not think we are trying to compete with Bracknell anymore than Bracknell is trying to compete with us. We will be having a separate kind of town centre to the Bracknell one and we are confident that we will find appropriate tenants and our plans have not changed.