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Question mark hangs over Sands project - COMMENT ON THIS STORY
A QUESTION mark hangs over the redevelopment of Scarborough's North Bay because the firm behind the project has run into money troubles.
Benchmark Leisure completed Phase One of the multi-million pound scheme – the building of seafront apartments – last year.
It had hoped to use cash from the sale of the apartments on the site of the former Corner Complex to fund the regeneration of the Open Air Theatre in nearby Peasholm Park.
However, because of the credit crunch it has sold 60 of the 100 apartments meaning it does not have the funds to spend.
To keep the scheme alive Scarborough Council's cabinet is being asked to step in and approve spending 3.5 million on the theatre redevelopment.
If the cabinet decides not to press ahead with the proposal there is a risk the entire North Bay Project could grind to a halt.
Councillors are also being asked to back Benchmark Leisure's re-finance deal with its bankers, the Royal Bank of Scotland (RBS). If that is not agreed RBS could force Benchmark to sell the remaining homes cut-price.
A report due to be discussed by council chiefs today states: "Should members not support the refinancing agreement between Benchmark and RBS, then RBS will demand immediate repayment of their existing loan funding and would be entitled to insist on immediate sale of the unsold properties at prices significantly lower than those included in the Phase one appraisal.
"This would significantly reduce the potential surplus available to support the Open Air Theatre construction, or other future elements of the scheme."
The council is also being asked to allow Benchmark to spend 180,000 on furnishing up to 15 of the unsold seafront flats for rental. The bank says if this is not agreed then the refinancing offer may be withdrawn.
The report states: "If the council does not permit the use of the commercial rentals in support of the refinancing package, they will withdraw their refinancing offer."
When Benchmark was appointed as project developer, it was agreed that no money would be taken as profits from the scheme until the principle visitor attractions – a water park and Open Air Theatre – were completed.
Phase one of the scheme was the building of 100 apartments in two blocks.
Today council chiefs will seek an "in principal" agreement to borrow up to 3.5 million to pay for the up front costs of redeveloping the Open Air Theatre.
The council will get its money back when the apartments are sold and Benchmark will repay the interest on the loan.
Council leader Tom Fox said it was vital the momentum of the project was maintained, adding: "If we are going to do this then there is no better time than now."
Jim Dillon, the council's chief executive added: "The relationship with Benchmark remains strong but we as an authority can make things happen quicker and exploit the economic climate in ways that they can't.
"Most of the risks are in the next six months – if we find it's not happening through the ongoing review process with the RBS then the deal's off. Nobody else is going to take the project forward – if we said 'we're not bothered' then it would be a disaster for the future of this town."
As well as the apartments and the Open Air Theatre, the multi-million pound North Project originally included plans for a water park, a casino, hotel and forest apartments. Hopes of bringing Legoland to the site of the former Atlantis water park collapsed almost a year ago.
The Evening News tried to contact Benchmark Leisure's managing director David Rhodes. At the time of going to press there was no response from Benchmark.
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Weather for Scarborough
Saturday 26 May 2012
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