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News - 1 March 2014
i360: Grab this opportunity with both hands
The Economic Partnership urges the council’s Policy & Resources committee to agree the funding for the i360 which is not only a fabulous potential addition to Brighton’s tourism offer but also exactly the sort of business deal that the city council should be seeking to offset reduced public sector funding.
The i360 will be one of the most advanced visitor attractions in the world, built by the team behind the hugely successful London Eye. The local authority is being asked to borrow money cheaply from the Public Works Loan Board and lend it at a profit to the i360 company.
The deal will deliver a return to the council £1m in one-off fees, £1m per annum plus 1% of the ticket sales and half of the business rates [the government keep the other half].
Like all councils, Brighton & Hove is faced with massive cuts in its funding from central government; £100m over the next four years. When it has cut everything to the bone, if it is to stand any chance at all of providing more than just social care and refuse collection, it has to start generating huge amounts of additional income. That means entering into commercial agreements to deliver a profit. That is the reality of the new public sector landscape. It is the new normal. This, for instance, is the only way that money will be generated for things like the repair of the seafront arches estimated to cost something in the region of £70m.
Like any commercial venture there will be a risk factor. You don’t earn a profit without taking risks. But the i360 is an exceptionally good risk. The Business Plan, which has been seen by the Economic Partnership and has been independently verified, explores a range of financial scenarios and market projections and paints a picture of a project that is financially sound, exceptionally well planned and pragmatic in its projections. Visitor numbers, which are based on realistic comparisons and assumptions, would have to fall by more than half before the council’s loan was at any risk.
Detractors suggest that the proposed visitor numbers of 700,000 - 822,000 per annum are unrealistic. But with a resident visitor catchment in excess of 15m people and a tourist market of 7m [and increasing] the projections are robust and achievable. If the attraction operated at only 50% capacity for only eight hours a day [which it won't] it would comfortably exceed the target.
Comparisons with Portsmouth’s Spinnaker Tower are spurious other than it also makes a profit and its construction was delayed, although for entirely different reasons. The Spinnaker was delayed largely because of design issues trying to marry 14,000 tonnes of concrete with 1,200 tonnes of steel on site. The i360’s delay was due to the financial crisis of 2008 and any construction delay once work starts will be minimized by the structure being much simpler to build and most of its component parts being manufactured off-site.
Other than that, the comparisons are weak. Portsmouth is simply not a tourist destination to compare with Brighton and even the location of the Spinnaker within the city is poor compared to the i360’s prominent seafront site minutes from Brighton city centre.
The i360 is one of those developments, like the Brighton Centre thirty years ago, that demonstrates vision and ingenuity on the part of the city’s leaders. Since the revenue that it will generate has also become an essential element of public sector finance, we are lucky to have a developer that wants to build it in Brighton and a elected members prepared to support it. We should grab this opportunity with both hands.
Click here to download i360 Policy & Resources report
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