Council asked to defer another £1million loan payment from Brighton's i360 attraction taking total missed to more than £6million
The i360 owner is expected to miss another £1 million loan repayment after the seafront tourist attraction’s income dropped because of the coronavirus lockdowns.
This would take the total amount missed over the past three years to more than £6 million.
Later this week senior members of Brighton and Hove City Council are being asked to agree to defer the loan payment – of more than £1.1 million – which is due this month.
And they are again asked to 'request that any funds over and above the cashflow necessary to keep the attraction operational are paid to the council in part-payment of the sums owed'.
The council had been expected to complete a 'loan restructure' with the i360 – reducing the coming instalments to give the business a better chance of paying off the overall £36.2 million loan.
But the covid lockdowns made it unrealistic to finalise the deal – and now, according to a council report, interest on the i360’s debt has pushed the outstanding sum up to £41 million.
The council is also due to take over the i360’s £4 million loan from the Coast to Capital Local Enterprise Partnership (LEP) – at no cost to the council.
The report, to the council’s Policy and Resources Committee, said: “Given the financial and visitor number situation, officers have not progressed the loan restructure agreed in December 2019 as this was based on agreeing improved visitor number targets, impossible while the attraction has been closed.”
The i360 reopened last month – on Monday, May 17 – and the report said: “Early figures for the first four weeks from the restart have shown strong performance in what are difficult circumstances.
“They are running overall down on visitor numbers by 19 per cent but it has been an improving picture week on week.
“The bank holiday week this year v 2018-19 was up by 7 per cent. Retail has performed down by 12 per cent but again improving week on week and the Skybar has increase revenues by 33 per cent v 2018-19 since reopening.
“All these numbers are ahead of their initial forecast which gives confidence as they move into their peak trading summer period.
“The catering business is performing even better. They opened on Monday, April 12, for outside dining only, and then with restricted numbers for indoor dining available from Monday, May 17, and are running at 75 per cent increase on the comparative year of 2018-19.
“With the limited foreign travel, they are expecting a strong summer for Brighton with increased staycations and day trips.
“Once out of the main summer period the future is of course more uncertain which is a concern expressed by the citywide visitor economy businesses.”
The report also said: “Lockdown business grants and furlough have helped the management of the i360 to control costs and a bounceback loan was received from government.”
And the report looks at the effects of the coronavirus lockdown and other restrictions, saying: “The covid-19 pandemic has had a massive impact on the attraction. The board took the decision to close on Thursday, March 19, 2020, ahead of the government-mandated lockdown announced on Monday, March 23 that year.
“The first national lockdown took place over weeks of good spring weather when the i360 would expect to make significant income.
“In June 2020 (the council) agreed to defer the loan payments due in June and December 2020, acknowledging that the cashflow situation for the attraction would be hit by lockdown.
“Later in summer 2020 the attraction was able to reopen in a socially distanced manner.
“The i360 performed well when compared to other attractions around the country and, while visitor numbers were obviously down, costs were managed well and by many indicators the attractions performed very well.
“For September 2020 the visitor numbers were only down by 13 per cent from the 2019 figures and yields (spend per head) were kept high.
“The marketing spend remained in proportion with the total budget, with marketing continuing during the lockdown.
“Furthermore, steps were taken to bring the underperforming hospitality concessions back in house and run them directly.
“However, the overall visitor economy remained limited by a lack of foreign visitors and towards the end of the year the second wave struck, resulting in a second lockdown over November followed by the tier structure and then a third more severe lockdown from Wednesday, January 6, 2021.”
Looking ahead, the report said: “For the year from July 2021 to June 2022 the i360’s forecast visitor numbers for the pod are 292,000.
“This is a 10 per cent drop on the last full (pre-covid) year, which was 2018-19, when the pod visitor numbers were 324,000.
“This projection is based on the fact that foreign visitors represent between 10 per cent to 15 per cent of visitor numbers and they are not expecting that market to pick up until 2022-23.
“But they are forecasting an additional 96,000 visitors to the site who do not go on the pod which would take this total to 388,000.”
According to the report the i360 has had a “strong economic and social impact … already contributing £89.6 million to the Brighton and Hove economy”.
It added: “By the time the £36.2 million loan from the city council and the £4 million LEP loan that were invested to fund its construction are repaid, the i360 will have contributed £640 million to the city’s economy.
“This represents a return of £15.90 for every £1 of public sector investment. It has also generated direct additional income for the council which has been or will be reinvested in the seafront.”
The report also said: “The council is due to receive 1 per cent of ticket sales in perpetuity to spend on local initiatives.”
If the i360 were to fail, the council would be expected to step in, at least in the first instance. The report said: “The case for supporting the i360 … is more than about the wider economic reasons. It is about protecting council finances.
“If the i360 were to fail then the cost of getting it operational again and the loss of future loan payments would outstrip any concessions made now.”
The report is due to be debated by the council’s Policy and Resources Committee in a meeting which is due to start at 4pm on Thursday (July 1).