Retail plans could reap windfall
A MAJOR new shopping and housing development in an Essex town could reap a borough council a £3million windfall each year, the EADT can reveal.The details of the financial arrangements for the £150m Vineyard Gate development in Colchester were last night described as good news for the town.
A MAJOR new shopping and housing development in an Essex town could reap a borough council a £3million windfall each year, the EADT can reveal.
The details of the financial arrangements for the £150m Vineyard Gate development in Colchester were last night described as good news for the town.
The confidential financial documents were obtained by the East Anglian Daily Times just days before Colchester Borough Council's cabinet is due to consider them.
They reveal the authority would receive 5% of the rent generated by shops in the retail scheme, which forms part of the regeneration of the St Botolph's area of the town.
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Based on normal occupancy of the complex - which will include more than 70 shops, including a House of Fraser store - this would total around £500,000.
But as part of a profit share with the developer involved, current estimates indicate a further £3 million could be earned annually by the council once Vineyard Gate is up and running.
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A report prepared by consultants CB Richard Ellis concluded that while there was degree of risk in any major project of its type, the council should proceed with the developer in delivering the scheme.
Yesterday John Jowers, leader of Colchester Borough Council, said while he was unhappy that details of the deal had been made public they represented good news for Colchester.
He said: "It shows that this is a very, very good thing for Colchester in very many ways.
"We are building on the success of both Culver Precinct and Lion Walk and we are really going for it.
"Not only will people come to Colchester for a new football stadium and visual arts facility, they will also be able to spend their money.
"If you want to be a regional centre, you need to provide facilities people want to come and use."
Richard Bourne, the council's Labour group spokesman for the St Botolph's regeneration, said: "In general we welcome the progress as we have always supported regeneration of this area of town.
"If the finances work out and income is increased, or capital is converted to revenue, then this too should be welcomed, although there is insufficient detail at present to fully examine the finances and risks."
And he added: "We cannot support any scheme which forces the closure of Gala Bingo, and we must insist on a proper adequate bus station if the current provision has to be moved."
Colin Sykes, leader of the Liberal Democrat group on the council, said: "I welcome the concept of the scheme.
"However, there are some financial risks and they need to be carefully monitored and scrutinised.
"This is a big, big scheme and, as with the Visual Arts Facility, we have to do a proper job of it.
"I cannot comment on any of the figures because they are not in the public domain."
The basic terms of the proposed deal with Caddick Developments are:
n the council will grant a 150-year lease over the completed development
n the council will receive a £250,000 per year during the construction period to compensate for the loss of current car park income
n there are prospects of additional profit sharing if the completed scheme exceeds the developers profit requirement.
In a report prepared for the cabinet, council officers noted three main risks to possible income:
n the anchor tenant, [ie House of Fraser], could drop out. This could present a significant problem as it is the only major department store actively looking for a new unit in Colchester.
n A variation in costs - because shopping centres take around 10 years to go from concept to reality, prices could change
n There might not be not enough demand from retail outlets for shop units in the town.
After considering the CB Richard Ellis report and documents from other consultants, officers are recommending the council should proceed to the next stage of the scheme subject to negotiating a minimum rent from the developer and obtaining financial assurances.