Agenda item - i360 Loan Restructure

Executive Director Economy Environment & Culture (copy attached)

RESOLVED: It was agreed -

(i)            That the Committee noted the advice of GVA contained in Appendix 1.

(ii)          That the Committee agreed to defer the consideration of a formal restructure of the loan to the i360 until its meeting in October 2019.

(iii)         That, during the period of the deferral of the restructure, the Committee agreed to the City Council also deferring interest and repayment instalments necessary to ensure the sustainable operation of the i360, whilst ensuring that all available cash-flow after operating expenses is available to the service the Council’s loan.

(iv)         That the Committee agreed, subject to the performance tests referred to in recommendation 2.5, not to take default action at this stage in relation to the failure to hit the financial ratios set out in the loan agreement.

(v)          That the Committee agrees to defer £880,304.25 of the total payment due on 31December 2018 (£1,492,304.25).

(vi)         That the Committee requested the Executive Director, Economy, Environment and Culture and the Executive Director Finance and Resources to bring this matter to a PR&G Committee meeting in June 2019 to determine the amount of deferral at the end of June 2019.

(vii)        That the Committee agreed to officers monitoring key performance indicators, and that if these fell below the levels set out at section 3.17 then officers may, in consultation with the leaders of the party groups, opt to bring a report to an urgency PR&G Sub Committee, to consider further action including (but not limited to) any of the options set-out by GVA in their work to date.

(viii)      That a comprehensive marketing strategy is developed and published prior to the June 2019 urgency meeting of the PR&G committee.

97.1    The Committee considered the report of the Executive Director Economy, Environment & Culture which set out the professional advice the Council had received regarding the restructure of the Council’s loan to the i360, and sought agreement for a preferred way ahead.

97.2    Councillor Bell said he was disappointed that there was no representative from the i360 present at the meeting. The Chair said that that had been his decision rather than theirs, as he didn’t feel it was appropriate for them as a debtor to the Council to sit through the meeting waiting to hear the Committee’s decision. Councillor Bell asked what assurances the Council had that the i360 would adopt recommendations made by the Committee. The Executive Director Economy, Environment & Culture said that officers had been engaging with the directors and they had agreed to accept and embrace the recommendations, and said that the Board would be happy to meet with Councillors.

97.3    Councillor Wealls said the Council were relying heavily on Mr Sharp to get the i360 to work. He asked if officers had had sight of employment contracts of him and other staff, and whether there were incentives linked to the performance of the attraction. The Executive Director Economy, Environment & Culture said that officers had not had sight of the contracts, but worth clarifying that some staff were board members and therefore did not have a contract. With regard to the content of any contracts, that could be subject to GDPR and therefore could not be shared.

97.4    Councillor Mac Cafferty noted the proposed steps the i360 were taking and complimented them on some things such as Pride, but was also concerned that other ideas such as working with other tourist attractions had not been done before.

97.5    Councillor Hamilton said that twice a year the Council should receive two payments, £922k towards the Public Loans Board debt and £570k as a ‘bonus’. In June 2018 the £922k was paid, but in December 2018 they were only expecting to pay £612K, and asked if the ‘bonus’ money had been put into a separate account and if it would be used to make up the difference in the loan payment. The Head of Finance said the money paid to the Council had gone into a reserve, and some has been spent on works on the seafront etc. The shortfall will impact on the Council’s shortfall, but the money would be received in the future.

97.6    The Chair noted that the Conservative Group had an amendment, and asked Councillor Janio to propose the amendment.

97.7    Councillor Janio said that the Conservative Group wanted the i360 to succeed, and in general terms supported the recommendations in the report. He proposed the following amendments to the report:

2.1       That the Committee notes the advice of GVA contained in Appendix 1. and

2.2       The Committee agrees to defer the consideration of a formal restructure of the loan to the i360 until its meeting in October 2019.

2.3       That, during the period of the deferral of the restructure, the Committee agrees to the city council also deferring interest and repayment instalments necessary to ensure the sustainable operation of the i360, whilst ensuring that all available cash-flow after operating expenses is available to the service the Council’s loan.

2.4       That the Committee agrees, subject to the performance tests referred to in recommendation 2.5, not to take default action at this stage in relation to the failure to hit the financial ratios set out in the loan agreement.

2.5       That the Committee agrees to defer £880,304.25 of the total payment due on 31December 2018 (£1,492,304.25).

2.6       That the Committee delegates authority to requests the Executive Director, Economy, Environment and Culture and the Executive Director Finance and Resources to bring this matter to a PR&G Committee meeting in June 2019 in consultation with Group Leaders to determine the amount of the deferral in June 2019 and take all of the steps necessary to determine the amount of deferral at the end of June 2019.

2.7       That the Committee agrees to officers monitoring key performance indicators, and that if these fall below the levels set out at section 3.17 then officers may, in consultation with the leaders of the party groups, opt to bring a report to an urgency PR&G Sub Committee, to consider further action including (but not limited to) any of the options set-out by GVA in their work to date.

2.8       That a comprehensive marketing strategy is developed and published prior to the June 2019 urgency meeting of the PR&G committee

The amendment to Recommendation 2.1 had been separated to make it clear that it was the administration, rather than the GVA, who were suggesting a deferral of the formal restructure of the loan until October 2019. Recommendation 2.6 (was 2.5) was proposed as it was not felt that it was fair to put the onus on one officer, and that it needed to come to this Committee. With regard to Recommendation 2.8, the word ‘urgency’ could be removed as it was a typo, and the matter would be considered by the Committee. He asked that the marketing strategy be reviewed by this Committee at its meeting in June 2019.

97.8    Councillor Wealls seconded the proposed amendment.

97.9    The Chair accepted that the proposed amendments were designed help.

97.10  The Committee voted on the proposed amendment and they were agreed.

97.11  RESOLVED: It was agreed -

(i)            That the Committee noted the advice of GVA contained in Appendix 1.

(ii)          That the Committee agreed to defer the consideration of a formal restructure of the loan to the i360 until its meeting in October 2019.

(iii)         That, during the period of the deferral of the restructure, the Committee agreed to the City Council also deferring interest and repayment instalments necessary to ensure the sustainable operation of the i360, whilst ensuring that all available cash-flow after operating expenses is available to the service the Council’s loan.

(iv)         That the Committee agreed, subject to the performance tests referred to in recommendation 2.5, not to take default action at this stage in relation to the failure to hit the financial ratios set out in the loan agreement.

(v)          That the Committee agrees to defer £880,304.25 of the total payment due on 31December 2018 (£1,492,304.25).

(vi)         That the Committee requested the Executive Director, Economy, Environment and Culture and the Executive Director Finance and Resources to bring this matter to a PR&G Committee meeting in June 2019 to determine the amount of deferral at the end of June 2019.

(vii)        That the Committee agreed to officers monitoring key performance indicators, and that if these fell below the levels set out at section 3.17 then officers may, in consultation with the leaders of the party groups, opt to bring a report to an urgency PR&G Sub Committee, to consider further action including (but not limited to) any of the options set-out by GVA in their work to date.

(viii)      That a comprehensive marketing strategy is developed and published prior to the June 2019 meeting of the PR&G committee.