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    Portfolio: All

Executive

    18 May 2005

    Financial Issues Report

    City Treasurer, Chief Executive’s Office Report by:

    Ward Implications: All

     For Decision

    Summary (and Community Implications) 1.

    1.1 This report sets out new capital schemes that have been identified since the

    Financial Issues Report in April and changes to the capital programme since

    it was last reported.

    The report also seeks approval for a loan of ?870,000 to the Theatre Royal,

    funded by Prudential Borrowing. The loan will be repaid by a first call on

    existing City Council Revenue support to the Theatre.

    The new capital schemes will bring a wide range of community benefits.

    Recommendation 2.

    2.1 Approve the inclusion of new schemes and changes to existing schemes into

    the capital programme as outlined in Appendix A; 2.2 Approve the buy out of the lease at High Friars, Eldon Square, for the sum of

    ?34,000 - to be financed by a loan from the Corporate Resource Pool, as set

    out in paragraph 3.2

    2.3 Approve a loan of ?870,000 to the Theatre Royal, as set out in paragraph

    3.3. The loan is to be taken over up to 25 years and will be financed through

    Prudential Borrowing. Repayments will be met from existing City Council

    Revenue support to the Theatre.

    2.4 Note the item on the allocation of Area Committee budgets at paragraph 3.4

    for information only.

    Financial Issues 3.

    Capital Programme variations 3.1

    3.1.1 Appendix A summarises a range of amendments, which if approved would

    result in a net increase in the 2005-06 programme of ?9.714m. 3.1.2 The key changes are:

    Education & Libraries An amount of ?1.159m is included for the extension

    to the Galafield Play and Community Facility to build a Children’s Centre with

    49 full day care places. The scheme is funded by SureStart Newbiggin Hall

    Local Programme and SureStart Children’s Centre programme.

    YHN Schemes totalling ?5.974m have slipped from 2004-05. This was

    partly offset by re-phasing back into 2004-05 of ?0.678m. Schemes have

    also slipped into 2006-07 totalling ?1.629m.

    New schemes amounting to ?1.196m are to be financed from borrowing,

    including ALMO resources.

    Social Services Schemes totalling ?1.220m have slipped from 2004-05.

    City Service - Schemes totalling ?2.696m have slipped from 2004-05.

     The slippage in the programme will not result in any loss of funding.

    Eldon Square High Friars Unit 3.2

    3.2.1 Capital Shopping Centres are recommending that the Partners pay a capital

    premium of ?85,000 (the Council’s 40% share being ?34,000) to obtain the

    surrender of a lease at High Friars. The unit would then be let for 15 years to

    the adjoining tenant at a combined rental of ?260,000 per annum (?81,000

    higher than the existing two base rentals of ?179,000). The council would

    receive ?104,000 per annum as equity rent.

    3.2.2 The council share of the capital premium would be funded by CRP Loan.

    Theatre Royal development, 5-7 Market Street 3.3

    3.3.1 Phase A of the development of 5-7 Market Street will consist of works to the

    basement, ground and first floors in order to upgrade stage and technical

    facilities, relocate the theatre’s Booking Office and expand the catering and

    education facilities.

    3.3.2 Total project costs are budgeted at ?4.2m. The scheme will be funded

    through a portfolio of public funds, donated funds, Theatre Royal funds,

    Newcastle City Council and borrowed funds.

    3.3.3 In March 2005 Executive agreed a grant of ?250,000 from the Corporate

    Resource Pool towards the scheme. Executive is now requested to agree to

    a loan of ?870,000 for a period of up to 25 years. 3.3.4 The loan would be financed through Prudential Borrowing. Interest is to be

    charged at 4.6%.

    3.3.5 The loan repayments will be the first call on the annual revenue grant

    provided by the City Council to the Theatre. However, there could be

    flexibility to allow earlier repayment should the Theatre wish to do so.

    Area Committee Budgets 2005-06 3.4

     ?

    35,594 Gosforth/North Newcastle

    36,192 Inner East

    61,780 Inner West

    35,184 North Central

    58,900 Outer East

    53,920 Outer West

    Total 281,570

3.4.1 Executive is requested to note this item for information only. Further details

    of balances brought forward from 2004-05 will be reported to individual Area

    Committees

    Corporate Implications 4.

    Financial 4.1

    4.1.1 The City Treasurer has been consulted and he is satisfied that all financial

    implications as set out in this report have been considered.

    Environmental and Sustainability 4.2

    4.2.1 In designing and implementing capital schemes, individual directorates will

    ensure that they are in line with the Council’s strategic objectives on the

    environment and sustainability.

    Risk Implications 4.3

    4.3.1 Risks for individual capital projects will by managed by the responsible

    Departments.

    What Happens Next 5.

    5.1 The capital projects outlined in the report will be implemented though normal

    procurement arrangements. Spending will be reflected in future capital

    programme monitoring reports.

    Further Information 6.

    6.1 Background Papers held by Capital and Investment Team in room 15