PAPER C
Purpose: For Decision

Committee

CABINET

Date

9 JULY 2020

Title

EAST COWES WATERFRONT SITE ACQUISITION

Report of

CABINET MEMBER FOR REGENERATION AND BUSINESS
DEVELOPMENT

EXECUTIVE SUMMARY
1.

At its meeting on the 11 July 2019 the Cabinet agreed to instruct officers to negotiate
with Homes England (HE) to agree terms towards acquiring land and buildings on
East Cowes waterfront formerly known as Venture Quays, primarily to protect marine
manufacturing jobs based in one of the associated buildings. Delegation to officers
to conclude the matter was agreed, provided the result of negotiations were within
defined parameters.

2.

Following completion of those negotiations in March 2020, the changed financial
position of the council and the economic impact of the recession, due to the Covid19 pandemic, now requires consideration by Cabinet in relation to whether to proceed
with the purchase at this time. Discussions with Homes England have resulted in a
short extension to complete the £1 million acquisition by 30 July 2020.

3.

This report outlines the considerations that the council must have regard to in
acquiring the sites at this time, the necessary timescales involved, and the risks
associated with proceeding with the purchase. It confirms ongoing discussions with
relevant government departments regarding the council's challenging financial
position and the resulting ability to progress its continued commitment to secure the
jobs on the site.

4.

The report recommends the final decision to acquire or not is delegated to the leader
and Cabinet member for business development and regeneration but subject to the
director of finance (section 151 officer) being s subject to consideration of the final
advice of the director of finance (section 151 officer) regarding the overall level of
financial risk to the council.
.

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 BACKGROUND
5.

The regeneration of East Cowes continues to be informed by its location as a key
point of entry to the Island and the need to consider appropriate uses for underutilised industrial buildings and brownfield land. It is complicated by hosting one of
the main car ferry terminals and still being home to a number of key manufacturing
employers. In 2005 a masterplan for East Cowes prepared by the South East England
Development Agency (SEEDA) was agreed and over subsequent years, new
housing, a new food store and a health centre have been developed.

6.

Following the withdrawal of the Venture Quays proposed development for a marina,
a hotel and further residential development in 2018, progress of the original
masterplan has relied on proposed improvements to the ferry terminal and proposed
leisure developments being undertaken by Red Funnel ferries. Throughout the
planning process for these proposals local stakeholders have raised concerns
regarding the resulting loss of manufacturing buildings providing local employment
and the displacement of marine based employment, reliant on water access to the
Medina estuary and the wider Solent area.

7.

During the period leading up to the abandoned marina proposals a new marine
manufacturing company, Wight Shipyard, entered into a short term tenancy with
Homes England in the Columbine building in East Cowes. Over the last three years
its business has flourished creating over 100 jobs at the site and supporting a further
200 in the local supply chain.

8.

Due to the significance of the sites involved and the high value marine manufacturing
jobs now based in the Columbine building the council commenced negotiations with
Homes England to acquire the employment and indicative housing sites. Cabinet
agreed in July 2019 to delegate the decision to purchase to officers, subject to key
financial parameters being met. These negotiations were concluded in March 2020
as the financial impacts on the council of the Covid-19 pandemic were beginning to
become evident.

9.

The council continues to work with all stakeholders to identify waterfront development
sites in the Medina Valley to accommodate modern, purpose built premises to
support the long term growth of the marine sector on the Island, supporting the vision
for the Solent as a key UK and international hub for the sector.

10.

By acquiring the relevant parcels of land (Appendix 1), in the short term, the council
will be able to secure the position of the marine and associated industries within the
Columbine building and develop and redevelop the neighbouring land parcels known
as Albany and Maresfield for affordable housing. There is also an opportunity to
support wider town centre regeneration through potential use of the Barracks
building, part of the site for improved public realm and potential community leisure,
training hotel and entertainment use.

11.

The project's outline business case (OBC), developed prior to the uncertainty caused
by the pandemic, identified marginal viability in terms of long term returns from
investment in the acquisition of the land and buildings. This financial risk and the
evident challenging market viability connected with the proposal is balanced by the
other wider economic benefits set out in the OBC, assuming that they can continue
to be realised in the new economic climate.
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 12.

In summary, the subject properties comprise a series of sites hatched on the attached
plan (Appendix 1) and are numbered and identified as follows:
(1) Columbine building including apron and dock, Promenade building and
Victoria Marina.
a) Freehold interest in a large industrial and office property currently in use for marine
manufacturing.
b) Freehold interest in the open ‘apron’ area, dock and associated mobile hoist.
c) Flying freehold interest in raised building at first floor level only currently in use as
office space (referred to as the ‘Promenade building’).
d) Long leasehold interest in a series of pontoons fronting East Cowes Harbour on
the western side of the apron and Columbine building known as Victoria Marina
(including foreshore and bed of the River Medina).
(2) Victoria Barracks. Freehold interest in the property comprising a vacant barracks
building which was most recently in office use, open yard and former ‘guard house’
outbuilding.
(3) Albany site. Freehold interest in a single storey industrial warehouse currently
used for boat storage;
(4) Maresfield Road site. Freehold interest in the cleared development property
currently used for car parking.

STRATEGIC CONTEXT
13.

The council’s Corporate Plan 2019 - 2022 and the ‘Inspiration Island’ Regeneration
strategy (2019) support the development of economic growth and prosperity and the
delivery of affordable homes.

14.

The strategic objectives for the acquisition are to:
1. safeguard local marine sector jobs;
2. create an enabling project for the wider regeneration of East Cowes town centre;
3. provide and bring forward a viable local affordable housing scheme.

15.

The development opportunities in East Cowes have a strategic significance in terms
of economic development and regeneration. The marine employment, currently
located in the Columbine, represents a significant element of what is an important
sector of the Island's manufacturing economy.
The creation of waterfront
employment sites to encourage further growth in the marine sector is also a key part
of the council’s medium term economic development and regeneration plans.

16.

East Cowes’s role as a key gateway to the Island has been reinforced further by the
implementation of Red Funnel’s terminal improvements and plans to redevelop its
former marshalling yards. The adjacent town centre still requires public realm and
access improvements, and this acquisition presents an opportunity to revisit and
refresh the previous masterplan for the town and its waterfront.

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 17.

The housing sites available as part of the purchase also potentially support the
council's housing delivery objectives, which seek to bring forward viable housing
development sites to assist in increasing the provision of attractive, affordable
housing options for Island communities.

18.

However, the response to the Covid-19 pandemic is having a significant financial
impact on the council and may also have an economic impact on the benefits
originally envisaged from the acquisition. Thus far during the crisis the council has
received from government a sum of £9 million towards its costs of responding to the
pandemic and the government has signaled that councils should prioritise the
following service areas:
 Adult social care.
 Children’s services.
 Public health services.
 Fire and rescue services.
 Waste collection services.
 Shielding the clinically extremely vulnerable.
 Homelessness and rough sleeping.
 Domestic abuse.
 Supporting the NHS.
 Managing excess deaths.

19.

The government has also confirmed a delay in the implementation of the outcomes
of the fair funding review. The council’s medium term financial strategy assumed a
sum of £2.5 million coming to the council in 2021/22 as a result of this review, which
is now in jeopardy.

20.

The current reasonable estimations of the financial risk to the council as a result of
the coronavirus crisis is set out below:
Description

£m

Additional costs
Budgeted savings - unable to be achieved
Income losses (eg rents, fees and charges)
Funding losses (ie council tax and business rates)
Total financial impact

8
1
8
2
19

Less: emergency Covid-19 funding
Total shortfall
21.

(9.0)
10

It would be responsible to continue with a working assumption that the council will
receive little or no further funding from government towards its costs of responding to
the coronavirus with the best case being that some, not all, of the council’s costs will
be met by government and this is borne out by recent ministerial correspondence.
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 However, recent announcements would indicate further consideration being given to
the financial challenges faced by all councils by government before the end of July,
but nothing is guaranteed.
22.

The council has an obligation to plan its financial management responsibly. It is not
allowed to either set a deficit budget or to draw upon its general reserves to the extent
that they fall below the minimum level of £7 million. Over the period of the council's
Medium Term Financial Strategy, the level of headroom above the minimum level of
reserves that would be available is £3.2 million and this is predicated on the council
making ongoing savings of £10.5 million over that period. In the context of both the
future savings that the council will be required to make, any further potential negative
impact of the pandemic and the need to be resilient to any other financial risks that
could arise, it would not be prudent to draw on the council's limited headroom of £3.2
million. Furthermore, adequate financial resilience of the council underpins the
continued delivery of its critical and essential services throughout this pandemic.

23.

Given the forecast shortfall of £10 million the Cabinet is in the process of developing
a deficit recovery strategy which will enable the council to continue to operate without
the need to consider emergency spending controls and service reductions. There is
confidence that the emerging strategy, to be developed into a detailed plan, will be
sufficient to identify savings of £10 million which will involve the following:
•
•
•

Some use of the council's corporate contingency.
Some use of earmarked reserves - previously set aside for risks that have
subsided and to fund transformation activities.
Placing some previously approved spending plans "on hold".

24.

Given the overall financial position of the council and the need to maintain an
adequate degree of financial resilience to continue to deliver critical and essential
services through the pandemic, it is important that there is reasonable surety that the
acquisition of Venture Quays does not place an ongoing financial burden on the
council and that the council is adequately protected against financial risk.

25.

The greatest financial risk to the council associated with the acquisition is the
economic recession.
The East Cowes project’s business case’s financial
assumptions therefore need to be considered in relation to the shape and duration of
any likely economic recession caused by the pandemic. The generally accepted
likely recession type is characterised below:

26.

U-shape recession
The virus lingered into June and social distancing rules have taken time to be
loosened. While there is a release of pent-up demand driven in part by the stimulus
of government and central banks, consumers do not race back to shops or
restaurants because factories and other workplaces take time to return to full capacity
and not every job lost in the crisis is won back.
This scenario impacts on the risk profile of acquiring these sites in terms of the
stability of tenant income and viability of potential housing schemes in a challenging
economic climate. This scenario plus other more serious recession types have been

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 modelled and are set out in more detail in the Financial / Budget Implications section
of this report below.
CONSULTATION
27.

East Cowes Town Council, East Cowes Community Association and the local ward
member have been consulted regarding the council’s intentions and are supportive
of the desire to secure the marine employment on the site. They seek to be actively
involved in informing the other proposed development of the other site parcels to help
best meet the needs of the town.

28.

Consultations continue with officials in the government’s Ministry of Housing,
Communities and Local Government and involved in the Business, Energy and
Industrial Strategy to seek government financial support to assist the council in
completing the acquisition to secure the employment on the site while minimising the
council’s financial exposure.

FINANCIAL / BUDGET IMPLICATIONS
Structure of the purchase
29.

The overall capital cost of the acquisition plus associated capital works for the site is
expected to amount to £1.3 million. The purchase price agreed is £1,050,000 for all
land parcels. The level of the council’s offer has been informed by an agreed position
with Homes England on the buildings’ condition and the cost to the council of making
essential improvements.

30.

Given the age and condition of the Columbine building further essential works have
been costed at £230,000 including estimated reinstatement of windows on the
southern elevation following the demolition of the adjacent building. Other works
include checking damp and flooding issues including remedial work where above
ground drainage failures have affected building fabric and staircase improvements to
ensure areas accessibility and compliance with fire and safety regulations.

31.

Heads of terms have been agreed with Homes England for the sale. Within these
terms, HE requires the council to implement a delivery strategy for the housing
elements of the proposed scheme within four years as a key strategic condition of the
sale. The timeframes include having necessary planning permission in place by
March 2022 and to have started residential development on either Albany or
Maresfield by March 2024. Failure to meet these conditions result in a reversion of
these sites to Homes England for £1.
Financial appraisal

32.

Separate financial appraisals have been undertaken which estimates all cash flows
(both capital and revenue) of both the Columbine proposition and the housing
proposition. As described previously, there is considerable risk associated with the
depth and length of any recession (often described as a particular shape eg V-shape,
U-shape, L-shape etc) and therefore a sensitivity analysis has also been undertaken
which seeks to evaluate the likely overall financial impact upon the council in each of

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 those scenarios. Modelling these different scenarios demonstrates the likely range
of financial outcomes that could arise.
Financial appraisal - Columbine
33.

A summary of the financial appraisal associated with the acquisition of the Columbine
building and associated land under alternative recession scenarios is described
below. For reference, the previous ‘base case’ scenario pre-Covid-19 is also
provided. The appraisal has been modelled over 15 years, representing a timeframe
over which it is reasonable to evaluate an investment of this nature. Modelling
beyond 15 years would become speculative and susceptible to obsolescence risk of
the building itself or a significant shift in market conditions. The generally accepted
‘base case’ among leading economists is for a U-shaped recession lasting one to
three years. For illustrative purposes a V-shaped recession (usually lasting one year)
and an L-shaped recession (lasting around five years) are also included as scenarios
with the likely range of possible financial outcomes.

34.

A summary of the key financial metrics of each scenario is provided below, with the
U-shaped scenario being the expected ‘base case’.
Key measure
Total capital
cost
Total cash
flow
Residual value
(RV) after 15
years
Positive cash
flow from
Net present
value (incl.
RV)
Net present
value (excl.
RV)

Pre-Covid-19

V-shape

L-shape

£000

U-shape
base case
£000

£000
1,309

1,319

1,339

1,349

2,342

2,330

1,935

1,738

1,741

1,741

1,741

1,741

Year 1

Year 1

Year 1*

Year 1**

1,689

1,480

886

495

487

441

48

-136

£000

* Cashflow would be negative for two years if the tenant's business failed.
** Cashflow would be negative for three years if the tenant's business failed.
Notes:
1. Assumed rent levels are to be at sub market rent but at a level sufficient to cover
the council's annual maintenance and debt costs.
2. Should rents at the assumed levels not be agreed, an annual deficit will arise.

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 35.

The ‘base case’ scenario illustrates an overall positive cash flow position after 15
years of £1.9 million which equates to £886,000 at today's values after taking account
of inflation and other risk factors (ie the net present value). However, this assumes
that at the end of 15 years, the value of the land and building will be £1.7 million (or
£838,000 at today's value). Should the land and buildings have no value at the end
of the 15 year period then the total cash flow will only just be cash flow positive at
£48,000 in net present value terms. In the same circumstances, should an L-shaped
recession arise, then after 15 years the council would make a cash flow loss of
£136,000.

36.

In summary, it remains possible for the council to cover its costs at a sub-market rent
in the ‘base case’ and whether or not the land and buildings have any residual value.
The rent level with the tenant however, will need to be at a reasonable level to cover
both costs and risks. Should a deeper recession arise then it is likely that the council
would make a financial loss.

37.

In addition to the acquisition of the freehold land, there is also the assignment of a
lease currently held between the Crown Estate and HE for part of the foreshore and
bed of the River Medina. The annual rent is currently £25,566 per annum and is
subject to an outstanding rent review from 2017. Once assigned to the council, it is
intended the tenant, WSC, will take a sublease and will cover this rent (and any
subsequent rental increase). This is included in the financial appraisal illustrated in
the table above. If WSC was to vacate the Columbine, the rent would fall to the
council to pay.
Financial appraisal - housing sites

38.

A summary of the financial appraisal associated with the housing sites (Maresfield
and Albany) under alternative recession scenarios is described below. For reference,
the previous ‘base case’ scenario pre-Covid-19 is also provided. The appraisal
assumed to the ‘base case’ has been modelled as a general housing scheme and in
the circumstances of a U-shaped recession. Given the longer life on new housing,
the appraisal has been modelled over a 40 year period and on a build for rent basis
(as opposed to build for sale). While housing has a design life beyond 40 years,
forecasting all circumstances beyond 40 years becomes extremely speculative. For
investment purposes, a 40 year modelling period is common in the housing sector.

39.

A summary of the key financial metrics of each scenario is provided below, with the
U-shaped scenario being the expected ‘base case’.
Key measure
Total capital
cost
Total cash flow
Positive cash
flow from
Net present
value

Pre-Covid-19

V-shape

L-shape

£000

U-shape
base case
£000

£000
17,500

18,409

20,163

21,039

8,928

4,590

-2,969

-9,414

Year 6

Year 13

Year 25

Year 37

3,600

-282

-3,339

-4,877

£000

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 Notes:
1. At the end of 40 years, the land and buildings are assumed to have zero residual
value on the basis that the current value of the land is zero and obsolescence
has reduced the buildings to zero.
40.

The pre-Covid-19 housing scenario indicated an overall cost of the housing schemes
of £17.5 million and a positive cash flow by the end of the 40 year period of £8.9
million which equates to £3.6 million at today's values after taking account of inflation
and other risk factors (ie the net present value). Furthermore, this scenario indicated
that the council would be cash flow positive each year from year 6 to year 40.

41.

The ‘base case’ scenario however illustrates an overall negative cash flow position
after 40 years of £3 million which equates to a negative cashflow of £3.6 million at
today's values after taking account of inflation and other risk factors (ie the net present
value). Furthermore, this scenario indicated that the council would be cash flow
negative for the first 24 years. Should an L-shaped recession arise, then after 40
years the council would make a cash flow loss of £4.9 million and make a cash flow
loss for each year up to year 36.

42.

As described, the housing proposition is extremely challenging. While in the preCovid-19 period a viable housing scheme looked likely, the impact of any recession
could turn the proposed general housing scheme with a low to medium viability (preCovid-19) to one of significant loss.

43.

There are however other opportunities to consider in relation to these sites. By way
of example an alternative student accommodation and key worker scheme has been
modelled. While the ‘base case’ for this scheme is also not viable on the current
assumptions and configuration, the viability gap is relatively marginal. Such a
scheme may become viable but it would, of course, be dependent on the demand for
this type of accommodation being realised. While there is known interest at this
stage, the scale or the certainty of that interest is not yet fully understood.

44.

While the housing sites remain challenged and there is not, as yet, a viable scheme
designed in outline, there remain opportunities to investigate. Given the national
priority for housing, it may also be possible to lever in external funding in order to
improve viability. Additionally, the risk associated with acquiring the housing sites and
continuing to investigate possibilities to develop a viable scheme has relatively limited
financial risk for the council. The continued development and a series of ‘project
gateway milestones’ would be proposed to help manage the council's exposure in
bringing forward the housing elements of the project as follows:
 Gateway 1 – following initial design and feasibility of appropriate housing
schemes, including production of detailed construction cost estimates, surveys
and site clearance a detailed financial appraisal will be produced taking account
of market conditions.
Estimated cost of passing Gate 1 - £25,000
 Gateway 2 – If a viable, deliverable scheme is identified at Gateway 1 then an
assessment of options for delivery of the scheme, including securing planning
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 permission, and potential financing, will be considered through production of a full
business case and implemented should the decision be to proceed.
Estimated cost of passing Gate 2 - £100,000 depending on delivery option - these
costs might be shared in any joint venture approach.
 Gateway 3 - following granting of planning permission, actual implementation of
the preferred option to deliver the scheme will be progressed subject to an up to
date assessment of market conditions and available finance options.
Estimated cost of passing Gate 3 - £15 million to £20 million to deliver the scheme
depending on the delivery option recommended by the full business case.
45.

VAT implications - All of the land to be purchased has been opted to tax following
receipt of specific tax advice related to this proposed purchase.

CARBON EMISSIONS
46.

The Columbine is currently let on a ‘tenancy at will’ which is intended to progress to
a lease and as such the emissions will remain a responsibility of the tenant. This will
be the same with Maresfield (currently a car park). Albany and the Barracks will need
to be managed initially and a review of their energy use will be undertaken on
completion to ascertain if there are any areas where we can reduce emissions while
plans are progressed for its future use.

LEGAL IMPLICATIONS
47.

The council will purchase the property using its powers under section 120 of the Local
Government Act 1972.

48.

State aid – Legal advice has confirmed that the proposed support provided under the
proposed lease terms to Wight Shipyard Co are compliant with state aid and require
use of either a grant under the UK Umbrella Scheme or support for investment under
article 17 of the GBER regulations for state aid “support for SMEs”.

EQUALITY AND DIVERSITY
49.

The council, as a public body, is required to meet its statutory obligations under the
Equality Act 2010 to have due regard to eliminate unlawful discrimination, promote
equal opportunities between people from different groups and to foster good relations
between people who share a protected characteristic and people who do not share
it. The protected characteristics are: age, disability, gender reassignment, marriage
and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual
orientation.

50.

There are no implications for any of the protected characteristics as a result of this
decision.

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 PROPERTY IMPLICATIONS
51.

There will be immediate implications for the council’s Property Team for the
management of the Columbine building with respect to its current marine related
tenancies and management of Red Funnel’s works. The buildings contain existing
tenants and new lease terms will need to be formulated and agreed. Heads of terms
have been agreed with the tenants and draft leases are with solicitors for final review.

52.

Detailed cost analyses have been prepared for the works required to the Columbine
building to ensure that the building will be in a suitable condition for letting. Necessary
works will need to be managed as well as ensuring that the property complies with
any statutory compliance for health and safety matters.

OPTIONS
53.

There are four options for how the council could proceed and these are outlined
below:
(1) To proceed with the acquisition of the East Cowes Waterfront sites shown in
Appendix 1 only once support from government for the acquisition costs is
confirmed.
(2) To delegate to the leader and Cabinet member for business development and
regeneration the decision to proceed with the purchase of the East Cowes
Waterfront sites shown in Appendix 1; subject to consideration of the final advice
of the director of finance (section 151 officer) regarding the overall level of financial
risk to the council.
(3) Not to proceed with the acquisition of the East Cowes Waterfront sites shown in
Appendix 1.
(4) To delay any decision to the acquire the East Cowes Waterfront sites shown in
Appendix 1 until such time as the council’s financial position in responding to the
impacts of the coronavirus is much more certain.

RISK MANAGEMENT
54.

There are a number of risks associated with purchasing the sites which have been
considered in detail prior to the Covid-19 outbreak. These have been considered
again taking into account the uncertainties associated with the pandemic and its
effect on the local and wider economy. The council has evaluated the financial and
economic impact considering different economic scenarios as the likely recession is
the biggest risk associated with the purchase.

55.

Given the Gateway arrangements set out previously relating to the housing element
of this acquisition, the financial risk of non-housing delivery is limited. The key risk to
be considered is the financial viability of the Columbine site given the current
economic climate. Prior to the outbreak, the market conditions, tenant mix,
refurbishment, management and marketing costs and projected income over a 20
year period were favourably assessed, in order to ascertain what the financial
implications were for purchasing the site.
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 56.

Since the outbreak, concerns have arisen about the levels of rent proposed and
possible to be achieved from the building. The costs associated with the Columbine
site have been reviewed once again and by only undertaking essential maintenance
rather than improvement works, is a lower rental level financially viable. There is risk
attached to this income and although the financial appraisal does account for an
element of risk, the impact to the economy following the pandemic is still very much
unknown.

57.

Feedback from the potential tenant is that while the current position is causing
extreme difficulty its medium to long term position is encouraging with orders for its
passenger ferry design in the UK and internationally looking healthy prior to the onset
of the pandemic. Its position as a key contributor to the Island’s economic recovery
also needs to be considered.

58.

Another element of risk is the level of investment required in respect of essential
maintenance within the Columbine site. Detailed estimates have been produced for
the site during the Stage 2 due diligence and contingencies included but there is
always a level of uncertainty with building works, especially with the changes in the
current market.

59.

In respect of the housing sites forming part of the East Cowes waterfront parcel,
Albany and Maresfield, these are both brownfield and the Albany site specifically will
require careful consideration as it sits within the flood zone. Again, development
appraisals have been run for the sites taking these site anomalies into account but
until these works are professionally costed, the true costs for these developments
cannot be confirmed.

60.

There has been interest from the market in forming a joint venture for the housing
elements on the site, whereby the residential sites are held on a sale and leaseback
arrangement with the development company funding the development. This
opportunity may allow for the new council housing company to let the properties out
on an affordable and market rent basis earning sufficient returns to cover
maintenance and management costs and return a dividend to the council but with
minimal risk and no capital cost. This model of delivering the housing elements needs
further detailed investigation.

61.

Should the main financial risks materialise in terms of a void period arising from the
business failure of the tenant due to the recession or otherwise, this would put a
financial strain on the council’s revenue budget requiring significant savings to be
made in other areas to compensate; this would be on top of anything the council
might have to save in order to cover the coronavirus debt gap and its £3.5 million
annual savings requirements for each of the next three years.

62.

If the council delays the acquisition of the sites, then there is a risk of Homes England
withdrawing from the agreement, but this must be considered unlikely as negotiations
have been ongoing for 18 months and the chance of finding another buyer in the
current financial climate is very limited. Of greater risk might be that the current tenant
of the site refuses to wait any further for a long term landlord and chooses to relocate
its business elsewhere. Relocating the business would however mean a good
proportion of its workforce having to relocate off Island.

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 EVALUATION
63.

The acquisition of the East Cowes Waterfront sites (including Venture Quays) shown
in Appendix 1 may secure the marine tenant’s occupation, subject to agreeing a
satisfactory lease, that does not significantly increase the council’s financial risk now
or in the immediate future. However, it will also give the council control of a key
landmark site which could benefit the community of East Cowes and the Island for
the long term. The acquisition will also allow the council the opportunity to develop a
viable, variant housing scheme to the current planning permission on Albany and
Maresfield sites to include, policy compliant, 35 per cent affordable housing and bring
forward the Barracks building and adjoining land as part of the further public realm
regeneration of East Cowes.

64.

While the strategic and economic case for acquiring the land parcels and buildings at
Venture Quays is strong the financial case in the current financial climate is weak.
Provision of high quality marine manufacturing employment will be a key part of the
Island’s economic recovery but the sector is vulnerable to the type of global economic
shock brought about by the pandemic. The need for affordable housing on the Island
for local residents is a corporate priority but the delivery of viable housing projects
remains a challenge without external support.

65.

The economic climate and the impact of the Covid-19 pandemic is the biggest current
concern for the island and UK as a whole. The likely prospect of U-shaped recession
impacting on prospects for economic recovery as well as the council's medium term
financial plan is a key factor influencing how to proceed in this case in the best
interests of the community of the Isle of Wight.

66.

Acting now to secure the jobs at East Cowes, ideally with some level of additional UK
Government support, demonstrates the council’s long-term commitment to protecting
local jobs to support future recovery and growth for this type of employment in the
Medina Valley and wider Solent area. The delivery of affordable housing in current
market conditions will also need the availability of a range of site and partnership
models accompanied by government support in assisting scheme viability.

67.

Acquisition of these sites can only proceed as part of a clear position for managing
the council’s overall budget for 2020/21 in light of the impact of the pandemic and the
potential impacts on other services of financing this acquisition. The council cannot
put at risk its ability to continue delivering its legal obligations by committing resources
to this acquisition without some certainty that this position is unlikely.

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 RECOMMENDATION
68.

Option (2) is recommended:
To delegate to the leader and Cabinet member for business development and
regeneration the decision to proceed with the purchase of the East Cowes
Waterfront sites shown in Appendix 1; subject to consideration of the final advice
of the director of finance (section 151 officer) regarding the overall level of
financial risk to the council.

APPENDICES ATTACHED
69.

Appendix 1: Site plan showing the proposed sites.

BACKGROUND PAPERS
Contact Point:
Claire Elderfield MRICS, Senior Surveyor,  821000 e-mail claire.elderfield@iow.gov.uk
CHRIS ASHMAN
Director of Regeneration

COUNCILLOR WAYNE WHITTLE
Cabinet member for Regeneration and Business
Development

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