Minutes:
Having excluded members of the press and public, Mr Jepson referred Members to page 15 of the report which set out the four options in relation to the spa. It was estimated that the addition of a spa would add at least three, and possibly as much as five, months to the completion date of the project. He reported that adding service capacity now – to allow the centre’s facilities to be expanded in the future - would be more cost-effective than doing it retrospectively.
Mr Pinnington advised that, over a 10-year period, a combination of spa day visitors and upgraded leisure centre membership would give an estimated average net revenue surplus of £49,000 per annum, allowing the Council to service a loan of £1.2 million. This would leave a shortfall in capital funding of £1,155,567.
In response to concerns expressed by Councillor M D Conolly regarding the significant increase in the capital cost of the spa, Members were advised that this was driven by the increase in the size of the spa from that originally envisaged. Original estimates had been based on what was on offer at Ramsgate and had not had the benefit of experts’ input, nor had they taken into account the additions and refinements needed to the original design which had come to light following discussions with the spa consultant and visits to other spa facilities. Mr Thomason added that the revised cost was now predicated on a specialist brief which reflected the needs of the market.
The Head of Finance gave a presentation. The cost of borrowing an additional 2.4 million to fund the spa facility would equate to £96,000 per annum. £49,000 of this could be funded from the estimated net revenue surplus generated by the spa. However, there would be a shortfall of £47,000 which would have to come from the Council’s General Fund budget. There was also a risk that Sport England (SE) would withdraw its funding (estimated at potentially £1.5 million) if the Council went ahead with a spa. Mr Pinnington advised that SE had 80 competing projects and they would prioritise those which were most in need of funding and which most closely met its priorities.
Councillor P Walker stated that he was concerned by the shortfall but suggested that this could be reduced by using more money from the Council’s reserves. He was not convinced by the 15-minute drive-time measure used by the consultant as he considered that there was a wider market for the facility. Whilst he would prefer to go for the £288,000 option, he was cognisant of budget pressures that could arise from other investments. In response to the DECA, Mr Lucas advised that it was difficult to estimate how much more the spa would cost to build in the future as factors such as inflation and site access would have a bearing.
Mr Pinnington added that if the leisure centre exceeded revenue/membership targets and the management contract came in higher than expected, the risk of adding the spa would be reduced. In response to the Chairman, Ms Ross offered her view that the leisure centre was likely to exceed expectations as had been the experience at Ramsgate and Pendle. Whilst some savings could be made to the cost of the spa, these were likely to be relatively insignificant. In the circumstances, she believed that it would be advisable to build the spa at a later stage.
Mr Thomason showed Members plans and explained that it would be possible to ‘future proof’ the building (to allow the spa to be added at a later date) by pushing the escape staircase out and increasing the footprint of the ground and first floors. This option would cost £288,000 plus VAT and the extra space would be usable in the interim. However, his view was that this was a costly option unless there was certainty that the spa would be built in the near future. The DECA confirmed that, if the £39,000 option were agreed by Cabinet, it would not need to go to Council for approval as it was within the existing budget allocation and was not specifically for the spa.
It was agreed to recommend to Cabinet that the Council should not proceed with the spa facility, and that the project should proceed as planned but with an increased services capacity (at a cost of £39,000 plus VAT).