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Ageas Bowl hotel 'could cost extra £10m'
5:00am Saturday 19th October 2013 in News
FEARS have been raised that a setback in the building of a taxpayer-funded luxury hotel could add a further £10m to the bill.
Work on a four-star 175-bed Hilton hotel at the Ageas Bowl, the home of Hampshire cricket, came to a dramatic halt two weeks ago after Denizen, the firm building it, went into administration.
The project is underpinned by public money from Eastleigh Borough Council.
But the director of a hotel firm, who opposed the council’s involvement, said he estimates that even if a replacement contractor can be found, the delays and costs could take the £30m project to £40m.
This claim has been refuted by the council.
And Leader Keith House said legal agreements were in place so that whatever the cost of the project, the council would be buying it for the same amount when it was complete so the taxpayer would not be affected.
Meridian Leisure was one of the companies that originally called for a judicial review into the use of taxpayers’ money in the project.
Managing director Moez Janmohamed said the Ageas Bowl was a complex project and that it was not simply a matter of bringing in another contractor.
He said whoever took over would have to re-assess everything, sorting out sub-contractors, which he estimated could take two to three months and increase the costs “That’s the additional costs with my experience of this scale of project – I’m adding 25 per cent, that’s to be expected,” said Mr Janmohamed.
“It’s a nightmare scenario.”
He said the project could end up being one of the most expensive hotels of its type in the country and questioned whether the council had made any guarantees on the loan to the lender.
In 2010 Meridian Leisure, along with Shire Hotels and MacDonald Hotels called for an investigation into the use of taxpayer’s money on the scheme, but it was thrown out and the trio withdrew their appeal.
The council has also bought the lease of the 167-acre site for £6.5m.
Last Friday it emerged that Denizen had plunged into administration with the firm pointing to “serious flaws” in the pricing of a number of the contracts by the previous management team.
Duff and Phelps has been appointed as administrators to identify if buyers can be found for the contract and the company’s assets.
Cllr House said a contractor was not yet in the pipeline, but said the banks, working with partners including the council, were in ongoing discussions to secure a contractor.
He said they hoped to retain the sub contractors that had been working on the building and that once a new contractor was found work could restart.
He disagreed about the potential extra cost, saying that parts of the structure were complete and only needed fitting out.
But he said it was impossible to put a figure on how much replacing Denizen might add to the project cost, but said this would not affect the council.
He said a contract was in place to acquire the building for a fixed rate of around £30m and the council expected to do that.
“This is an issue for the banks to consider how they get themselves out of the position they’re in,” he said.
Asked if the council had made any guarantees to the lender, he said: “We have a structure of agreements about what the council has agreed to do.
“We spent a great deal of time on legal agreements to make sure that the council is protected.
“The council tax payer is not at risk as a result of one contractor going into administration.”
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