10 Nov 2023
The latest delays to the completion of Jubilee Square – the huge project on the site of the former police station and NHS building in Victoria Street – raises further questions over its impact on council finances.
The entire scheme has taken more than four and a half years, and construction company Morgan Sindell has missed various deadlines when it comes to handing over the site to SADC.
All 93 residential properties have been sold to Watford Community Housing, which plans to make 33 available for social rent and sell 60 apartments on a shared-ownership basis with support from Homes England.
SADC has thus far received zero income from the site, but has refused to comment on the cost implications of the delays due to confidentiality terms within their contract with Morgan Sindall.
However, some information about the project was revealed at a recent meeting of the city neighbourhoods committee.
Picking through the details buried in the report uncovered a line suggesting the delay in generating new income has resulted in budget pressure of £125K per month.
Another section referred to Minimum Revenue Provision (MRP) – the charge to revenue representing the sum required to pay off borrowing to finance the capital programme in the General Fund. The MRP calculation is set at £3,951,000 for Year One alone, and although this is not solely Jubilee Square there is a net cost (presumably after the sales to Watford Community Housing) of £39,156,000 of a total of £45,000,000.
They have calculated paying off the loans over 45 years at a total MRP cost of over £5,000,000 per year for at least 10 years (SADC’s total income is circa £41,000,000 at the moment).
This illustrates how the costs of Jubilee Square have escalated, with no signs of anyone moving in at the present time.
If SADC is losing £125,000 a month because of this scheme we wanted to know what is being done to complete the buildings and get occupiers in paying rent?
Suzanne Jones, strategic director for customer, business and corporate support for SADC, told the St Albans Times: “Jubilee Square has not been completed due to a small number of outstanding issues that we are working to resolve with our building contractor.
“The sale of the flats to Watford Community Housing will take place after completion. Thirty-three of the flats are for social rent and will go to people on St Albans City and District Council’s housing register as we retain full nomination rights. This includes tenants of Telford Court who may wish to move there. The other 60 flats will be sold on a shared ownership basis.
“We had expected to receive £640,000 in rental income from the commercial space during the current financial year and our budget planning will take account of this.
“The property market has changed since the project was conceived prior to the pandemic, but recent advice from an independent consultant is that Jubilee Square is a high-quality building and our rental projections are in line with what is achievable.
“We are now looking at our strategy for marketing the commercial space and will explore all options to attract suitable tenants.”
So the waiting game continues, as do the interest payments, which are then coupled with the staggering loss of £640K in rental income.
The completion of the sale to Watford Community Housing was said to be “close to completion” back in June, but has still not been finalised. There are currently no prospective tenants for the commercial buildings, nor even any agent’s boards up in the windows, and in any event they would probably get a rent free period to start. The site has been empty or sparsely populated by workmen for several weeks, raising more concerns about its completion date.
Full details of the project’s budget will be made available to SADC’s regeneration and business Committee once the final accounts have been agreed, and only then will we know the bottom line for the entire scheme.
Morgan Sindell was appoached for comment.
