Project will ‘break even’ as unforeseen costs continue to mount

Later today councillors on Hastings Borough Council’s (HBC) cabinet will be asked to give the go ahead to spending another £166,000 on the renovation of York Buildings to cover unforeseen costs.

It’s the second time councillors have upped the budget for the project having increased it from £757,000 to £846,000 in September 2019. If tonight’s request for additional funds is approved – as is expected – it will bring the total spend on the project to £1,011,000.

That means that each of the six flats that is being created will have cost £168,000. Councillors will be told that some of the additional costs are the result of: “additional contract costs arising from Covid-19”.

A report from Peter Grace, the council’s Chief Finance Officer will tell members: “The construction works were largely started on December 9th 2019 with the removal of asbestos followed by the general works starting in January 2020.

“The works were disrupted due to the government lockdown on March 23rd and the site was closed for health and safety concerns and the supply chain for materials being considerably disrupted.”

The report will detail other reasons why more cash is needed: there is an additional £28,211 for structural works and making good, another £4,620 for fire protection requirements throughout the building to meet latest regulations and for wood beetle treatments. Additional asbestos removal will cost £9,629 and gas, water and electrical utility works are £6,180 which the report says were, “omitted from contract costs”.

Councillors will be told that while the contract was for internal conversion works, once underway it became clear that external structures, windows, cills and gullies also required maintenance. The additional costs
have been estimated at £45,980 which includes £13,000 for the cost of replacing and repairing some of the mathematical tiles on the building, Mr Grace’s report says this work was not originally envisaged when this project was first approved in 2017. There is also damage to the newer windows which require what the report calls ‘extensive repair works’ costing £14,995. The leaking lead cills will cost £10,650 and replacement of the lead valleys a further £5,244.

Mr Grace concludes: “This project was only ever likely to be viable while borrowing rates remain at their historically low levels and this remains the case.

“The Covid-19 pandemic has highlighted more than ever the need to transform town centres and include more homes in them – thus enhancing the vibrancy and sustainability of the local economy. The need for these new homes remains as high as ever.

“The Council is still in the fortunate position to be able to complete this project despite these additional, and unwelcome, costs.”

HBC borrowed the money to renovate the upper floors of York Buildings from the Public Works Loan Board over a period of 40 years and that will cost £40,141 per year to repay. The council originally estimated rents from the six flats to bring in £40,200 although tonight councillors will be told the expectation now is that figure will be higher.

2 thoughts on “Project will ‘break even’ as unforeseen costs continue to mount

  1. I think this one venture alone proves that HBC are inept players in the property market . Firstly, was there a proper,professional survey of this property? If so, this would have highlighted expensive issues. Secondly, the initial budget was £757k but it has escalated to £1,011,000? All such projects will have a contingency figure of 10-20% – but 35%!? When HBC moan about how little spare money they have they should take a hard look at their ventures into the property market…

  2. I have to agree with Mr Fisher on his opinion regarding HBC’s ineptness in the world of property.
    The rushing out to buy various retail units around he borough was hardly a wise move and something nobody really knew anything about that until it was announced what they had purchased. Based up on this informative article, I would say if HBC was a private company they would probably be in the hands of the liquidators by now.
    They really need to do what councils should do and that is manage, maintain and provide the necessary services for the borough and its residents – no more than that.

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