Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
Approval to the extension of the loan
Cabinet considered the report and RESOLVED to:
1. Approve the extension of the expiry date of the £15m loan facility with Propiteer Hotels Ltd and its subsidiary Fletton Quays Hotels Ltd from 31 March 2023 to 31 December 2023 subject to confirmation being received that the rights and security of the Council will be unaffected by this extension.
2. Delegate authority to the Director for Law and Governance (Monitoring Officer) and the Executive Director for Corporate Service and s151 officer in consultation with the Cabinet Member for Finance and Corporate Governance,following receipt of confirmation that therights and security are unaffected of the Council are unaffected by this extension to take all necessary steps to finalise, agree and enter into all necessary legal agreements for the purposes of facilitating the decision in Recommendation 1.
The Hotel will not be fully constructed by the expiration of the current loan facility. By approving the recommendation, the Council will ensure its loan can be refinanced in an orderly manner once the hotel construction has completed and begun trading.
The Council could refuse to extend the loan facility; however, this would require Propiteer to refinance in the middle of construction, which although not impossible, gives rise to a risk that the refinance is not achieved and there is a significant delay in build completion.
If refinance was not achieved for the uncompleted hotel the Council would need to exercise its security and take over the hotel building. The Council would then need to market the hotel on the open market in its uncompleted state or assume the responsibility for its construction and fit out in order to market for sale or operate itself once completed. The Hilton brand hotel franchise agreement is with Propiteer and any transfer of the brand to the Council would need to be separately negotiated, again leading to the risk of the city losing a prestigious Hilton Garden Inn hotel on the Fletton Quays site.
Cabinet Report SEPT17/CAB/41
Cabinet Member Decision Notice OCT18/CMDN/47
Cabinet Member Decision Notice APR22/CMDN/91
Publication date: 13/03/2023
Date of decision: 13/03/2023
Decided at meeting: 13/03/2023 - Cabinet
Effective from: 17/03/2023