The council has received a plea from the developers of the Hilton Garden Inn after building work was hit by a combination of difficulties stemming from the outbreak of Covid-19.
Construction of the 160-bedroom, riverside hotel, that will boast a rooftop skybar with stunning views across the River Nene and the Embankment, has been funded by a two year loan of £15 million from the council beginning from the first drawdown in May 2020.
That loan, which is expected to net the authority £500,000 in interest, was to have been paid back by April 30 this year.
The loan committed the developers to paying market rates interest during construction for up to 21 months followed by three months of trading during which the company would refinance the loan and pay back council.
But in a letter to the council, Mike Aspinall, director of developers Propiteer Hotels, reveals that it had not been possible to start work as planned and staff did not go on site until July 2020.
He states: “The global Covid pandemic has clearly created many issues across virtually all sectors of the economy, with hotels and construction far from immune.
“Some of the impacts causing delay include:
“Unable to start the project in May 2020 as planned due to lockdown, started on site mid-July 2020.
“Further full lockdowns limited site activity.
“Significant on-site labour impact of positive tests and self-isolation within the workforce.
“UK wide shortages of key building materials, including cement and plasterboard seriously impacting programme.
“Sun contractors also unable to source materials and impacted by labour pressures. One example is the rolled steel which delayed the roof by a month alone due to the industry scale shortages.
“Repeats of the above due to various waves of the pandemic.”
He says that due to these factors the Hilton Garden Inn hotel will not now be completed until November 2022.
He adds: “It would be extremely difficult to refinance mid-build.
“We request the facility term be extended to 31st March 2023 this still falling within the same financial year but allowing for practical completion of the project and suitable time for refinancing post-completion.”
The request for an amendment to the loan agreement has been sent to Councillors Andy Coles, the cabinet minister for finance, who has delegated powers to approve the request and is expected to make a decision by April 6 - but that could still be ‘called in’ for scrutiny by councillors.
However, council officers point out that to refuse the request would require Propiteer to
refinance in the middle of construction, which could be risky.
And they say if the refinance was not achieved for the uncompleted hotel, the council would need to exercise its security and take over the hotel building.
They point out that if the council agrees the loan extension it will continue to receive interest on the loan until the refinance is completed and the loan repaid.