Councillors set to make final decision on redeveloping Whitley Bay seafront site into flats
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North Tyneside Council granted the demolition and redevelopment of the former 42nd Street bar, on North Parade, in September last year. North Eastern Holding Ltd successfully applied to replace the derelict bar with 19 flats.
However, the application was dependent on the firm making over £33,000 payments and making financial contributions to affordable housing in the area.
The firm has now said the contributions would render the redevelopment financially unviable and has asked for the payments to be waived, with the exception of around £6,400 for coastal mitigation.
North Eastern Holdings told the local authority that the rising costs of building materials and borrowing are major financial constraints. The company’s financial viability statement predicts a profit return on the project of 2.68%, which is considered “significantly” below the standard 15 to 20%.
Councillors delayed their decision to waive the cash contributions last month so they could study the firms’s viability statement. Now, the council’s planning committee will convene next week to make their decision.
An independent assessment of the firm’s financial assessment has calculated the total development value at £5,120,000 which is £370,000 more than initially estimated by North Eastern Holdings.
Council officers have recommended the planning committee waive the financial contributions.
According to a council report on the development, the affordable housing provision and contributions would make the proposed development “unviable” and they “cannot be afforded”.
Councillors will make their decision on Tuesday, September 26.