Flats project on former Whitley Bay pub site to continue
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North Eastern Holdings was granted permission to bulldoze and erect 19 flats on the site of the ex-watering hole back in September last year.
However, this green-light was conditional on financial contributions to affordable housing to the equivalent value of almost 1.5 of the proposed units.
In addition, the company was scheduled to pay around £40,000 to enhance play areas, parks, and the local ecology, and contribute to local training.
North Eastern Holdings has since submitted financial reports claiming that owing to rising costs the scheme would be rendered not viable if these contributions remained.
The firm has committed to contribute £6,000 to ecological mitigation.
Councillors delayed a decision on this last month to scrutinise the finances of the project.
According to the council’s report, the applicant advised that the provision of affordable housing and contributions would make the development “unviable.”
A financial viability appraisal was used to show “an actual profit return of just 2.68%, which is significantly lower than the assumption of 15 to 20%.”
In addition, the project’s initial value of £5,120,000 had been overestimated by £370,000, according to the independently reviewed appraisal.
Councillors approved the continuation of the development without the cash contributions, but hoped it was not set “a bad precedent”.
Cllr Steve Cox said: “I am very concerned we are losing the affordable home contributions and also losing other very important contributions, but having taken the opportunity to look at the funding viability there is not anything there to say we cannot accept this.”
Cllr Pat Oliver added: “I share Cllr Cox’s concerns. We all know building costs are rising but I am just concerned that this is going to set a precedent.
"In principle, I approve of this development but I do have serious concerns about the money.”