Loan for student housing

Work underway at the Surtess Street site.
Work underway at the Surtess Street site.

A COUNCILLOR has expressed concerns over the local authority’s plans to loan more than £2.2m to a housing organisation to fund new student accommodation in the town.

The Vela Group, which incorporates Housing Hartlepool, has planning permission to build two apartment buildings and two townhouses on the former Crown House site, in Surtees Street, which will provide 56 student bedrooms.

The council agreed to sell the site to the housing organisation as part of the plans. The capital cost of the scheme is £2.218m but the interest rate that Vela can obtain is higher than that which the council can secure from the Public Works Loan Board. Vela approached the local authority with a view to securing the borrowing at a cheaper level to make the project finacially viable.

A report said the repayments will be phased over 40 years and the council’s financial position will be protected by two guarantees to ensure there is no cost to the authority and that the loan will be fully repaid.

The council’s chief finance officer said it isn’t a project he would normally advise members to support.

But officers say the development will have a positive impact on the local economy and regeneration of the area and have set safeguarding measures to protect the council’s financial position. They include a guarantee to the council by the Vela Group to pay the annual repayments for the duration of the 40 years and a guarantee that the Vela Group will not increase the loan above £2.218m. Any additional costs will be funded by the housing organisation.

At a meeting of the council’s finance and policy committee, Hartlepool Borough Council’s chief executive Dave Stubbs said: “The regeneration of that area is extremely important to us.

“It’s a great opportunity to get more students into the town. In real terms there is nothing in it for us financially on the face of it, but it’s huge regeneration and the income that that brings with it.”

But Councillor Robbie Payne said: “I just don’t see what’s in it for us, the local authority. We are taking all of the risks here and I think we, as an authority, should be looking to get more from it.”

The demand for student accommodation increased due to the expansion of Cleveland College of Art and Design and the relocation of its higher education course provision to Hartlepool. The matter will now be brought before full council for approval on December 5.