HARTLEPOOL Borough Council is faced with having to fund an extra £348,000 towards a major regeneration project.
The Perth Street area of Hartlepool is set to be transformed with 199 houses and a social club demolished to make way for 83 new houses, including 15 affordable homes.
The multi-million pound scheme is being delivered by Keepmoat Homes.
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Back in December 2010 when the developer was first appointed it was agreed the council would fund £111,080 towards demolition.
But the costs of the overall scheme have soared.
The local authority is now facing a total funding contribution of £457,000.
Reasons behind the rise include:
● The sales projection figures being revised from 36 units to 24 a year due to the current economic climate;
● A site investigation in January found greater proportions of ash in the ground which require more extensive foundation works to the new builds and more remediation works;
● Recent improvements in the standards of building and sewer regulations have also added to the cost.
The number of new houses has also been scaled down slightly from 85 to 83.
Damien Wilson, the assistant director of regeneration and planning, said: “It is proposed that Hartlepool Borough Council fund the shortfall by contributing to the demolition of the existing properties.
“This requires approval of an additional contribution of £348,080 which requires the council to fund £457,000 in total.
“The demolition is to be carried out by Keepmoat Homes under a license arrangement, at cost using an open book approach.”
The issue was discussed by the cabinet committee, before it goes to full council for approval.
One member raised concerns about developers changing the “goal posts”.
But Mr Wilson said the problems were unforeseen and threatened the viability of the scheme.
Independent councillor Cath Hill said: “I am always unhappy when a developer comes back and wants to change the goal posts.
“We are in between a rock and a hard place because it would be difficult to get somebody else in to pick it up.
“If we stay with the current developer, which is inevitable, then it is going to cost us a lot more money.
“I know that discovering ash is not something we could have foreseen but I still have a problem.”
Mr Wilson said the scheme was always going to be marginal and said it was not “profiteering” on the developer’s part adding it was more to do with the unforeseen ash and remediation work.
Mayor Stuart Drummond said: “A lot of the reasons are out of our control.”
Mr Wilson said if demolition doesn’t take place then the cost of managing and security is about £100,000 a year and there is a risk Keepmoat Homes would not take the scheme forward.
Malcolm Walker, one of the community advisors appointed by Mayor Drummond, said: “If there was a significant delay in developing this major part of town it is likely to have a detrimental impact on the people living in that area.”
Demolition work for the housing market renewal programme plans could start in November.