From Today's PEDC meeting agenda
INVERNESS AIRPORT BUSINESS PARK – ANNUAL REPORT
Report by Director of Planning and Development
SummaryThis report provides Members with information about the current financial position of Inverness Airport Business Park Limited. Members are invited to note the report.
1.2 Inverness Airport Business Park Ltd issued Loan Stock of £1.175m to the Council to reflect the cost incurred by the Council in building the new access road to the airport from the A96. The repayment of this Loan Stock will allow the Council to recover its costs in constructing the road, albeit over a period of time. The Council is currently represented on Inverness Airport Business Park Ltd. Board of Directors by Councillor David Henderson, with the Director of Planning and Development attending in an advisory capacity. This provides the Council with the ability to closely monitor the financial situation of the IABP Ltd.
2. Current Situation
2.1 Inverness Airport Business Park have provided the Council with a copy of their Directors Report and Financial Statements for the year ending 31 March 2010 and these are attached as an Appendix to this report.
2.2 The Balance Sheet to March 2010 indicates the net worth of the company as £509,785 and the Profit and Loss Accounts report a loss of £116,439 over the same period. These figures reflect that the company has still to commence its trading activities and is at an early stage in developing the business park. It should be noted that the loss in 2009/10 is lower than that incurred in the previous financial year where the loss amounted to £225,691.
2.3 Under the Loan Stock Agreement, Inverness Airport Business Park Ltd. Is required to repay 50% of the loan stock to the Council in May 2010 and the remaining 50% in May 2015. However, the Loan Stock Agreement gives the company an option to defer payments if they believe the repayment would have a prejudicial impact on their business proposals for the Business Park. In this regard the company opted to defer the first repayment of £587.5k due to be received by the Council in May 2010. The Council was notified of the deferment in accordance with the terms of the Loan Stock Agreement. The Finance Service undertook a review of the company’s draft Annual Accounts for 2008/09 and 2009/10 which confirmed that if repayment had been made in May 2010 it would have had a prejudicial effect on the business proposals. Under the deferment arrangements, the 2010 repayment now becomes payable to the Council in May 2015 unless independent reviews of the Company’s accounts indicate the deferred amount can be paid earlier. The company has no option but to repay the loan stock if these independent reviews provide an opinion that the repayment can be made without prejudicing the development.
2.4 The Council’s Finance Service continues to review the Company’s Annual Accounts to ascertain if an independent review should be carried out. This situation will continue until the total Loan Stock amount of £1.175m has been fully repaid to the Council
2.5 With the Council proposing to grant planning permission subject to a section 75 agreement being enacted, the status of their development proposals will be changed. This agreement is being considered by the Council’s legal advisers, and the legal advisers appointed by the company.
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The Principal Planner, Mr K McCorquodale, began by drawing members attention to paragraph 7.49 of the report which stated that the Council did not have a financial interest in the development. He explained that the Council had lent the applicant £1.25 million to assist with building the Airport Link Road, a project jointly funded by the applicant, HIE, the Council and substantial EU funds. This loan, and the arrangements for its repayment, would, however be unaffected by the Committee’s decision on the planning application for the business park, be it to grant or to refuse permission. The Council accordingly had no financial interest in the application.