Multi-million pound cash loans to support the Coombe Abbey Hotel and Indigo Hotel were approved in Coventry – despite criticism they amounted to a ‘taxpayer bailout’.
Council loans have been made for the authority-owned Coombe Abbey Hotel and developer Castlebridge Group for the construction of the Indigo hotel in Friargate.
Coombe has been hit hard by Covid-19 with revenues down 70%, with the authority saying it has exhausted its cash flow and could go out of business without further support.
Advisers have been told Castlebridge is investing £ 16million in the Indigo Hotel at Friargate but need more funding to ensure the start of the four star hotel.
Loan amounts have been kept private, but public council reports show Coombe will have received a £ 5.8million loan as of March 31, which includes a £ 1million loan last year .
Union advisers said the loans would support jobs and the economy.
Only freelance Cllr Glenn Williams voted against the two, exploding the authority to lend money “like it’s old-fashioned,” adding: “It is absolute madness that we find ourselves in a position of having to bail out companies to cover our own evil. investments. ”
Coombe was unable to access government aid Coronavirus Business Interruption Loan Program (CBILS), as it belongs to the board.
Speaking to the plenary council on Tuesday, March 16, finance cabinet member Cllr Richard Brown said: “In short, it’s about putting an arm around a much-loved asset, saving jobs and to allow Coombe to bounce back as fast as possible. ”
Opposition conservatives also supported Coombe ready, but Cllr frontman Gary Ridley said it was done “with very clenched teeth” to ensure that the council’s investment – having bought the site for an advertised price of £ 9.5million in 2017 – not be lost.
But he said the hotel had become a “taxpayer’s drain” since its purchase.
He added: “The irony is that if it was a private company it would have been bailed out by the government and not the Coventry taxpayer.
“We will support this as if we don’t lose it, we will lose everything that has been put so far. In the long run I seriously wonder if we will get the 10% we were promised [when it was purchased]. ”
The Tories opposed a loan to the Indigo Hotel, however, with Cllr Peter Male saying it would “put the authority more at risk – a risk the private sector is unwilling to accept under current market conditions.”
Jobs and Regeneration Cabinet member Cllr Jim O’Boyle said it was a small risk to take to get jobs and a high-quality hotel.
Cllr O’Boyle: “It’s about investing in our future, our city and our people. Failure to do this now would be wasting a massive amount of private investment.
“This is a £ 16million investment and it is estimated that it will bring in £ 40million to the economy by building it.
“This [loan] will be a small amount of money against the backdrop of the £ 16million construction costs and the return will be very generous to the local authority which can then be reinvested in our town’s utilities.
The 100-bed Hotel Indigo will be the first four-star hotel in the city center for almost 50 years. It was hoped to be completed in the spring of 2021, but the work is considerably delayed.
The historic Coombe hopes to open its outdoor patio for afternoon tea next month, before it fully reopens on May 17.
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