THE borrowing debt owed on Herefordshire Council’s capital programme could top £200 million within the next four years.
The potential for a £32 million rise on the present £168 million debt figure will be put to a meeting of the council’s overview and scrutiny committee next Tuesday.
A quarter of the council’s assets are now financed by debt with the repayment rate currently £10 million a year.
At Tuesday’s meeting, members will get an update on the council’s capital programme to 2016-17 – as approved by full council in February - which lists nearly £147m worth of projects.
These spends range from £40 million on the joint incinerator project with Worcestershire to £76,000 for closed landfill sites.
Some £27 million goes towards the Hereford link road and around £20 million to both the Fastershire Broadband scheme and roads.
Nearly £17 million is identified for “corporate accommodation”.
The committee will hear that additions to the programme will total £57.5 million of which £48.6 million is funded by capital grants or revenue savings already identified.
A balance of nearly £9 million would be financed through borrowing added to borrowing levels within the council’s treasury management strategy.
The revenue implications of this will be put to the committee as pressures on budget forecasting.
Of that near £9 million additional need £4.5 million relates to Colwall School and any contribution to the cost of a new school should it not be possible to rectify the ongoing damp problems affecting the current school.
Alternative grant funding has been sought and, if successful, will reduce this borrowing.
Around £800,000 relates to borrowing for vehicles and equipment where the cost of borrowing will be funded by the service areas concerned.
The remainder relates to property enhancements which are needed where structural deterioration threatens closure or litigation.
As of March this year, the total outstanding capital project debt was £168 million being repaid at £10 million a year.
Additional investment has already been approved for the incinerator, leisure centre improvements, road investment and the Hereford link road – all of which are pitched as “self-financing” schemes.
On the assumption that the new investment need is approved - and including all other capital investment approved to date – the debt requirement would rise from £168 million to £200 million by March 2018.
The council current has a debt to asset percentage of 26 per cent, meaning a quarter of its assets are financed by debt.
As identified, the additional borrowing will give rise to borrowing revenue costs of £35,000 in 2015-16, £210,000 in 2016-17 and £498,000 in 2017-18 to continue for a further 25 years.
These figures comprise both interest and debt repayment and are included in budget proposals to 2018 as new pressures.
In June, the Hereford Times reported the council’s total external debt to be around £195 million as its use of short term “ends meet” loans from other authorities continues.
A final debt figure is feared to be far higher once accrued interest and other adjustments are added on.
The council has already been warned of its exposure to “significant risk” over interest rate movements on both its borrowings and investments.
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