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New Street Upgrades in Sheffield Could Save up to £14M

Refinancing arrangements are being made on a Sheffield Council Contract to upgrade street lights, replace trees, and repave pothole-laden streets. The new terms could result in savings of up to £14 million.

A report recently submitted to the authority’s cabinet meeting is looking for approval to continue with the refinancing, which will save between £300,000 and £600,000 annually throughout the remaining 22 years of the privately financed initiative.

The report states that failure to go ahead with the Streets Ahead refinancing could result in major cuts to frontline services due to slashed council budgets. It added that the change would not result in loss of service for Sheffield residents.

According to the council, if the report is approved, negotiations will be scheduled with both potential new funders and the financial institutions that presently fund the contract. The goal will be to obtain better interest rates than those agreed to three years ago.

Cllr Ben Curran, finance and resources cabinet member, said that it is important to take advantage of current interest rates, which are lower than they were in 2012. Pointing out that the Sheffield council is facing a reduced budget due to government cuts, he said that they are doing their best to lower costs associated with back office spend, so that there will be resources available to preserve the frontline services that the public depends on.

Approval is also being requested for certain operational changes which will result in additional savings. Some of the amendments to the £2 billion contract are being described as high value ones.

These changes are itemised in a report appendix which is restricted because it contains information relating ‘to the financial or business affairs of any particular person.’

Structural Defects Insurance

The report also indicated that the Sheffield council had already tried to obtain more capital funding by using public sector debt to create savings, but the proposal was later turned down due to accounting problems.

The council will incur significant costs to bring about the refinance and amend the contract. These expenses will include the appointment of legal and financial advisers as well as paying the costs of the current private financer, Amey, as agreed under the contract.

These costs are in addition to paying half of the £265,000 in costs from when the previous attempt to create savings was rejected.

Refinance-associated savings would apply from the 2016-17 financial year.

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