A COUNCIL'S ambitious plan to fund the building of a town centre hotel has moved a step closer.

Stockton Borough Council's cabinet committee approved the scheme to borrow £17m to pay for the hotel just minutes before recommending a 4.99 per cent increase in council tax bills – a 1.99 per cent council tax rise alongside a three per cent adult social care levy.

The controversial project must now go to full council next week before a final go ahead can be given.

Questions were asked about the financial impact the scheme could have on the council and what implications any planning approval would have on another hotel scheme in neighbouring Thornaby.

Richard McGuckin, the council's director of economic growth and development, outlined the scheme's benefits, which the authority believes will complement the recent Durham University announcement over developing its International Foundation College in the area, which could result in the conversion of the empty Swallow Hotel into student accommodation.

In a report before the Labour cabinet members, he said: "The council has a strong track record of successful delivery and the current challenging financial climate the Council is facing, the importance of making the best use of both its own assets and exploiting new opportunities is more important than ever.

"The proposed hotel development is built on a rock solid business case that has been independently verified by two industry experts."

If the project goes ahead, the 125-bed Hampton by Hilton hotel would be owned by Stockton Council and built on the former dairy site on Bishop Street on Stockton Riverside, as part of the town’s North Shore regeneration scheme.

Projections forecast the council would receive net operating profits of £1.2m per year, which it says would more than cover the estimated £830,000 per year required to pay back the borrowing over 35 years.

Conservative councillor Phil Dennis questioned the business sense of investing the council's money in the hotel and its proposed location.

"We are taking on all the risk – there is no such thing as a rock solid business proposal," he said. "Let's look at how we can use this money to drag more investment in this town."

However, Cllr Jim Beall, cabinet member for adult services and health, said such objections were baseless, adding: "I think it's opposition for the sake of opposition."

UKIP Ingleby Barwick town councillor Ted Strike called on the council to release its financial projections so residents could scrutinise them before putting the plan to borrow the money to a public referendum.

"I'm opposed to this hotel for a number of reasons," he said. "I believe the council shouldn't be going into business. How can the council be impartial for any future hotel plans, such as the proposed hotel in Thornaby? Correct me if I'm wrong, but a few years ago the council refused an application for a hotel on Teesside Park because there was no need."

The council's chief executive Neil Schneider reminded Mr Strike that the planning committee is a quasi-judicial panel which makes decisions based on the evidence before them and could not be influenced.

A final decision will be made at full council on Wednesday 22 at 7pm in Stockton town hall.