Why plans for a new £40m snow centre were axed by Middlesbrough council

IT’S certainly felt Baltic at times this winter around Middlesbrough Dock. 

And for seven years, there were ambitions to make that corner of Middlehaven cold all year round – with a ski slope, bowling alley and a raft of spin-off outlets. 

But doubts grew – and last month the final nail in the coffin came for the project as Middlesbrough Council revealed it was looking at alternatives for the land.

Now Rachael Howson, director of Subzero, has spoken out after the authority ruled out pumping in public money – stressing the plan did stack up, and questioning why the council turned its back on the scheme when it had looked to back it last summer. 

Timeline

Former Mayor Ray Mallon revealed he was in talks with developers on the snow centre vision in 2014 with Middlehaven touted as a possible location. 

The council secured the land in a transfer from the Homes and Communities Agency to give it greater control over what happened on the site. 

Councillors heard years later how more than £800,000 was paid for the stretch as part of the deal. 

Initial hopes planned for the centre to be completed in late 2017/early 2018. 

But the opening dates were gradually pushed back over time. 

Outline planning permission was granted in July 2017 with Scottish firm Ice Factor unveiled as the potential operator.

However, the firm’s involvement in the project later ended. 

Fresh hopes of the centre opening again were revived later that year with a new opening target of September 2019 – with two slopes in the offing on the seven acre site. 

And in February 2018, the TVCA gave £250,000 towards the project to “get it over the line” – and the attraction was renamed “Subzero” later that same year with the £10m Middlehaven Road bridge completed in October. 

But 2019 saw opening hopes pushed back to Easter 2022 – with ground surveys in April to help architects draw up final designs. 

More detailed plans were then lodged for the centre in December 2019 – and these were approved in March 2020 as the pandemic gripped the nation. 

A 165m ski slope, a beginner run, shops, restaurants and cafés were all in the offing once again. 

They also included  “substantial” complementary sporting facilities – with documents showing spaces for a “ten pin bowling tenant” and a “trampolining and climbing attraction” underneath the ski slope. 

But come October, Middlesbrough Mayor Andy Preston said the snow centre proposals didn’t look to financially stack up for the owners – adding it was a “private project” and would not be delivered by Middlesbrough Council. 

At the time, Subzero said the claims “did not reflect their understanding at all”.

A row then broke out a month later between Middlesbrough MP Andy McDonald and Mr Preston – with the Labour MP saying he “could not comprehend” why the council wouldn’t back it when it could bring “guaranteed income” of £3m a year.

Bosses at Subzero claimed the council had known the “financial dynamics” of the scheme “for some considerable time”.

However, in February this year, Middlesbrough Council officials revealed an option for the developer to take over the land at Middlehaven had now expired.

The authority now says it will look at alternative uses for the land now the snow centre will not go ahead.

Project was still alive last summer

The brief timeline above doesn’t cover what happened between March and late last year – and a full story of what unfolded is unlikely to emerge for some time. 

However, email correspondence seen by the Local Democracy Reporting Service shows the scheme was very much alive in July and August in the eyes of the council – as bosses worked alongside the Tees Valley Combined Authority (TVCA) to try and fund the scheme. 

A study commissioned by Subzero to give to the council calculated the Snow Centre would directly generate 12,653 jobs during its first 30 years and £289m in “GVA” – a term used to describe the boost something gives to the economy. 

The survey by ERS Research and Consultancy also showed 18,761 jobs would be generated “indirectly” by the project over the next three decades – with an additional Gross Value Added boost of £373.8m.

In total, the survey reckoned the snow centre would bring a total boost of £662.8m and 31,413 jobs over a 30 year period. 

Emails show officials at Middlesbrough Council and the TVCA were looking at ways of funding the £30m-£40m project in an 80/20 split in July using money borrowed from the Public Works Loans Board (PWLB) – a Government body used to fund capital infrastructure projects. 

Correspondence from council officials to the TVCA on July 20 state a best case scenario would have brought in just under £2.7m a year – equating to an annual profit of £1m after the borrowing costs were shaved off. 

The email added: “The current option expires in October and we are therefore keen to either fund or kill the scheme in September.”

The option on the land was later extended to January when it subsequently expired. 

More emails on the project also show the project was still seen as doable by council officials over the summer.

Another message from council chief executive Tony Parkinson dated August 5 to the mayor said the council could get the project “over the line” if it wanted to.  

However, the top officer’s email warned the TVCA had concerns about the risk versus the reward – suggesting council-owned land at the south side of the dock, where Cool Runnings held an option, could be included in the funding deal in a bid to counter the risk. 

Mr Parkinson said if the council was to push on, it would need a decision by Tees Valley council leaders in October to fund the project. 

The top officer has since confirmed this email reflected the situation at the time.

But stances began to shift as summer drew to a close. 

More emails

On August 15, correspondence between consultants BNP Paribas and Middlesbrough Council gave advice on both the council and the TVCA “stepping into a development role” on the project. 

Under a list of “issues to be thinking about”, the firm posed whether the two public bodies were prepared to “hard ball out” the existing developer. 

“I think we are agreed this is not a scheme for a novice developer to cut their teeth on,” it added.

An email from former council director Kevin Parkes to Ms Howson also showed meetings were being held between Mr Preston and Tees Valley Mayor Ben Houchen on the project on September 2. 

It was late October when Mr Preston spoke out on his Facebook page to say the project didn’t look like it stacked up financially for the owners.

He added: “The project is a private development and not something that Middlesbrough Council is delivering.”

Mr Preston said it could be a “genuine game changer” – and that the “only way” the project could possibly happen was if the council and “perhaps the TVCA” guaranteed half of the £40m cost. 

The mayor added: “We have thought long and hard about whether we should guarantee the finance the project needs.

“But the possibility of losing £20m on this exciting but speculative £40m project feels way too much of a risk.

“Having said this, we’re still talking with the owners of the project and they are working hard to find a way to make it work out financially.

“We will definitely continue to talk with them and we absolutely are happy to support the scheme financially so long as the maximum potential loss for us is reasonable. 

“But right now that’s not the case.”

Sub Zero hits back 

In November, TVCA chief executive Julie Gilhespie wrote to developers and council officials to “make it clear” the combined authority saw its position as “supporting Middlesbrough Council” and that it would “invest alongside them if they determined that this was a scheme they could support…”.

Sub Zero has lodged freedom of information requests to the council and the TVCA to uncover what went on between July and the end of the year on the project. 

And Ms Howson has aired her disappointment and frustration over how the project died a death. 

The developer says the build cost would have been £32m not £40m – believing the cost would have fallen further to around £28m to £30m after the tender process. 

Ms Howson has also insisted the project did stack up.

On the back of the emails, the developer has also accused the council of putting them at enormous expense – claiming it was trying to acquire the project for itself.

And the developer has also accused the council of a lack of transparency by not disclosing all information and email attachments requested in FOIs.

It’s understood appeals have now been lodged with the Information Commissioner’s Office (ICO) relating to this. 

Ms Howson added: “It’s strange. They turn round and say it doesn’t financially stack up – so why did they want to buy it?”

The developer said it had not been asked to provide additional information after July 1 – and believes it met the targets set by council officials to get the project moving. 

A Subzero spokeswoman said the council had “simply changed their minds in October” – claiming this was without justification and was politically motivated.

She added: “Subzero (Middlehaven) Ltd also had a second phase development on another parcel of land opposite the Snow Centre Site called the south side development.

“Expressions of interest letters were provided to Middlesbrough Council from international companies.”

The firm says this scheme will now not go ahead either – but claimed it would have generated another £1.5m in business rates and Subzero had agreed to “sign the land back over” at no cost. 

“Disappointing”

Ms Howson also moved to counter suggestions the firm didn’t have enough clout – telling the Local Democracy Reporting Service her business partner owned a multi-million pound company. 

The council should be held accountable,” she added.

“I’ve been working on the project for seven years and the council was fantastic all the way through until the eleventh hour. 

“It’s ended up like this which is disappointing. 

“We’ve spent time, wages and money on all the reports we’ve had to do. 

“It all comes to about £1.2m we’ve spent on it. It’s disappointing for the seven years of work to result in this but also the amount of money.

“The council has put us to that expense.”

Legal action in continuing behind the scenes between the council and the developer.

Ms Howson said she was frustrated and agitated with how the saga had played out – and annoyed at why the council didn’t say they didn’t want to go ahead two years ago. 

She added: “I’m disappointed it’s got to this. It didn’t need to get to this. I’m not the sort of person to start submitting legals through the court.

“But you get frustrated and agitated – and ask why they’ve let it go on like this and why they’ve acted in such a way.”

The top officer’s take

Despite the legal wrangling are arguments continuing, the dust is beginning to settle on the snow centre scheme.

Chief executive Tony Parkinson said his email to the mayor from August 5 did reflect the position at the time. 

He added: “We all got on the same page that so long as the developer could deliver us what they were telling us they could, we would be able to do the deal.

“But the stark reality was they never delivered what they said they could deliver us.”

The top officer also offered more on why the plans went sour. 

He said the scheme costs grew and the income diminished – adding there was “still a potential legal issue” which went unresolved. 

Mr Parkinson added: “We weren’t prepared to go forward until there was greater clarity on the costs, greater clarity on the income – and the strength of the information presented around leases – and the potential legal issue had been resolved.

“None of those things got resolved.”

The chief executive also feared for the losses the council would face after the first three years of operation of the Middlehaven scheme. 

Mr Parkinson said: “If the Snow Centre goes bust after three years, we’re left having to pay for a snow centre. 

“Nobody else is going to go into it and you can’t use it for anything else. 

“So that level of risk was just too great for us because of those three things I mentioned. 

“Everyone loved it. Andy was up for doing it – we all were, until we couldn’t get what we’d said we wanted from the Snow Centre people at the very outset.”

Potential investment of £2m per year meant the support of the TVCA was sought last summer for the project, Mr Parkinson said. 

But he added the council couldn’t find the evidence it would produce the returns it needed. 

The top officer also confirmed the decision not to proceed was “not a political decision” .

He added: “The decision not to proceed was a decision between the mayor, the chief executive and the director of finance – communicated with the combined authority. 

“Nobody on the council’s side believed we should take that level of risk. Nobody on the TVCA side believes they should take that level of risk.”

“It was never going to stack up for an institutional investor because they need a certain level of return guaranteed, and it couldn’t guarantee that.

“It was right for the public sector to consider it. 

“We don’t need to make a 5-8% return because of the wider benefits to the area.

“We’d have been happy to do it if it washed its own face. 

“But the reality is, whatever scenario we planned on the figures which had been provided, it was going to cost money.”

Mr Parkinson revealed the council could have lost more than £2m annual from year 4 onwards – adding it was a “big gamble” 

He said: “Our finances are precarious like every local authority.

“On that basis, it wasn’t a gamble we could take.”

The chief executive said it was a shame the project didn’t stack up for the council – but didn’t rule out another developer coming in to look at the idea.

He added: “We always thought it would be difficult for anybody to fund the snow centre on its own which is why we were talking about throwing the south side in which is why they had the option on it. 

“So anybody who came along could take a very low – or even no return – on the snow centre but take the profit from the south side so it was dealt with as a package.

“They’re both ours so we’re not in that situation. 

“We don’t need to invest in the opposite side of the dock and put the Snow Centre in place in order to take a profit out of the south side. We’re in a different position.

“As disappointing as it is, it’s the right decision based on the information that we’ve got.

“If that ever changes, we’d be more than happy to look at it again.”

The future 

The Captain Cook Square shopping centre in the town centre is a key part of the council’s regeneration ambitions. 

The authority intends to use the £14.1m it was granted from the Government’s Future High Streets Fund (FHSF) on the leisure project – alongside efforts to boost urban living in the town. 

Mr Preston has revealed the council is in “detailed discussions” with a cinema operator and a bowling alley operator about developing a “really exciting concept” focused on food and music in the authority-owned building.

A £21.9m Government boost was also unveiled as part of the “Towns Fund” for Middlesbrough.

Council reports show up to £10m has been earmarked from both the FHSF and the Towns Fund to boost efforts north of the A66 at Middlehaven. 

It comes as council leaders also agreed to expand a joint venture with Chinese construction giant BCEGI last month on a stretch including land where the snow centre was planned to go. 

The move saw the Snow Centre dream officially end – with the council looking at “alternative uses” on the seven acre site. 

A council report added: “A snow centre has been a key factor in previous plans for Middlehaven.

“The developers who secured the option on the site were ultimately unable to bring forward a commercially fundable scheme, or one that the public sector could support without risking tens of millions of pounds of taxpayers money over the lifetime of the project.”

Legal wrangling continues behind the scenes for the time being. 

Middlesbrough Council declined to comment any further on the accusations, whether the Government funds above were considered for the scheme, and why the wider Snow Centre project was dropped. 

On the project, Mr Preston said: “Over the many years of this potential project, the council was always positive about trying to find a way forward, as was I both before and after I became mayor. 

“It would be fantastic for the area if it stacked-up financially. 

“But the sad truth was that when we finally received from the developer all the information we needed, it was crystal clear that it was not only financially very risky but that public money was required to bankroll the whole project. 

“It would be absolutely wrong to do that.”