Three Rivers District Council might have to borrow cash to buy out homeowners and businesses in South Oxhey after losing almost £18million in six years.

As part of the South Oxhey Initiative, a mass-regeneration project which will see the precinct in South Oxhey revamped, the authority will have to buy land it does not own.

However, the Watford Observer understands this could cost in the region of £10million and the council might have to borrow cash to pay for this.

This process is expected to begin in late 2015 and is scheduled to finish in Autumn 2017. 

A council source, who asked not to be named, said: "The council is going to have to borrow money - it does not have the funds to buy out the indicated properties.

"They are going to have the loan for a long of period of time. 

"My concern is, if we borrow this money, it would be on a long term basis from the sources that the council borrows from. It will be a low interest rate, but it will be a long term loan, perhaps decades.

Council figures indicate that the authority has lost nearly £18million from its reserves since 2008.

In 2008, the council had £33,608,000 in its reserves, but in 2008, the authority had £15,742,000.

The source added: "The council needs to have a certain amount of reserves to meet its obligations. 

"If we take the capital spending for the next two, three of four years, we would find, in the next two or three years, we would have spent most of the reserves we have. To be able to do the South Oxhey Initiative, we have got to find the capital funds. 

"That is going to come through borrowing."

But Councillor Matthew Bedford, lead member for resources at Three Rivers District Council said the expenditure would be an investment and said one of the options being considered by the council is that they would spend the money and they would then receive it back from the developers once they complete the project.

He added: "It is not a bill, in the same way as when you pay for stationary. It is an investment that will increase as a result of the development.

"The council has a medium term financial strategy which covers a three year-period. We are looking at it now for the next three years. 

"I do not believe the solution will be that the council will pay that money and get it back, but it could do that if it needed to." 

The authority has spent £1,151,027 since it started the ambitious South Oxhey Initiative three years ago.

Two weeks ago, the council axed the number of potential developers from 11 to five and they have to submit a main bid, which has to incorporate the financial, residential and retail aspects of the project.

Councillors and council officials will then compare these bids against one another, but potential developers will be given the opportunity to propose different ideas for the centre of South Oxhey.

  • This report originally used the words, “council official”, in describing the person expressing concern over the council’s financial policy on the South Oxhey Initiative. We have accepted these words are misleading and have replaced them with the words, “council source”.