More than £16m could end up being spent on the Chard regeneration scheme – most of which will be funded by borrowing or selling off existing council assets.

South Somerset District Council announced in January that £3m had been committed to delivering Chard’s new swimming pool and leisure centre, along with other improvement projects in the local area.

But recently-published council documents have revealed that the total gross cost of this scheme will end up being more than five times higher than this.

The council has said the scheme remains on budget, adding that it would secure the outstanding funds through the sale of assets and income from the leisure centre when it opens towards the end of 2021.

The total budget of the scheme was revealed in papers published before a virtual meeting of the council’s district executive committee on Thursday morning (August 6).

The entire Chard regeneration scheme – of which the new pool and leisure centre forms phase one – has an approved gross budget of £16,409,000, which was signed off in January 2019.

A total of £2,148,000 has already been spent on the scheme – of which £437,000 was spent before April 2019 and £1,711,000 in the 2019/20 financial year.

The council expects that the remaining work on the project will cost £14,261,000 – of which around half will be spent before April 2021.

The council said the costs of phase one were “known for certain and fully profiled”, with the ongoing construction work being coordinated by its contractor Alliance Leisure Services.

A spokesman said: “The figures are a difference between the gross budget (i.e. what the scheme will cost in total) and the net budget (i.e. what the scheme will cost the council), and these figures haven’t changed.

“The £3m figure announced in January 2020 is the capital cost to the council.

“The build will cost a lot more than £3m, but we’re getting the majority of that back through the sale of assets and a proportion of the income from the leisure centre when it opens.

“This income will still leave a cost of £3m, which is what we have committed to spend on the project due to its importance to Chard and the benefit it will bring to the area.

“We use internal borrowing as a way to optimise our returns and limit our exposure to lending rates.

“This is similar to the approach used in the commercial strategy, investing (not spending) to generate returns – and everything we do is fully audited, risk-assessed and checked.”

The council set out the framework for the Chard regeneration scheme in January 2018, stating it would seek as many sources of funding as possible over the course of the programme to reduce the burden on taxpayers.

Chief executive Alex Parmley stated at the time that income could be generated for a scheme through the sale of property, revenue generated from other assets or external grant funding from central government or other sources.

The council will use borrowing and the sale of assets to “forward fund” the Chard regeneration scheme – with the income from the leisure centre being used to help repay these sums.

Mr Parmley said: “Improvements regeneration will make to the town may indirectly contribute income to us – for instance, through increased business rates and increased use of car parks.

“However, this is difficult to account for and cannot be relied upon to fund this work.

“The final net cost of this project could be offset, partly or entirely, by other projects that generates a net surplus – for example, the development of a site in our ownership which should aim to generate a surplus.”

Councillor Peter Seib, portfolio holder for finance, legal and democratic services, said the council’s commercial investments were bearing sufficient fruit to make this practice more feasible without creating greater financial risk.

He told the district executive committee: “This wind is getting into the sails of our commercial programme. We have used an awful lot of capital to generate an awful lot of income.”