£84m to refloat waterfront

Published on Thursday 18 February 2010 09:02

AN £84 million plan to restart the massive redevelopment of Edinburgh's Waterfront and create up to 7,200 new jobs has been unveiled by city council chiefs.

The council has admitted that without the radical move, the 30-year vision for the regeneration of Leith Docks will grind to a halt.

&#149 Is the council right to borrow 84m to try to revive the waterfront development? Vote here

Councillors are set to agree to a scheme which will see them borrow the 84m needed against future increased income from business rates to fund a new cruise liner terminal, riverside walkway, shops and restaurants.

Providing the Scottish Government then gives its backing, it is thought that work could get underway within six months.

And the council estimates that, by carrying out the initial infrastructure work, it will help encourage up to 110.7m of new investment into the Waterfront area including hundreds of flats and thousands of jobs.

City leader Jenny Dawe said: "If this scheme goes ahead it would be a really crucial stage for it to happen and it can help to stimulate the construction industry as well as getting the redevelopment going down there."

She said the Waterfront masterplan still had the potential to be a "really exciting" development.

"What we want to see in the Waterfront is a mixed development where, in an ideal situation, there are houses, people walking to work in nearby retail, hotels and tourist businesses, and the tourism potential of the area is being met with berths and the Big Wheel," she said.

The money would be used to fund a public esplanade for new shops and restaurants at the water's edge outside Ocean Terminal and a new pier for the Britannia and visiting cruise liners.

It would also be spent on a new road link between Seafield Road and Constitution Street to improve access from the east and new lock gates to make ferry and marina facilities possible.

The new business case for the scheme suggests best and worst case scenarios for the economic impact of the new development.

It suggests that anything from 2,630 to 7,172 new jobs would be created, as well as an additional inward investment of 72 million to 206m. It also shows that it could help lead to several hundred square feet of new offices and business space, hundreds of homes and several hotels.

Councillors will be asked to approve the business case at a meeting next week and, if approved, council chiefs will then approach the Scottish Government to approve the proposals.

Once backed, the process of finding developers would begin and it is thought that work could get underway within six months from getting Government approval.

The council would be likely to become the first in the UK to use tax incremental financing (TIF) to fund infrastructure development, although Glasgow has also shown an interest in the scheme.

Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, said: "We welcome this proposal as it is clear that in the present public sector financing climate we need to find different ways to fund public infrastructure."

He said that the Chamber believed that the figures the council has used to show the potential economic impact could even be too conservative and admitted that the infrastructure works will be a major boost to the construction industry and the city's economy.

Business advisers Pricewaterhouse Coopers had examined projects across the whole Waterfront area on behalf of the council but it said funding these would be too ambitious for a TIF project.

Instead, the council focused on a number of key infrastructure projects that are considered "most likely to unlock the greatest economic benefits in the short to medium term".

The move was cautiously welcomed by Councillor Cameron Rose, finance spokesman for the Conservative group on the council. He said: "In principal, it is a good idea that is worth exploring. However, we will need to look closely at the amount of debt and the risk factors involved."

The council has already approached the Scottish Futures Trust about its proposals and it has indicated its support. It also indicated that Scottish Government ministers are "generally supportive in principle".

Council chiefs also intend to ask the Scottish Government to underwrite 50 per cent of the early year's interest gap until extra revenues start to meet the interest gap.

A Scottish Government spokesman said: "We are open to innovative ways of supporting local economic growth and, in conjunction with Cosla and the Scottish Futures Trust, are looking at the potential use of tax increment financing. We look forward to seeing detailed proposals."

Nobody at Forth Ports, which is known to support the council's proposals, was available to comment today.

WHAT'S IT WORTH?

The 84m investment could lead to:

WORST CASE SCENARIO

&#149 583 new homes

&#149 2630 new jobs

&#149 175,500 square feet of new office/business space

&#149 94,770 square feet of new retail space

&#149 541 new hotel beds

&#149 5827 more tourist visits a year

&#149 72 million of new income for area

BEST CASE SCENARIO

&#149 1241 new homes

&#149 7172 new jobs

&#149 540,000 square feet of new office/business space

&#149 270,000 square feet of new retail space

&#149 10,800 new tourist visits a year

&#149 206 million of new income for area

WHERE WILL THE CASH COME FROM?

FORTH Ports is responsible for the development of the Leith Docks area but the scale of its 30-year masterplan is said to need the help of the public sector.

The city council believes that, by spending 84m on infrastructure work, it will encourage businesses and developers to invest in the Waterfront area. But times are tough and the council is not in the position to find 84m to spend.

Instead, it will borrow the money using an innovative "tax incremental financing" (TIF) scheme - a new tool that is popular in the United States for helping local authorities to kickstart regeneration.

Under the scheme, the council will be able to borrow the money against the projected future increase in business rates that the new development and new business rates payers would bring.

The extra tax would then be used to meet the debt repayments.

Council leader Jenny Dawe said: "Although it is innovative, I don't think it's chancy."