Fresh blow for city as St James Centre tram tax falls by £6.5m

Published on Wednesday 10 June 2009 10:08

THE city's tram scheme has been dealt a new blow after council chiefs only managed to secure a £1.4 million "tram tax" from the planned £850m redevelopment of the St James Centre – around £6.5m less than expected.

The deal leaves the council still needing to bank another 40m towards its 45m share of the tramline's costs.

The Evening News understands council officials were originally expecting an amount closer to 8m for the massive St James revamp when the tram project was first approved in 2006 but negotiations with developer Henderson Global Investors (HGI) and the onset of recession have seen that figure dwindle.

The news comes just weeks after it was revealed the council has settled for a 2.5m tram contribution from the firm behind the planned Morrison Street goods yards development, instead of the 4m it had originally demanded.

A developer also recently dodged paying a 500,000 contribution for a 103-bedroom hotel on Princes Street after threatening to pull the plug on its plans if forced to pay the tram tax.

City leaders – who are now turning to borrowing the money they need for their share of the tram scheme against the developer contributions they expect to net over the next ten years – today insisted there are no concerns over raising the money for the council's part of the deal. However, opposition politicians today raised fears over city taxpayers being saddled with more debt.

The city's Tory transport spokesman, Mark McInnes, said: "I am very concerned about these very low levels of contribution at this stage of the project.

"I am most concerned that council tax payers will be saddled with the extra costs. The council has failed to properly calculate what it will get from the contributions and it will be ordinary residents who will suffer."

The developer contribution – or "Section 75" – deal struck with HGI also includes building affordable housing away from the St James site, though the location and number of new homes will be dependent on how many homes within the St James development are granted planning permission

HGI has also agreed to buy three cars for the City Car Club and contribute 25,000 towards air quality monitoring initiatives in the city centre over the next ten years. St Thomas of Aquins High School will also get 8,480 towards improvements.

Myles White, a fund manager for Henderson Global Investors, said: "We are pleased that the Section 75 measures have been approved so quickly by the city council, allowing us to progress swiftly to the next stage of our ambitious plans.

"It once again shows the benefits of taking a partnership approach with the council from the start."

Transport leader Councillor Gordon Mackenzie today insisted the St James contribution was "appropriate". "I am confident that overall sufficient funds will come from other developments as the tram route is clearly a significant factor in attracting investment to Edinburgh," he said.

The new St James Quarter development will create up to 90 shops, a new 150-bed, five-star hotel and 250 homes.

Workers find themselves in deep water

THEY are perhaps more used to battling against the tide of public opinion, but tram workers on Princes Street faced an altogether more pressing problem yesterday after bursting a water main.

Just 24 hours after celebrating the long-awaited arrival of the project's first set of tracks, contractors were seen frantically pumping out the water after damaging a pipe near the Scott Monument.

Passer-by Stefan Karpa, 39, said: "It was just outside Marks & Spencer and looked fairly major. It looked like it was a canal they were constructing, rather than a tram line."

Mike Connelly, a spokesman for tram firm TIE said: "I can confirm that a water pipe was damaged. However, it was reported to Scottish Water by us immediately on two occasions before 9am in order for them to make the repair. We are working closely on site with traders as well as with Scottish Water to resolve the situation."

Scottish Water said engineers were on site to make repairs. Only one property – Clinton Cards – lost supply. All other properties were unaffected.

Your Say: Are you happy with the council borrowing money to pay for the trams?

Christopher Day, 54, choreographer, Dundas Street: "It would depend on the terms of the loan. I think it's reasonable to take out a loan for a piece of capital investment.I'm not generally in favour of loans to meet running costs."

Charles McAllistair, 22, IT consultant, West End: "I don't mind them taking out a loan – I think they will get the money back at some point."

Anna Richardson, 29, project manager, Bruntsfield: "Not really, but I'm not sure what the alternative is. I suppose it is better than cutting other services to find the money."