An unnamed bank had previously refused to sign off on the transfer of land between NHS Lothian and Consort – the company that owns the long-term lease for the Little France site, where the new Sick Kids’ would be built.
But after detailed negotiations between the lender and the health board, Consort and the Scottish Futures Trust, the bank is close to agreeing to a set of conditions which would see them commit to the deal.
It is understood that the agreement could be formally signed off within weeks, with contracts going out to tender by September and a projected 2017 completion date.
The city’s health leader, Ricky Henderson, said: “This is welcome news. It will be a long, complex process but this is a step in the right direction.
“Finding the site and finance was always a challenge. Hopefully, this is a significant step.”
The £250 million hospital had originally been due to be completed by next year, but the project was hit by a series of complications and setbacks.
It was feared that the difficulties could lead to a new Sick Kids’ hospital in Glasgow, which has been funded directly by the Scottish Government, becoming the only centre of excellence for children’s medicine in Scotland.
The land swap issue was the latest to threaten the project, with one of 11 banks, which is part of the original Consort private finance initiative (PFI) deal behind the ERI, refusing to sign off.
However, at a meeting of the NHS Lothian board, finance director Susan Goldsmith revealed that a breakthrough had been made within the last fortnight.
The agreement would see NHS Lothian take over the main car park site, where the Sick Kids’ would be built, and then transfer a new nearby car park to Consort in return.
The new hospital would be built under a non-profit distribution model – a similar arrangement to a PFI.
Ms Goldsmith said: “Since the last board meeting there has been significant dialogue between us, Consort and the bank. I can’t disclose the conditions which are between the bank and Consort but [these] have been met. We are now waiting to hear from the bank.
“All of us who have been involved with this are reasonably confident that this is close to a resolution.”
At a previous meeting of the board, members had asked whether other options, including staying put on the existing site in Sciennes, should be examined again. But at the latest board meeting Ms Goldsmith said building at the ERI site remained the preferred option.
Following the board meeting, Ms Goldsmith added: “We are pleased that discussions with Consort and their funders over changes to the PFI project agreement are moving in the right direction.
“If these discussions progress as expected, we anticipate that by September we will be in a position to embark on the process of selecting a preferred bidder to design, build and manage our new Department of Clinical Neurosciences and Children and Young People’s Hospital at Little France.”