Craigmillar revamp hit by £10m black hole
While the first phase of the 200m project saw scores of people queue overnight to get their hands on a cut-price home, there has been little interest in the latest batch of family homes, months after being put on the market.
Developer PARC – a joint venture between the city council and its development firm EDI – was last year forced to revise its business case for the 15-year regeneration after council chiefs dubbed it "very optimistic".
But now the full extent of the financial battle facing PARC has been laid bare in documents leaked to the Evening News.
Among the problems facing PARC are:
The regeneration firm's finances have been hit hard after its major loan provider, the Dunfermline Building Society, revised borrowing terms and downgraded valuations of future developments in Craigmillar.
PARC needs to raise 10m in 2009 to shore up its financial position. 2m of this will come from parent firm EDI but the rest will need to be found from private investors.
A new 30m high school planned for Craigmillar could be delayed by up to six years if the funding woes continue, with the library and community facilities also potentially under threat.
The financial situation at PARC is expected to improve in the coming weeks, however, as it is understood the firm is on the verge of signing a multi-million pound deal with a major supermarket chain for a new food store and petrol station in the area.
PARC bosses today refused to be drawn on the revelations but added they would continue to deliver on their commitments for the area, albeit at a slower pace than if the market was buoyant.
Local councillor Maureen Child, however, said the people of Craigmillar will be shocked and saddened by the news.
She said: "This is not good news but hardly unexpected given the worldwide economic problems."
Plans to create a new town centre in Craigmillar around Niddrie Mains Road were this week given planning consent. The first phase of homes built by PARC proved very popular, with the first batch of 28 houses and flats around Wauchope Square released last February sold instantly.
However, the property slowdown which has engulfed the Capital since has also hit Craigmillar and just one out of 22 homes in the latest phase of Wauchope Square has been sold so far.
The city's finance leader, and chairman of PARC, Gordon Mackenzie, said: "
At this relatively early stage of development, when the housing market is a problem globally, PARC has to consider a number of options to prioritise its delivery programme.
"PARC is still committed to completing all the projects it has in its 15-year strategy.
"However, as with any developer today, it is taking the very positive step of reviewing its funding options to ensure long term delivery."