Edinburgh gets go ahead for £84m Waterfront funding
An £84 million investment in Edinburgh's waterfront is to be progressed using a new method of public financing.
Finance Secretary John Swinney has backed the City of Edinburgh Council's proposal to use Tax Incremental Financing (TIF) in the development of a new cruise liner terminal, lock gates, esplanade and link road.
The Scottish Futures Trust (SFT) has developed TIF for use in Scotland and is working with a number of local authorities to develop pilot projects. The scheme in Edinburgh is the most advanced and will be the first time TIF - which involves borrowing the money needed to finance key infrastructure against future increases in business rates income in an area - has ever been used in the UK.
In a speech to the Scottish Futures Trust (SFT) conference in Edinburgh, Mr Swinney revealed that a business case for the scheme had been provisionally approved by the Government. SFT, whose role includes developing and providing guidance on innovative funding mechanisms such as TIF, has worked closely with the city council to develop the business case.
Mr Swinney said: "Westminster cuts to the Scottish Budget have emphasised the importance of finding new funding models to deliver crucial infrastructure projects such as the Edinburgh Waterfront, that can unlock further economic development, whilst ensuring maximum value for the public purse.
"We established the SFT to do exactly that - an approach endorsed by the findings of the recent Independent Budget Review. Approval of this pilot project shows that greater collaboration across the public sector through SFT can achieve positive results. SFT and City of Edinburgh Council have presented a convincing case for use of TIF to kickstart this project, which presents real opportunities for the city and wider Scottish economy."
Councillor Jenny Dawe, Leader of City of Edinburgh Council, said: "Attracting new investment is critical to the city's future and I warmly welcome the Scottish Government's support.
"We produced a clear and compelling business case for the use of TIF to help transform Edinburgh's Waterfront into a more attractive area for living, working and leisure. Our aim is to kick-start growth, which will protect and create jobs now rather than waiting until the economy recovers.
"As well as being an innovative step, this shows we are being proactive and looking out for Edinburgh's long-term success. This is crucial for the country as a whole, because when the capital performs well it benefits all of Scotland."
Barry White, Chief Executive of the Scottish Futures Trust, said: "Tax Incremental Financing is an innovative way to fund growth from growth which supports jobs and aids economic recovery. This pioneering 84 million pounds waterfront development brings TIF to the UK for the first time and will unlock up to 660 million pounds investment from the private sector."
Pioneered in the United States, TIF involves using anticipated incremental tax revenues to fund infrastructure projects. TIF allows councils to borrow cash for the project and use the increased revenues from the commercial development that the infrastructure encourages to pay it back. Scottish Ministers are supportive of a small number of pilot schemes to test TIF's suitability to Scottish circumstances.