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Property industry welcomes second Scottish TIF

Property industry welcomes second Scottish TIF

The Scottish Property Federation has welcomed the news that finance secretary John Swinney has given the green light to the second Scottish tax increment financing (TIF) scheme, at the former Ravenscriag site in Motherwell.

TIF involves using anticipated incremental tax revenues to fund infrastructure projects, with Swinney estimating that the Ravenscraig scheme has the potential to unlock £425m private investment and create 4,500 new jobs.

Scotland leads the way in the use of TIF in the UK with Ravenscraig representing the second such scheme. In September last year Mr Swinney approved the use of TIF in the £84m upgrade of Edinburgh’s waterfront.

Director of the Scottish Property Federation, David Melhuish, welcomed the announcement by saying: “Scottish ministers should be congratulated. Whilst TIF still waits to get off the ground in England it has now proved crucial in progressing two vital regeneration schemes when the Scottish economy most needs help.”

Jim Fitzsimons, chief executive of the Capella Group who is managing the Ravenscraig development, said: “Obviously we are delighted, and it will certainly assist in convincing private sector investors that Ravenscraig is very much a live and deliverable project.

“The benefits will be felt across the North Lanarkshire County as it will deliver infrastructure which will open up the Motherwell-Ravesncraig-Wishaw conurbation, linking the M8 and M74.

“On a wider note, although TIF is ideal for Ravenscraig, there is still a need for government to find other ways to assist in bringing forward infrastructure and development, as TIF is not a solution in all cases.”

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For information, images and interview requests contact:

Paul Sweeney, Media Assistant, Scottish Property Federation, psweeney@bpf.org.uk  – 07841 732 194

Notes to editors:

Scottish government press release - Go ahead at Ravenscraig

A £73 million investment in the regeneration of Ravenscraig is to be funded through Tax Incremental Financing (TIF).

Finance Secretary John Swinney has provisionally backed North Lanarkshire Council's proposal to use Tax Incremental Financing (TIF) in the second phase of Ravenscraig's redevelopment, which will includes road upgrades and infrastructure works that will lead to the creation of a new town centre.

The project has the potential to unlock an additional £425 million of private investment and create up to 4,500 new jobs - including 500 in the construction sector.

The Scottish Futures Trust (SFT) has developed TIF for use in Scotland and has been working with a number of local authorities to develop pilot projects. TIF involves borrowing money from the Public Works Loan Board to finance key infrastructure projects against future increases in business rates income in the area resulting from new development.

In September last year Mr Swinney provisionally approved a business case to use TIF in the £84 million upgrade of Edinburgh's waterfront. As well as announcing provisional support for Ravenscraig, the Government has today confirmed that the Edinburgh TIF scheme has now been formally agreed by Ministers and the Council.

Mr Swinney said:

"Massive cuts to the Scottish Budget imposed on us by Westminster have underlined the importance of finding new, cost-effective funding models which crucial infrastructure projects such as the Edinburgh Waterfront and Ravenscraig regeneration, enabling us to unlock economic development, whilst ensuring maximum value for the public purse.

"The Ravenscraig regeneration scheme is vitally important to the future of the North Lanarkshire and wider Scottish economy. The council and SFT have presented a convincing business case for the use of TIF in driving this pivotal project forward.

"Following the Edinburgh Waterfront TIF project, which has now been formally signed off, Ravenscraig is the second pilot project to be given the green light by Scottish Ministers. It demonstrates that greater collaboration across the public sector, working with the SFT, can achieve positive results.

"It also highlights the increasing importance of SFT to public finances in Scotland. In its first full year SFT delivered some £111 million of net benefits and savings - well within our expectation of benefits in the region of £100-150 million. And in 2011/12 SFT will work on capital projects valued at £9 billion, helping to sustain economic recovery and stimulate construction."

http://www.scotland.gov.uk/News/Releases/2011/03/21084201