Council may seek extra funds for Lowood Estate development

SPECIAL FEATURE on a flagship Borders project lagging behind schedule

Four years after purchasing the remains of a country estate near Melrose for £9.7 million to accommodate housing and commercial development Scottish Borders Council has yet to order the bulldozers onto land at Lowood to start the costly process of installing infrastructure.

The first phase of a plan to build at least 300 houses as an extension to Tweedbank village has already slipped behind schedule from a timetable drawn up in 2019. A land audit predicted 30 homes would be completed in 2023, but that target will not now be met.

And it has emerged that a new business case may have to be assembled as part of an application to outside agencies for substantial sums needed for the construction of roads, utilities and bridges, and to pay for extensive earthworks and other basic essentials.

Not Just Sheep & Rugby submitted a list of questions to the local authority after noticing references to Lowood in SBC's recently published SHIP (Strategic Housing Investment Plan) which was considered by the influential Executive Committee in early October. 

According to page 46 of the SHIP: "“In December 2018, the Council purchased the Lowood Estate, Tweedbank. This the only Scottish Borders strategic housing site identified in the Borders Railway Corridor and in the Edinburgh and South-East Scotland City Region Deal.

"Following a public consultation exercise, revised and finalised Tweedbank Expansion Supplementary Planning Guidance and a Design Guide were agreed by Council in June 2021. These documents will frame future work to develop and agree a master plan for the development of the area, marketing strategy and inform the development of a funding and infrastructure investment phasing package to implement this.

"As the situation clarifies, the Council may need to develop a Business Case in order to seek to secure additional infrastructure funding via City Region Deal and Scottish Government processes, such as Housing Infrastructure Funding grant.”

Opponents of the estate purchase criticised the council for failing to publish a fully costed Business Case with infrastructure prices ahead of the deal.

However, our investigation has revealed that a 74-page document containing this vital information was considered by councillors in private during 2018 prior to the sale going through. A copy of that appraisal by consultants - deemed commercially sensitive at the time - has now been released to us.

The report from Ryden, and Turner & Townsend shows the Lowood infrastructure costs (at 2017 prices) totalled £13.7 million, including £1.5 million for a possible new road crossing over the Border Railway. At that time it was not clear whether SBC would have to shoulder the entire infrastructure bill or if the cost would be shared by developers. The price is likely to have risen considerably in the intervening four years.

As we reported previously, an agent for the council lodged a planning application with SBC's own planning authority seeking permission for the construction of infrastructure at Lowood to include earthworks, landscaping and roadworks.

But the planning process appears to have been in limbo for several months. Since June no new documents pertaining to Lowood have been posted on the authority's planning portal apart from a request for an update on the application from a senior planning officer.

When we asked the council about the lack of progress with their own application we were told: "The planning application for the initial infrastructure remains active and further progress is expected on this soon, linked with the delivery of a care village in Tweedbank."

The SHIP report notes: "The Council is developing a Final Business Case for a Care Village, and has lodged a Planning Application for the construction of a new access road, which could potentially be complete by February 2023." That also seems highly unlikely.

The 2019 Lowood housing timetable suggested 30 houses would be provided in 2023, a further 50 in 2024, 50 in 2025, 50 in 2026 and 120 "post seven years".

But the new SHIP has the first phase of 30 houses to be developed by Eildon Housing Association [EHA] now scheduled for 2025/26. A second phase by Eildon involving 25 new homes has become a so-called Potential Pipeline Development Project.

The plan explains: "Notwithstanding the ambition and drive to deliver as many new homes as possible it is inevitable that challenges and issues means that sometimes projects stall, or have to be removed from the programme."

When asked about apparent slippage to the EHA phasing at Lowood, the council told us: "The reason for the delay is that we need to construct the infrastructure to unlock access to sites for development. Regarding EHA’s ‘downgrading’, this is because a specific site has not been identified for this housing. This will be formalised as we progress discussions with developers."

SBC has also responded to the apparent implication in its SHIP that the local authority cannot afford the infrastructure costs associated with the Tweedbank expansion which will need total expenditure of over £200 million if the original Masterplan is to be implemented in its entirety.

The detailed statement from the council stated: "Officers are currently developing a report which will be considered by Council before 31 March 2023. This is likely to include revisions to the final business case in relation to Lowood to reflect current market conditions and inflationary impacts.

"It was expected at the time of the purchase (of the estate) that further public sector investment would be needed to enable the housing and business space development ambitions set out in the Tweedbank Masterplan, linked to the City Region Deal and other public funding sources."

We also asked for details of the costs incurred since 2018 on servicing the Lowood purchase, and the amount spent on the upkeep of the estate which includes a substantial country house.

According to SBC: "In line with the Council’s Treasury Management Strategy, the Council does not borrow to fund specific projects but only borrows to support the Council’s general cash flow position when required. 

"Prudent cash flow management allowed the purchase of Lowood to be funded from internal cash surpluses with no borrowing required at the time of purchase. There are no capital repayment costs associated with the purchase of the estate due to the intention to recover the cost of the purchase from future sale proceeds. 

"Costs relating to the site are minimal and are centred around property and utility costs which in 2020/21 amounted to £5,096. These costs are fully met and exceeded by rental property income and grazing income from the site."

When the ownership of Lowood transferred to the council it was announced that SBC would enlist a development partner to take forward the ambitious proposals. But so far a partner has not been identified.

In response to a question about any potential partnership being forged, the authority told us: "Soft market testing has been undertaken over the Summer 2022 and it is likely that a recommendation to progress procurement action will form part of the report due to come to Council."