Delivery plan for Tweedbank expansion requires £108 million

by LESTER CROSS

The largest single development project to be promoted by Scottish Borders Council since its formation over 25 years ago faces a range of issues and challenges including a £108 million price tag, councillors will be told next week.

And over four years after the local paid around £11 million to purchase the Lowood country estate near Melrose, a revised Business Plan for the Tweedbank Expansion project will be required to deal with radical changes in market conditions.

It is now expected that between 300 and 400 new homes will be planned on the land which was acquired from the Hamilton family in 2018. But the overall scheme, including the construction of a new bridge over the Borders Railway, will need to attract large sums of external finance. There is still no firm indication where that money will come from.

The vast project requiring extensive investment in infrastructure before housebuilding and other construction can start has been criticised in some quarters. It has been claimed the concept is flawed given the relatively low demand for new homes in the Central Borders.

The new document from John Curry, Director of Infrastructure & Environment at the council, says: "The report sets out the key deliverables that the project seeks to deliver over the next 15 years providing further explanation summarising work recently undertaken as well as providing analysis on the impact of the current economic climate and market conditions. The report maps out a delivery plan, setting out a series of proposed actions to build momentum and deliver a project that contributes to our ambitions for the Scottish Borders to be a green, fair and flourishing region."

It has been revealed that SBC obtained Marketing and Development advice from property experts Savills as part of the process. They undertook an assessment of planning guidance alongside an analysis of the housing market and prices in Tweedbank area in August 2022. 

Mr Curry's report states: "This assessment reached the following conclusions: The market will be stable in coming years given the attractive rural area, good connections and a lack of new housing. Average house prices will still be relatively low compared to other areas closer to Edinburgh which will still be preferable to volume housebuilders.

" A phased approach to development that adapts to changes in demand and market conditions is recommended and more desirable to private builders and smaller scale developers. The cost of the infrastructure is expected to be significant recommending an ‘Infrastructure First’ approach where SBC undertakes these works addressing existing market failure, making sites more viable and desirable for private sector development."

Council members are presented with this warning: "Since the Savills report was prepared, the economic climate has continued to remain uncertain. There has been continued and significant inflationary increases on construction costs, alongside rising interest rates, making borrowing and servicing debt more challenging. Both factors have consequentially impacted the housing market hampering action to accommodate increasing demand for homes across the Scottish Borders and in particular in the Central Borders."

According to Mr Curry, it is recognised that to enable development to progress, Scottish Borders Council need to take action with public sector partners to de-risk development by forward investing in key infrastructure. 

"On greenfield development sites, the logistics and costs of enabling infrastructure is a significant factor in development appraisals, typically accounting for 15- 25% of the overall development cost. 

"As development progresses, design of the remaining access road will need to be developed. This will include a bridge connection over the railway to Essenside Drive to provide a strong link with the heart of the established Tweedbank village. The nature and design of the crossing will be determined as part phasing and programming but may include vehicular access and measures to encourage and support active travel." 

At the same time, an appraisal is being undertaken of the utility requirements for the initial development zones to the eastern part of the overall Tweedbank expansion. It is intended that details of utility requirements will be accommodated within the access road construction. There are some capacity issues with the waste water treatment works in Galashiels and discussions are ongoing with Scottish Water.

A section of the report headed Meeting Housing Needs claims the challenges and the effects of insufficient homes are being reported more frequently by businesses and communities.

"These include: Lack of suitable homes in the right locations; Lack of homes that are affordable in price or in running costs; Old housing stock with poor energy efficiency and subsequent health and net zero issues; Pressures on homelessness services; A need for greater diversity of housing types and tenures; and key workers finding it difficult to find homes to enable us to deliver vital services, adding to recruitment challenges for private and public sectors. 

"Successfully tackling these issues is key to our success and the delivery of good quality homes at Tweedbank provides us with significant opportunity. To unlock economic opportunities in the Sottish Borders it is essential that people are able to find the homes they need, both for those already in the region and to attract new people, helping to tackle the need for more working age people." 

The report makes clear that due to the size, scale and nature of the project, the Council will retain control of the development. But it is recognised that this will need dedicated resource focused on delivering the huge scheme.

"It is expected that there will be a phased approach, responsive to market conditions, that maximises opportunities, optimises market interest, and manages risks. It is proposed that we commence the development of a procurement strategy in order to secure a development partner.

"The first stage is likely to include a detailed access and transport assessment, site investigations, utilities and servicing strategy and will lead to development project plan and phasing strategy, cost plan and finally a revised business case."

Councillors are told the revised business case is necessary due to the change in market conditions and to support any future funding bids given the significant funding shortfall. Once approved by Scottish Borders Council, the revised business case will be submitted the Edinburgh & South East Scotland City Region Deal and is likely to seek funding support towards business and housing infrastructure.

So far as the financial implications are concerned, most recent estimates for likely costs of delivering the Tweedbank Expansion Project which includes homes, care and community facilities and infrastructure indicate full costs of £108 million. The programme will rely on significant external investment. and further development of this programme will require updated financial forecasts to take account of the current market prices.