Scottish urban regeneration revolving fund expands early due to surprising fast success

The government’s Scottish Partnership for Regeneration in Urban Centres (SPRUCE) fund has passed an important milestone.: it’s so successful that more money is now available for additional proposals.

SPRUCE is a £50 million fund that offers loans and equity investments to revenue generating infrastructure and energy efficiency projects to support regeneration in 13 eligible local authority areas in Scotland.

The Scottish Government established SPRUCE using European Regional Development Funds in conjunction with the Joint European Support for Sustainable Investment in City Areas (JESSICA) programme.

The fund initially invested £50 million, in loan form, in regeneration and energy-efficiency schemes across Scotland. As those loans are starting to be repaid and some ahead of time, the investment can be recycled and used to deliver further regeneration projects.

Thus, housing minister Kevin Stewart, this week announced £8.9 million to support a scheme involving refurbished office space (the former headquarters of Scottish Equitable) in central Edinburgh. “SPRUCE loans are now being recycled with the repayments being used to deliver yet more new infrastructure, supporting the economy and jobs and transforming our communities for the better,” he said.

The £50m Scottish Partnership for Regeneration in Urban Centres (SPRUCE) Fund is a JESSICA (Joint European Support for Sustainable Investment in City Areas) UDF (Urban Development Fund) that is a source of funding for regeneration and energy efficiency projects within targetted areas of Scotland.

The SPRUCE fund has been established with funding from the Scottish Government and the European Regional Development Fund. The fund provides affordable, flexible, repayable loans for project sponsors. Eligible projects will be located within the 13 local authority areas in the Lowlands and the Uplands of Scotland as determined by the Scottish Index of Multiple Deprivation. The SPRUCE Fund is designed to lever significant co-investment from the public and private sectors in supporting urban renewal and employment growth through revenue generating projects.

The SPRUCE Fund is managed by specialist fund manager Amber Fund Management Limited (Amber), which was appointed by the JESSICA Scotland Investment Board comprising senior Scottish Government officials, urban regeneration experts and specialist fund experts. The SPRUCE Fund supports a wide range of urban regeneration activity within well defined, integrated, sustainable urban development plans.

Eligible and investible projects include the development of office and commercial space, key transport projects and investment in energy efficient projects. This latter activity includes support for innovative approaches to energy efficiency retrofit measures.

The SPRUCE Fund can lend to public, private or joint venture entities delivering regeneration or energy efficiency benefits within the designated local authority areas. The SPRUCE Fund lending rates are highly competitive.

Financial support from the SPRUCE Fund is provided in the form of loans of investment capital to be repaid within an agreed timescale. The Fund is not able to provide support in the form of grants.

Seven projects have been supported so far:

  • Dundyvan, Coatbridge – £1.8m was used to create business units to support development of commercial workspace for Small and Medium Sized Enterprises (SMEs). The investment has a potential to support up to 100 jobs and provide space for up to 16 SMEs;
  • Queen Street, Glasgow – £9.6m was used to create a substantial Grade A office development in the city centre. It will accommodate up to 1,500 workers and during construction help to support 250 jobs in the sector and 30 apprenticeships;
  • St Vincent Plaza, Glasgow – a new Grade A office development in the city centre received £9.6m investment. It will support approximately 400 jobs in the construction sector and accommodate up to 2,600 workers on completion;
  • Haymarket, Edinburgh – this project received £9.6m SPRUCE contribution to remediate a four-acre site and undertake works within the ground to prepare it for further investment. Total anticipated project cost for Phase 1 is £29.5m. The overall £200m project will provide five mixed-use development buildings (offices, retail, leisure and a hotel), with the total space of 650,000ft2. The groundwork will support up to 300 jobs and through community benefit clauses provide eight employment opportunities, 26 training places and six apprenticeships;
  • Guardbridge, Fife – £11m to deliver a project which will regenerate 36 acres of a former paper mill, to create a Low Carbon Innovation Centre, linked to St Andrews University buildings. The overall project is estimated to cost £25m. The University has secured a £10m grant from the Scottish Funding Council’s (SFC) Carbon Reduction Programme. The project is forecast to deliver both considerable carbon and regeneration outcomes through the ‘Guardbridge Guarantee’;
  • North Lanarkshire – Western Campus, Strathclyde Business Park – £2.1m to provide development of a 44k ft2 industrial business park with 97 car parking spaces being developed as a JV between Fusion Assets and CBC, who worked together successfully to deliver the Dundyvan scheme;
  • District heating Scheme at Broomhill, Glasgow – £5m to deliver a project which will comprise the construction of two new energy centres, providing heating and hot water for 702 connected homes. The project is projected to schedule to deliver significant CO2 savings over its life, with the first full year of operations scheduled to deliver 2,008 tonnes of CO2 savings at a cost of £2,491 per tonne.

Photo of Haymarket, Edinburgh by Kim Traynor via Wikipedia.

See full article by Roger Milne in The Planner.

See SPRUCE Fund website.

See Amber Fund Management website.

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