New powers for councils could unlock funding for hospitality and leisure projects
Hotel and leisure developers could benefit from new funding powers for local government announced at the Liberal Democrat autumn conference.
The powers, revealed today by Deputy Prime Minister Nick Clegg, will pave the way for councils to utilise Tax Increment Financing (TIF).
The TIF scheme, widely used in the US, allows councils to borrow against future business rates, allowing them to fund projects such as mixed-use developments that wouldn't happen otherwise.
A spokesman for the British Property Federation (BPF) welcomed the news and said it represented an "elegant" solution to currently constrained bank lending and the lack of public finances for infrastructure projects.
"Done properly this should be a win-win for all involved including hotel and leisure developers," he said.
Examples of mixed-use schemes with hospitality components that may use TIF to unlock funding include Grosvenor's £625m regeneration of Crawley town centre and Hammerson's £650m retail quarter in Sheffield.
However, despite describing the news as "brilliant" the BPF has warned the devil may yet be in the detail, with plenty of work remaining to make sure any regime is workable and effective.
More information on how TIF will potentially operate will be set out alongside next month's governmental spending review.
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By Chris Druce
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