Lorn Arc Tax Incremental Finance (Tif) Update
Argyll and Bute Council · 9 October 2025
Back to Policy and Resources Committee — 9 October 2025 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE DEVELOPMENT AND ECONOMIC GROWTH 9th OCTOBER 2025 LORN ARC TAX INCREMENTAL FINANCE (TIF) UPDATE 1.0 EXECUTIVE SUMMARY 1.1 This report provides an update on the Lorn Arc Programme and the current live Lorn Arc projects at Dunbeg and Oban Airport Business Park. 1.2 The report outlines the agreed changes to the Lorn Arc Tax Incremental Finance (TIF) agreement which will extend its potential operation by ten years and significantly reduce risk associated with the projects. The Lorn Arc TIF initiative is currently holding a positive balance of £2.4m that is ring fenced for this project. 1.3 LINK RSL has submitted four planning applications for Phase 4 development at the Dunbeg Corridor, which has already delivered 375 affordable homes and significant infrastructure upgrades. Phase 4 will include circa 430 residential units including social rent, mid-market rent, student housing, shared equity, private sale and plots. In addition, a new trunk road roundabout will be constructed on the A85, a new residential link road, and a commercial area which may include an hotel, drive through restaurants, and small supermarket. The Council is currently processing these applications in tandem. 1.4 Substantial progress is being made at Oban Airport Business Park and a detailed report on this project will be presented to Council in November. It is estimated by council officers that the majority of the Oban Airport Business Park works will be completed in 2026. 1.5 RECOMMENDATION 1.6 It is recommended that Council consider the content of the report and note: • The significant ten-year extension to the TIF project; and • The substantive progress that is being made both at Dunbeg Corridor and Oban Airport Business Park.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE DEVELOPMENT AND ECONOMIC 9th OCTOBER 2025 GROWTH LORN ARC TAX INCREMENTAL FINANCE (TIF) UPDATE 2.0 INTRODUCTION 2.1 This report provides an update on the Lorn Arc (TIF) Programme and the current live Lorn Arc projects at Dunbeg Corridor and Oban Airport Business Park. 3.0 RECOMMENDATIONS 3.1 It is recommended that Council consider the content of the report and note: • The significant ten-year extension to the TIF project; and • The substantive progress that is being made both at Dunbeg Corridor and Oban Airport Business Park. 4.0 DETAIL Lorn Arc TIF Programme 4.1 In January 2025, following extensive negotiations facilitated by the Scottish Futures Trust and council officers, the Scottish Government agreed a formal amendment to the TIF agreement. The effect of this was to lengthen the agreement period from the current end stop of 2040, to 2050. This is a significant extension as It gives a further ten years for the Council to continue retaining the additional NDR revenue that has been created since the creation of the TIF scheme. The effect of this is to reduce significantly the risk involved in repaying the investment, and to potentially allow a greater investment to be made in infrastructure at both the Dunbeg Corridor and Oban Airport Business Park. 4.2 The following table provides the general financial highlights for the TIF programme and the projects at Dunbeg Corridor and Oban Airport. It shows that the TIF scheme is currently retaining a £2.4m surplus, although this is fully committed in future years for works identified in this report.
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Finance Highlights Total Current TIF Reserve (opening balance for 2025/26) £2.402m TIF revenue (NDR retained) 2024-25 £0.815m TIF spend – 2025-to date £0.280m Dunbeg Corridor 4.3 LINK Housing Association has submitted four planning applications within the Dunbeg Corridor. These are for: - • the commercial area development which includes an hotel, drive through restaurants and small supermarket • phase 4 of the housing development (circa 430 houses) including social rent, mid-market rent, student housing, shared equity, private sale and plots. • A new Trunk Road roundabout. • The associated road network leading to the commercial area and housing site.
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4.4 These planning applications are currently being considered by the Council and responses from statutory consultees being awaited. It is anticipated these planning applications will be determined by 2025/6 FQ4. 4.5 In parallel with the assessment of these planning applications, preliminary negotiations are taking place between LINK Housing Association, the Council and Scottish Government More Homes Division, with the aim of formulating a development agreement to take forward the construction programme. This work is ongoing. 4.6 When the planning applications are determined, it will enable infrastructure and design work to be commissioned to provide more detailed development costs to be established. At that stage, a Full Business Case will be prepared for approval of the P&R Committee. It is anticipated that this will take place towards the end of 2026. 4.6 The Dunbeg Corridor Working Group continues to meet and prove a valuable forum for discussion between the Council, public agencies, and the public on issues arising with this development. The next meeting of this group is arranged for the 14th November 2025. Oban Business Park 4.7 A detailed report on the Oban Airport Business Park project will be presented separately to Council in November. In general, the project is progressing well with initial site works now completed, planning consent have also been granted for the two initial buildings to be developed, the design team and main contractor appointed and the programme estimating commencement of the main contract prior to the end of 2025 with the majority of the works completed in 2026.
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5.0 CONCLUSION 5.1 The Lorn Arc (TIF) Initiative has had a long history of delivery. This innovative financial mechanism enables the council to retain additional NDR income to facilitate further infrastructure works that enable new developments to take place. Good progress continues to be made with the Lorn Arc TIF programme. The Scottish Government after extensive negotiations has agreed a significant extension to the scheme and both live projects; Dunbeg Corridor and Oban Business Park are progressing well with a reduced risk of delivery due to the longer payback period having been agreed. This funding with consequently assist the delivery, subject to the regulatory process, of a further 430 new homes, a new commercial area at Dunbeg, significant road improvements together with a built- out business park at Oban Airport. 6.0 IMPLICATIONS 6.1 Policy - None 6.2 Financial - none directly arising from this report. Business Case for the investments confirm the financial positions and are presented to P&R at appropriate stages for approval. 6.3 Legal – None directly from this report. 6.4 HR – None. 6.5 Customer Service – None. 6.6 Risk – The wider risk for the projects is unforeseen increases in development costs, and the availability of the NDR to repay debt. Both these can be mitigated by careful project management. 6.7 Climate Change – The services proposed to be developed at Oban Airport are mainly lifeline services rather than recreational or tourism related. Oban provides a central location for search & rescue functions which could reduce the flying time of operational activity. New housing in Dunbeg will be built to the most recent environmental standards and is centrally located in Lorn thus minimising travel demand. 6.8 Fairer Scotland Duty – Socio-economic Duty – the delivery of business and commercial opportunities and housing across Argyll and Bute facilitates socio- economic opportunities for all.
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6.9 Equalities - protected characteristics - the activity outlined in the report is consistent with the aims and objectives set out in LDP2 and the Local Housing Strategy which were subject to EQIA. 6.10 Consumer Duty – none. 6.11 Island Communities – none. 6.12 Children’s Rights and Wellbeing – the delivery of more housing will enable more children to have a safe secure environment. Kirsty Flanagan Executive Director with responsibility for Development and Economic Growth Councillor Jim Lynch, Council Leader and Policy Lead for Economic Development, Islands and Rural Communities and Housing August 2025 For further information contact: Fergus Murray – Head of Development and Economic Growth fergus.murray@argyll.bute.gov.uk Matt Mulderrig – Development Policy and Housing Manager matt.mulderrig@argyll-bute.gov.uk Adrian Jackson-Stark Oban Lorn Arc Project Manager Adrian.jackson-stark@argyll-bute.gov.uk