A project to build nine affordable houses on the Isle of Colonsay needs an extra £300,000 to end a dispute over rising construction costs - and Argyll and Bute councillors have agreed to pay £100,000 of it.
A shortage of affordable homes led to Argyll and Bute Council declaring a housing emergency in 2023 – the first local authority in Scotland to do so.
At a full council meeting on April 25, the first under a new SNP-led administration, councillors approved two cash injections from the Strategic Housing Fund for housing projects on the Isles of Colonsay and Ulva.
The council’s executive director Kirsty Flanagan updated: "Colonsay Community Development Trust are currently developing nine affordable homes and three self-build plots.
"The council has already contributed £136,000 in the form of a grant from the Strategic Housing Fund. In addition, we have provided them with a loan of £440,000.
"During the construction of the development, a dispute has arisen between Colonsay Community Development Trust and its contractor regarding costs, and these have escalated in common with many other construction projects, and it’s exacerbated by the remote nature of Colonsay.
"So following professional evaluations, an agreed £300,000 increase in cost has been reached, and this is imperative to ensure the completion of the development.
"Scottish Government and HIE (Highlands and Islands Enterprise) have both agreed in principle to provide a one third share of £100,000 each of the increased costs.
"So given the significant level of housing need on Colonsay, and the accepted widespread increase in construction costs, it is recommended that the Strategic Housing Fund is used to provide an additional £100,000 to enable the successful delivery of the affordable housing subject to the match funding from Scottish Government and HIE."
The new policy lead for care, Councillor Dougie McFadzean (SNP, Kintyre and the Islands), said: "I know the desperate need for this additional funding. A failure to provide the funding would bring the development to a halt. Could I ask that the funding, if approved, is processed as quickly as possible."
Former depute council leader, Councillor Gary Mulvaney (Conservative, Helensburgh Central), said: "I’m certainly in favour. My only quibble is the £300,000 divvied up £100,000 each: the only ones that do not seem to be putting money in is the actual development company.
"As an authority, we are not the lender of last resort. We struggle to fund their own projects and never mind anybody else’s.
"They’ve got a loan from from us to allow them to do the work. But we’re obviously funding the loan."
Councillor Andrew Kain (Ind, Oban South and the Isles), vice chairperson of the Oban, Lorn and the Isles Area Committee, said: "We need to look at some of the definitions we’re using here. ’Affordable?’ I’ve looked at some of the costs of these constructions on islands, and you’re really stretching the imagination if you can put the term ’affordable’ in them. We need to find another mechanism. I just think it’s unsustainable to carry on the way we’re doing it."
The new policy lead for housing, Lib Dem councillor for Kintyre and the Islands Robin Currie, said: "When I was over there at the end of last year, they were actually more or less finished. Looking forward to the opening in a few months time, and surely we can move on to the second site, which West Highland has been trying to get started. So, it’s all coming together. [The CDT] have played a big part themselves. Money is tight, but that’s what our Strategic Housing Fund is for, for us to help out."
Depute policy lead for climate change, renewables and net zero, Bute SNP Councillor Reeni Kennedy-Boyle, added: "We should very much be investing in our communities, and I think by offering the development trust this loan, that’s exactly what we’re doing. I’m sure we will be getting repaid by the wealth generation that results in it."
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