Housing association seeks £3.5 million from council for rental homes

Councillors are being asked to approve a £3.5 million grant to Hjaltland Housing Association over and above the agreed budget for this year.

The housing body is seeking approval before the end of this week to help it build 75 new rental homes in the isles and a rapid decision is required in order for it to secure grant assistance from the government.

Fifteen units are due to be built at what was Lerwick’s North Star, while a further 12 are earmarked for the town’s Pegasus Place.

A large development at the Strand in Tingwall should see 40 new homes erected, while Ladies Mire in Brae could host a further eight units.

Work on the projects, costing £11.2 million in total, has been hampered in the short term by government cuts.

Help from the council would allow the houses to completed in three years rather than eight, addressing a “significant under supply of affordable rental homes in Shetland”.

A report due to go before a special meeting of councillors on Wednesday says: “HHA have asked for a response to their request by the end of April, in order to submit a bid for grant assistance in line with the new funding arrangements for housing associations.”

The council may have to draw on its reserves to pay out the grant. The report warns the draw could bring reserves down to £256.5 million by March 2012 – perilously close to the £250 million level which, according to council policy, reserves should stay above. The council, says the report, will need to review that policy.

An alternative option is to prioritise spending on social housing above other currently approved schemes.

Members will also be asked to bear in mind options for Shetland’s fledgling fibre-optic network which is currently being developed – although the report does not indicate how much investment it will need in the short-term.

The report says the project will be developed “over the next few months” and considered as part of a capital programme review in the autumn.

The objective is to replace the ageing Pathfinder Project, which will be defunct by March 2014, with a purpose-designed, faster system.

Various aims and objectives are being considered, including a new “backbone” in Lerwick which will connect Hayfield with the council’s ICT and the Town Hall.

The report says: “There are clearly significant financial implications, yet to be fully determined, irrespective of the number or combination of these objectives to be realised.

“The potential for external funding is currently being explored, however it is likely that there will be significant direct cost to SIC if this project is to be promoted.”