Councils used to be straightforward to run and finance - councils get income from government, council tax and business rates - the money goes into one pot and then gets allocated to services and mortgages at good rates of interest for public sector developments, where the amount of assets the council owned meaning they were a safe bet for lenders.
Then PFI and PPP came along from the big four political parties in Scotland which resulted in the government departments (and unelected quangos) and 32 local councils across Scotland committing to £22 billion PFI debt which is already diverting £1 billion a year of our taxes towards repayments instead of services.
But the SNP government did not stop PFI, as voters thought, and instead set up the Scottish Futures Trust (SFT), with the ex vice chair of RBS, Angus Grossart, as the chairman, and together in 2008 they turned Scotland into the world's first PFI monopoly board, while no one was watching - why Rupert Murdoch calls ex RBS man Angus Grossart "the puppet master of Scotland".
SNP appointed some of the same people who managed the Lib/Lab PFI to the board of SFT, despite SNP continually hounding the other parties for that PFI .
SFT Tax increment Financing (TIF) Scam Outlawed in California
Councils across the UK, including Scotland, normally got loans from the Public Works Loan Board, at preferential interest rates, to develop public infrastructure.
But now the SNP government has decided councils should borrow money to help encourage private developments, the private sector claim would not go ahead without councils taking on debt, and use all the business rates in the Tax Increment Financing (TIF) area to pay off the loan over 25 years, instead of the money going into council coffers for services.
Tax Increment Financing (TIF) is just one of the new PFI type scams being implemented across Scotland by the SNP government, the Scottish Futures Trust and COSLA together - TIF impacts so badly on council coffers, California outlawed TIF in 2011, with one report saying
"Critics say redevelopment has become a subsidy for developers at taxpayers' expense. Building malls, sports stadiums and arenas, instead of funding for schools, roads and other vital needs."
Westminster announced in 2012 they would experiment with TIF, but councils, it is claimed, will have more protection than in Scotland, who is leading the world to implement TIF after America tried and failed - here is why they failed.
TIF means taxpayers take on 25 years debt for a loan to help encourage the building of private developments but "ring fence" all future possible business rates for the next 25 years for that development TIF area, to pay the debt - exactly what caused the financial crisis - placing debt against a development in the hope it's values would rise - but the values crashed leaving other taxpayers to foot the bill (the cause of all this austerity).
By ring-fencing all future possible "business rates" for 25 years for the development area - including those from existing busineses in this area, this means none of those business rates are available for council services for the next 25 years - and every other taxpayer outwith the TIF area has to cover services for the TIF area - a massive change in how business rates are used, diverting business rates to support private instead of public infrastructure developments
A very insightful article explains the rise and fall of TIF in California, published in 2014 in the Planning Report, Insiders guide to planning and infrastructure website, as
"George Lefcoe, a professor of law at USC Gould, and Charles W. Swenson, a professor of accounting at USC Leventhal, take an in-depth look at the rise and fall of CRAs in California—the first state to embrace tax increment financing for redevelopment, and the first to abandon it."
"TIF gained political acceptability in the early 1950s in California because it required no new taxes. TIF proceeds were drawn entirely from higher property taxes assessed upon future owners of property within redevelopment project area boundaries." with government grants given to lower the price the property developers paid for the land and to clear it for their development.
Tax Allocation Bonds (TAB) were issued for the state to borrow the money they had to put into the private sector redevelopment by borrowing money to be used to fund the private development - with all future business rates (property taxes) for the development ring-fenced to pay off the bond holders over 25 years.
As time progressed the TIF area enlarged so much "virtually all of downtown Los Angeles was placed in one of nine development project areas" which effectively became TIF districts where none of the property taxes for homes or businesses in the TIF district went into council coffers to run public services - purely going to pay off loans for these private developments.
Politicians claimed the council, schools and hospitals will eventually receive a bonanza in 25 years, once the TIF loans are paid, and all those extra property taxes finally starting flowing into council coffers 25 years later.
The writer goes on to explain what the politicians don't say
redevelopment projects seldom create new demand.
They simply shift demand from areas contributing property taxes to council coffers to the TIF area which has been developed with public money, where no business rates are being paid to the council -
This means the businesses outside the TIF area lose business - further reducing tax revenues for the council - to subsidise the TIF private development.
If the development is a failure this can lower not just the development property prices, but all property prices in the area but if it is a success the rest of the developments paying property taxes (outside the TIF area) see no benefit as the extra tax revenues don't go into council coffers until the TIF redevelopment debt is paid in full - with redevelopment agencies constantly expanding TIF and development plans so the property taxes run forever into their coffers instead of the council coffers.
The report goes on to say these developments would likely have went ahead without TIF which would have meant the council, all services and other property tax payers would have benefitted as more money coming in meant more money for services and all property tax payers having to pay less as a result.
One study found, despite the claims by politicians it would bring in extra money and jobs, of TIF implemented by Regional Development Agencies
"In the 1990s there was little measurable impact of RDAs on RDA area employment, poverty rates, family incomes, rental vacancy rates, and average residential rental rates. He also found that there was also little measurable business growth in such areas during the 2000-2009 decade in terms of job creation or business revenues."
TIF deals rolled out across Scotland
Despite this, Alex Salmond and Angus Grossart (both ex RBS) changed our laws on how local business rates are used to start diverting them into encouraging private developments and one of the early TIF deals agreed between the SNP Government, SFT and New Labour controlled Glasgow City Council was with Buchanan Partnership, which owns the Buchanan Galleries.
Buchanan Partnership is owned by Land Securities and Henderson Global Group - two of the richest companies in the world.
They had already started their expansion of Buchanan Galleries - meaning they could afford the development which was going ahead before any idea of using TIF to subsidise it.
Despite Buchanan Partnership's development not requiring state subsidy, the document approving the deal for Glasgow City Council to take out an £80 million loan and pay Buchanan Partnership in installments (£55 million in total) to support the build "public works" for their own development at each "milestone" - with a further £25 million taken out to fund changes to George Square and other areas on behalf of the developers.
Does this mean areas like George Square and the others mentioned in the document are part of the TIF area - and so all the business rates for existing businesses go into the TIF loan repayments too?
The SNP Government's TIF Pilot Scheme guidance states there will be a defined area which will be mapped and councils will be able to transfer other income they decide e.g. car parking charges within the TIF mapped area to the TIF pot, instead of into council coffers as happens now with the official guidance for TIF pilots stating
"Area of individual Projects
1.A local authority TIF project will operate within a clearly defined and agreed boundary from which the incremental non-domestic rate revenue will be raised. This area will have to be defined in a way that will differentiate between properties inside, and outside the line and provide a clear determination of whether any new development is within or outwith the TIF area. This will require a detailed plan showing the boundary. Each project will in practice have a unique area; a TIF area cannot be part of two TIF projects.
Incremental Revenues 2.
It is anticipated that the incremental revenues captured as part of the TIF project will principally comprise non-domestic rates arising from development unlocked by the infrastructure investment. Local authorities may propose capture of other incremental revenues, for example car parking charges as part of the funding mechanism for any TIF project."
The Scottish Futures Trust websites reveals there are currently four TIF schemes up and running with another two on the way
Glasgow City Council’s £80m TIF scheme for the Buchanan Quarter is expected to unlock £310m in private investment and create almost 1,500 jobs
Fife Council is investing nearly £20m to improve vehicle and marine access to Energy Park, Fife, allowing the potential for further offshore and wind projects to be developed
Argyll & Bute Council’s £20m Lorn Arc project is aimed at extending Oban’s north pier and wider economic infrastructure which will act as a catalyst to grow marine tourism, renewables and aquaculture
Falkirk Council is investing over £67m to support its commercial activity, manufacturing and distribution and support sectors in Grangemouth which will include strategic road improvements and flood defences.
Two further TIF projects, one based in North Ayrshire and the other again in Fife, are currently being developed and are being taken forward to full Business Case for approval.
Meaning for the TIF map drawn up for the TIF deal in each area, all business rates and other income will no longer go into council coffers for the next 25 years - despite what has been learned in California.
A report on the Buchanan Galleries TIF deal gave little insight into how this would all work, but it did reveal as part of the deal Glasgow City Council extended Land Securities Buchanan Ltd (LSBL) lease on the land from 100 years to 175 years.
Here are the details of the Glasgow City Council, Scottish Government, Transport Scotland, Scottish Futures Trust Buchanan Quarter TIF deal where the council reveals land transfers via compulsory purchase to Land Securities
"that some other minor land transfers of land acquired during the Buchanan Quarter Compulsory Purchase Order (CPO) had also been requested by LSB which would tidy up their title on the west of Buchanan Street as envisaged in the agency agreement with LSB which accompanied the CPO;"
The Buchanan Quarter TIF Map below shows initial "black line" and "red line" boundaries, pages 27-28 of the revised Buchanan Quarter TIF full report.
agreed with SFT to define a TIF boundary which meets the requirements set out in their guidance through reference to two areas as part of the business case:
A ‘black-line area’ – which is similar in nature to the ‘red-line area’ as traditionally defined in the TIF guidance representing the area of direct economic impact within which an uplift in business rates is considered likely to occur as a result of TIF
A ‘red-line area’ – which in the case of the Glasgow TIF, is an area within the ‘black line’ that is drawn more tightly around the Buchanan Quarter Developments and key routes into and out of the Quarter to represent the area of actual rates capture and within which the financing of TIF and any initial expenditure will be managed and met
On page 29 of the full revised TIF business case report it states
"It can be seen that the proposed redline area extends from Killermont Street to George Square and otherwise forms the boundary of Buchanan Street and North Hanover Street. The redline boundary also includes the public highway comprising Cathedral Street and Buchanan Street. The redline area includes George Square insofar as it comprises the public realm and infrastructure"
"As would be expected, outwith the red line area displacement will occur at existing retail and other outlets (as consumers switch their expenditure to the Buchanan Quarter) and thus may reduce overall business rate levels".
The council admitting they expect business rates to fall elsewhere but have also said they expect to implement more TIFs across Glasgow - reducing business rates on a wider scale going into council coffers despite the report from America warning new developments don't bring more jobs and higher purchases - just move the money and the jobs from one area to another.
"that the Tax Increment Finance (TIF) initiative used anticipated future increases in Non Domestic Rates (NDR) revenues to finance infrastructure improvements, which were expected to bring forward developments that generated increased revenue and as part of the process evidence had been required to be gathered that private funds were insufficient to undertake the necessary infrastructure and that without the TIF the development would not be achieved and the original Business Case had set out the rationale for proceeding with the TIF initiative"
In the next point the SNP government acknowledged the Buchanan Galleries development has already started As the document goes on to say
"that during dialogue with the Scottish Government, it had became clear that the decision by Buchanan Partnership (a joint venture between Land Securities and Henderson Global Investors), who jointly owned Buchanan Galleries, to commence work on the Atlas phase of the development in advance of approval for the TIF scheme weakened the “but-for” case for that part of the development and on this basis it had been agreed to remove the Atlas phase of the development from the TIF business case;"
Henderson Global Investors an Irish based company - Ireland being the favourite base for those seeking to pay some of the lowest tax on profits in the EU.
The development was started but the next phase was delayed by issues upgrading Queen Street Station.
Buchanan Partnership decided they would not continue until they secured TIF as page 10 of the main "revised business case" report reveals
"It should be noted that Buchanan Partnership's successful tender submission to Network Rail (in respect of works to Queen Street station) is conditional upon TIF Funding approval. In the absence of TIF, the proposed extension to Buchanan Galleries will not proceed. As a consequence, the multi storey car park will remain in its current location and the expansion and associated improvement works to Queen Street Station will not take place."
The business case was changed, despite the development already being started, an indication the development did not need TIF, with the paperwork stating
(4) that the TIF allowed for incremental NDR to be retained by the Council over a 25 year period to fund borrowing costs arising from Council investment and borrowing costs associated with the proposed Council capital expenditure of £80m were around £5.85m per annum, with the annual incremental NDR which could be retained by the Council as a result of the development estimated to be £6.1m and this income would be ring-fenced to service the debt, which would allow repayment of Council borrowing associated with the TIF in advance of completion of the 25 year period; and
(5) that the development appraisal had identified a funding gap of £55m for the delivery of public works allied to the development at North Hanover Street and the Buchanan Galleries and £55m of the public works would be undertaken by Buchanan Partnership as part of the main development contract, with the Council paying on a milestone basis and only after the works had been signed off as completed and the remaining £25m of public works would be undertaken by the Council and would include improvements to the Concert Hall, Cathedral Street bridge upgrade, upper Dundas Street upgrade and public realm improvements to Cathedral Street, George Square and the general Buchanan Quarter area"
The SNP government give their backing to TIF in 2010 - their sales pitch on the Government website states
"The Scottish Government has brought forward secondary legislation, The Non-Domestic Rating Contributions (Scotland) Amendment Regulations 2010 under existing provisions in the Local Government Finance Act 1992 to enable the TIF pilot schemes to take place."
"Ministers have stated that they are supportive of a maximum of six pilot projects to test applicability of TIF to Scottish circumstances. TIF should be used in parallel with existing public and private sector funding streams."
"The Scottish Government tasked the Scottish Futures Trust (SFT) with developing appropriate criteria for the potential application of TIF in Scotland and to work with local authorities in developing their proposals. SFT will need to be convinced, on behalf of Ministers, that the economic case for a particular TIF is clear."
Already there are two other new TIF zones proposed for Glasgow, in areas with some of the highest property values and business rates in the city - so these business rates are not longer going into council coffers for 25 years.
"Two innovation districts have been identified in Glasgow - in the Merchant City and the West End, anchored around the Universities of Strathclyde and Glasgow - as these areas are judged to have the characteristics that could bring sustainable economic development in key sectors."
So who within the SNP government and their unelected PFI quango, the Scottish Futures Trust planned all this.
At the time, 2010, ex RBS man Alex Salmond was advised by the two people who used to control RBS, ex Chairman of RBS George Mathewson (who was still being paid by RBS after the collapse appointed as one of the First Ministers "official economic advisors".
Then at the same time, Alex Salmond appointed the ex "vice" chair of RBS Angus Grossart, who pedals porn channels over Sky boxes (ex RBS man Salmond chose as one of his "official economic advisors" and his vice chairman at RBS, Angus Grossart.
These two men found various innovative ways to run RBS over many years - which later resulted in the bank being sunk while they were no where to be seen (Grossart doing the same when Rangers FC and Murray International was sunk).
Grossart as the ex vice Chairman of RBS and the Chairman of SFT, between 2008 and 2016, who owns his own merchant bank, knows all about the sort of "innovative" financing that results in the financial sector doing very nicely, running scams that end up with the public paying the price every time - that's what bankers do - why Rupert Murdoch calls his friend, the ex chair of the Daily Record, the wily puppet master of Scotland
Andrew Wilson (SNP), above left with Angus Grossart and George Robertson's son Malcolm Robertson (new labour).
Andrew Wilson (SNP) one of Alex Salmond's main advisors set up Charlotte Street Partners with New Labour's Malcolm Robertson and Roland Rudd (Tory Minister Amber Rudd's brother) and Angus Grossart.
SNP's Wilson is the SNP man who proposed Devo Max (telling Alex Salmond he could get Labour and Tories to back it for them) - who, on 1st July 2018, now also demands SNP promote "Soft Independence" to be SNP policy i.e. Devo Max 2., with Nicola Sturgeon choosing this team to review SNP currency policy (for a successful Devo Max 2 vote).
Conflicts of Interest and Global Elite Control of Scottish Futures Trust
SNP (Grossart's) planned £billions more PFI projects were delayed for years as changes to EU accounting rules highlighted the SNP government and Angus Grossart were attempting to hide their massive PFI expansion plans. The EU told the SNP government they had to declare the PFI elements of their projects which they and the Scottish Futures Trust, they set up to manage their massive PFI programme, have failed to do.
Looking at the "register of interests" for SNP's Scottish Futures Trust board reveals, the new chair of Scottish Futures Trust, Ian Russell, who has replaced Angus Grossart, is just as mired in the financial sector as Grossart, as he is also the chairman of HICL Infrastructure Company Limited, an "infrastructure investment company" for public projects as well as being director of two other infrastructure investment funds "The Mercantile Investment Trust plc" and "BlackRock Income Strategies Trust plc"
The CEO of Scottish Futures trust, Barry White, is a member of the World Economic Forum, the global elite who meet annually in Davos. Nicola Sturgeon has two other members of the World Economic Forum controlling Scotland as her "official economic advisors" - the same two people who advised and sunk Greece, advised Bill Clinton and who are also official economic advisors to the Westminster Government and Jeremy Corbyn's New Labour.
This CEO of SFT used his power to add a 25 year £1.18 PFI contract to a £415 central belt motorway work to a company called "Scottish Roads Partnership" - a consortium of three Spanish builders and a French financier - six months later he was invited to join the board of the same company - a complete conflict of interest, where now he sits on the SFT board and declares his seat on the board of Scottish Roads Partnership as a "non-financial interest" - giving this World Ecomomic Forum man £1.18 billion reasons to smile.
Another SFT board member, Graeme Bissett is on the board of a construction company Cruden as well as "Smart Metering Systems Plc and investment companies as well as being a non executive director of Joint Management Board of Scotland Office and Office of Advocate General, as well as a whole lot more board memberships.
Another board member, Carolyn Dwyer, also works as Direct of Build for the City of London, the financial capital of the world - and thanks to Nicola Sturgeon she gets to impose £billions more PFI on Scotland, to enrich her city friends - why Nicola Sturgeon is in the Queen's UK privy Council for life.
As a result £billions more 25-35 year PFI maintenance contracts have been signed with the SNP government ordering councils to build £1billion more PFI schools, with schools too small and schools faulty before they have even opened.
This while SNP shout in public about the LIb/Lab PFI when SNP are using some of the exact same people to implement their PFI for £1billion more PFI schools, even using the same builder who built so many faulty schools previously.
The SNP government added £1.45billion PFI contract to the £465million cost of building the new Aberdeen bypass, where this week we found this bypass has been given "special road status" - meant for motorways, to stop tractors using the bypass as that will take profits away from the PFI - diverting farmers tractors into Aberdeen city roads not covered by the PFI contract.
With the SNP government also giving Barry White and another director of SFT, Christa Reekie (who implemented Labour/Lib Dem PFI) a £55 million taxpayer loan to set up their own “housing charity" (LAR) as a subsidiary of SFT.
No coincidence, another PFI scam invented by SNP's Scottish Futures Trust was for "affordable homes"
SFT Affordable Homes PFI Scam
Scotland, is the first country in the world (RBS ex vice chair in charge) to implement a PFI affordable homes scam - where councils borrow 70% of the money up front and hand it over to developers - who put a 30 year PFI contract for maintenance on the development and then can sell all the "affordable homes", after just six years, to private landlords, repay the council with interest and keep the profits.
The "affordable rent" guarantee disappears as fast as the property developer with the SNP government claiming the profits for the developer are "capped". This huge "affordable homes" scam is run by SNP's National Housing Trust, a subsidiary of the Scottish Futures Trust, with their website revealing
"Contracts have been signed with developers to build over 1,600 affordable homes for rent in Aberdeen, Clackmannanshire, Dumfries and Galloway, Dundee, Edinburgh, Falkirk, Fife, Highland, Scottish Borders and Stirling. Hundreds of households are already enjoying living in their new homes."
With the SNP government deliberately, with Angus Grossart getting Scotland into £billions more PFI debt - Grossart and Alex Salmond totally restructuring financial scams in the worst possible way for Scotland - when they could have borrowed all the money at the lowest interest rates in history for the past 11 years - instead opting to enrich financiers from around the world and burden Scotland with an everest of debt - this demonstrates the Scottish Parliament has been nothing more than a Westminster and City of London trojan horse - with every single political party complicit - with SNP using RBS bankers for just about all they do - the people who caused all this austerity.
Effectively, together, ensuring Scotland's taxes are all for private financiers profits and services and the public are all paying the price - for the next two generations, at least.