Edinburgh City Council has finalised funding arrangements for a proposed £84 million upgrade to the waterfront area of the city.

Following negotiations the project has been granted the go-ahead to use future business rate revenues to fund the development.

The decision means the city council will take out a loan to build the development – which is set to include a cruise liner terminal, lock gates, an esplanade and a new link road.

Rates from new businesses in the area will then be used to repay the debt.

The redevelopment will include a cruise terminal

Finance Secretary John Swinney explained the scheme was a first for Scotland.

He said: “Westminster cuts to the Scottish budget have emphasised the importance of finding new funding models to deliver crucial infrastructure projects - such as the Edinburgh waterfront - that can unlock further economic development while ensuring maximum value for the public purse.”

The council claimed the development could trigger £660m in private sector investment and create up to 4,900 jobs.

Edinburgh City Council leader Jenny Dawe said: “Attracting new investment is critical to the city’s future and I warmly welcome the Scottish government’s support.

“We produced a clear and compelling business case for the use of TIF (Tax Incremental Financing) to help transform Edinburgh’s Waterfront into a more attractive area for living, working and leisure.”