New Battersea Tube link in London gets $1.5 billion funding plan

London’s proposed subway link to 16,000 new homes near the U.K. capital’s iconic Battersea Power Station would be financed by local developers and companies under a plan announced today.

The two-mile spur from the existing Tube will be funded via a 1 billion-pound ($1.53 billion) loan raised by the Greater London Authority and backed by the government. Repayments would come from local business rates, made available using legislation on so-called enterprise zones, Wandsworth Council said today.

Linked to the Northern Line at Kennington, the new route, which could open by 2019, will have stops at Battersea and Nine Elms, serving London’s largest redevelopment area. Buyers reserved three-quarters of homes to be built on the site of the renovated power station within five days of them going on sale in January, and the area will also house the new U.S embassy.

“Over the long term the scheme would pay for itself while delivering a major economic and inward investment stimulus for London,” Ravi Govindia, leader of Wandsworth Council, said. “It would give Battersea its first underground station and help bring an underused part of the Thames riverside back to life.”

Battersea Power Station, featured on the cover of Pink Floyd’s 1977 album “Animals,” has frustrated developers since it closed more than 29 years ago. Malaysia’s SP Setia Bhd. and Sime Darby Bhd. bought the site for 400 million pounds in July after its previous owner was put into administration.

Chancellor George Osborne signaled that the government would underwrite the subway project in a Dec. 5 budget statement. Wandsworth Council’s executive will reach a final decision on backing the plan on March 4.

Editors: Chris Jasper, Benedikt Kammel. To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net. To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.