Transcript Developer Payments Community Infrastructure Levy & Viability

Councillor briefing
Developer contributions:
Community Infrastructure Levy,
S106 obligations, viability
Date: FEB 2015
www.pas.gov.uk
What is PAS ?
• PAS is a DCLG grant-funded programme but
part of the Local Government Association
• Governed by a ‘sector led’ board
• 11 staff – commissioners, generalists, support
“PAS exists to provide support to local planning
authorities to provide efficient and effective planning
services, to drive improvement in those services and
to respond to and deliver changes in the planning
system”
Programme
Presentation:
– Viability as a consideration
– Types of developer contributions
– S106 Planning Obligations
– Community Infrastructure Levy
• Questions & discussion
Growth and Infrastructure
When you need to consider viability:
• Local Plans /core strategy
• Other policies affecting the cost of development
proposals
• Community Infrastructure Levy
• Planning applications
• S106 obligations
It is all about delivery
• Growth
• Viability – including developer/landowner
motivation
• Mitigation - Infrastructure
• Community expectations
• Policy requirements – e.g. affordable housing
Basic elements of viability assessments
Policy costs
Including:
• materials
• sustainability codes
• BREEAM
• Affordable housing
• On-site 106 contributions
Developers costs
• Contaminated land
• Poor ground conditions
• Green field costs – connecting to infrastructure and
services.
• Materials
• Fees
• Marketing
• Profit (risk)
• Finance
Money money money
There is only so much - how much?
• What will bring development forward?
• You need to have information on viability
• You have choices
Developer and other contributions
• S106 obligations
• Community Infrastructure Levy (CIL)
• Highway contributions ( s38 and s278
Highways Act)
• New Homes Bonus
• Retention of business rates
S106- Planning
Obligations
www.pas.gov.uk
s106 obligations can:
• restrict the development or use of the land in
any specified way
• require specified operations or activities to be
carried out in, on, under or over the land
• require the land to be used in any specified
way; or
• require a sum or sums to be paid to the
authority (or, to the Greater London Authority)
on a specified date or dates or periodically.
S106 Obligations
• S106 is not replaced by CIL but..
• Viability - reality – pre 2008 and post 2008
• Legislation -pre and post 2010 CIL
regulations and now post April 2015
S106 - tests
• If the development is capable of being charged CIL,
the S106 obligation must meet these legal tests:
• NECESSARY to make the development acceptable in
planning terms
• DIRECTLY RELATED to the development
• FAIRLY AND REASONABLY related in kind and scale to
the development
• These are also now the policy tests in the NPPF
Do your s 106 obligations currently
meet these tests?
• Most basic tariffs are already contrary to the
regulations (they do not meet the legal tests)
• If they don’t meet the regulations you are in
danger of legal challenge to your decision
making.
• Time is running out…. To get a CIL in place
S106 obligations
• Site specific mitigation measures
• For pooled contributions up to April 2015/CIL
adoption, then for up to 5 developments where
infrastructure not funded by CIL
• NPPF- planning obligations should take into account
changes in market conditions over time and, where
appropriate, be flexible to prevent stalling(para. 205)
Delivery and viability of development
• "Where obligations are being sought or
revised, local planning authorities should take
account of changes in market conditions over
time and, wherever appropriate, be sufficiently
flexible to prevent planned development being
stalled.“
Paragraph 205- NPPF
Renegotiation of s106 A
• Amended Regulation (Feb 2013) to set out a
procedure for amending any planning
obligations entered into between 28 March
2008 and before 6 April 2010.Section 106A of the Town and Country
Planning Act 1990
• where the s106 - "no longer serve a useful
purpose" or "continues to serve a useful
purpose equally well“
• Sunset- April 2015
Renegotiation of s 106BA
• Changes in the Growth and Infrastructure Act
that require a council to renegotiate previously
agreed affordable housing levels in a S106,
and change the affordable housing
requirement Section 106BA of the 1990 Act
• viability of affordable housing requirements only
• not reopen any other planning policy considerations
or review the merits of the permitted scheme
Appeals
• Under Section 106B of the Town and Country
Planning Act 1990
• Under section 106 BC- Appeal on affordable
housing viability – revised level of Affordable
housing for 3 years
DCLG s106BA and BC Guidance
• Overview of what
evidence is required.
Chief planner: councils 'must face
consequences' of lack of CIL progress
• Local planning authorities that fail to get a
Community Infrastructure Levy (CIL)
charging schedule in place by next spring
must 'face the consequences', the
government's chief planner has said.
•
June 2014 -DCLG chief planner Steve Quartermain
What does this mean for you?
• From April 2015 you will only be able to pool
S106 on a very limited basis
• Without a CIL in place your council is at risk of
significantly reducing income from developer
contributions
• Without a CIL in place you may not have a
mechanism to obtain necessary mitigation for a
development.
Summary – key regulations
Regulation 122
Regulation 123
Timing
From April 2010
From adoption of charging schedule or
6th April 2015 whichever is earlier
Impact
Introduction of three legal tests
(a)Necessary to make the
development acceptable in
planning terms;
(b)Directly related to the
development ;and
(c)Fairly and reasonably related
in scale and kind to the
development.
Granting planning permission cannot be
dependent on a S106 or S278 for
infrastructure on reg 123 list
Cannot pool from more than five
separate S106 planning obligations
Limitations on pooling for infrastructure
begins from 6th April 2010
No limitation on pooling for S278
agreements
What are you doing?
The Minister of State, Department for
Communities and Local Government
(Brandon Lewis):
• Affordable housing and tariff changes
Affordable Housing and tariffthreshold
• 10-units or less, and which have a maximum
combined gross floor space of 1,000 square
metres, affordable housing and tariff style
contributions should not be sought. This will
also apply to all residential annexes and
extensions.
•
Brandon Lewis, The Minister of State, Department for Communities and Local Government
(28/11/14)
Rural designations
• In designated rural areas- authorities may choose to
implement a lower threshold of 5-units or less,
beneath which affordable housing and tariff style
contributions should not be sought.
• If the 5-unit threshold is implemented, payment
between six to ten units should be sought as a cash
payment only and be commuted until after
completion of units within the development.
•
Brandon Lewis, The Minister of State, Department for Communities and Local Government
(28/11/14)
No change• Not applicable to rural exception sites
• Affordable housing and tariff style
contributions should not be sought in relation
to residential annexes and extensions.
•
•
Brandon Lewis, The Minister of State, Department for Communities and Local Government
(28/11/14)
Vacant buildings
• “ A financial credit, equivalent to the existing
gross floor space of any vacant buildings
brought back into any lawful use or
demolished for re-development, should be
deducted from the calculation of any
affordable housing contributions sought from
relevant development schemes. “
• Does not apply to vacant buildings which have
been abandoned.
•
Brandon Lewis, The Minister of State, Department for Communities and Local Government
(28/11/14)
Autumn Budget Statement
1.141…taking steps to speed up section 106
negotiations, including revised guidance,
consulting on a faster process for reaching
agreement, considering how timescales for
agreement could be introduced, and improving
transparency on the use of section 106 funds; …
Page 42
(4/12/14)
Questions?
Community
Infrastructure
Levy
www.pas.gov.uk
What is a CIL?
• A mechanism for developer contributions
• To contribute towards infrastructure needed to
support the development of the area
• A charge per square metre of floorspace
• Not mandatory
What is CIL for?
• To help pay for infrastructure needed to
support new development
• But not to remedy existing deficiencies unless
the new scheme will make it worse
• Councils must spend the income on
infrastructure – but you can decide what (and
that can change over time)
Charging CIL – some basics
• £ per square metre on net additional (internal)
floorspace
• Rates can vary by geographic area, use, or
scale ( or a combination)
• Due when the development starts
• It is index linked
• The landowner is responsible for paying it
• The local planning authority is the charging
authority (& sets the CIL)
When does it apply?
• To all development that involves ‘buildings that
people normally go into’
• Development over 100sqm gross internal floorspace
• A single dwelling ( even under 100sqm) (but not
subdivisions of dwellings)
• Includes permitted development (it doesn’t have to
follow a planning permission)
• Once set, you can’t pick and choose which
developments to charge
• Exceptions including– self build: annexes and
extension
Why set a CIL?
• Money for infrastructure through charging
nearly all new development -a little from
almost everyone (so fairer)
• There is a lack of government or other money
• It is set out in a schedule based on evidence
(so more transparent)
• Developers have certainty
• Changes to s106 – legal tests and pooling
CIL- positive economic effect
• “The levy is expected to have a positive
economic effect on development across a
local plan area. When deciding the levy rates,
an appropriate balance must be struck
between additional investment to support
development and the potential effect on the
viability of developments.”
para. 9 - CIL Guidance – April. 2013
Setting a CIL
• Identify the aggregate infrastructure funding
gap- Is a CIL necessary?
• What rate is viable to charge?
• Check out the consequence of the rate on key
uses
• Make sure that the rate is backed by evidence
• Consultation required
• Independent examination
What you need to set a CIL?
• Up to date development plan is desirable
• Evidence on infrastructure funding gap –
aggregate gap
• Evidence on viability
• All evidence is ‘appropriate available
evidence’
• Rates should be consistent with viability
evidence across the area
Strike the Appropriate balance
Between
– the desirability of funding the infrastructure gap to
support the development of the area from CIL
and
– the potential effects (taken as a whole) of the
imposition of CIL upon the economic viability of
development across the area.
Viability - rate setting:
•
•
•
•
•
Strategic approach
Look at the effect on the whole area
The rate may put some development at risk
No requirement to use any particular models
Can set differential rates – but rate changes
can only be differentiated on viability grounds.
Note: If there is a CIL, a rate must be set for every use.
Differential rates
•
•
•
•
•
Different between uses (not just use classes)
Different across the geographic area
Different by scale
All or none
All differential rates must be based on viability
evidence (not policy objectives)
Different rates for different authorities
• £70 per sq Metre – flat rate – based
on residential growth.
• residential charges rural - £80m2 and
urban -£40m2 . All office/industrial
uses £0m2 charge.
• 4 residential rates, 3 employment
rates,– high level of differentiation by
area and use.
Members role
• Make sure you know what is necessary to aid
delivery of growth in your area. Make sure
your priorities are clear.
• Get involved in deciding how ‘risky’ your rates
are going to be - strike the appropriate
balance for your area.
Exemptions etc
• Social housing relief
• Buildings used for charitable purposesexempt
• Discretionary relief for charitable investments
• Self build
• Instalments policy
• Exceptional circumstances (where scheme
can’t afford to pay it) but conditions apply
Exceptional Circumstances
• It is very difficult to get
• It is not a negotiated amount
• Should not be considered when setting rates
How is the levy paid?
• Usually cash contribution but can be payment
in kind- infrastructure and/or land
• Falls due on commencement of the
development but you can agree to payment by
instalments
What has PAS learnt from the early CIL
authorities?
Those that succeed have:
• Councillor and management team support
• Effective project management
• Project team
• Project plan
What has PAS learnt from the early CiL
authorities?
• There is no one way to DO a CIL
• Remember the basics
• Infrastructure – Local Authorities should use what
they have
• Viability and balancing risk are key to the rate
• Keep it simple
Who has a CIL?
• There are 56 CIL’s adopted,
• A further 10 are through examination, and 28
submitted for examination, (October 2014)
• Many more are being worked on – 100 by
April 2015 (?)
Questions?
Spending CIL – For Charging
Authorities
• It must be on infrastructure needed to support the
development of the area
• It can be spent on infrastructure outside the CA’s
area, and spent by another body
• Doesn’t have to spent on the infrastructure referred
to in your charge setting evidence but.. the links
should be clear
• It is advisable to publish a list of the infrastructure
you intend to use CIL for (Reg 123 list)
• You cannot spend CIL on affordable housing.
Purpose of the Reg 123 list
• “double dipping” is a concern for Developers
• Reg123 is the requirement for a published list of
infrastructure projects or types of infrastructure that
the Charging Authority intends will be, or may be,
wholly or partly funded by CIL, those infrastructure
projects or types of infrastructure.
• …put another way you cannot collect s106 to spend
on items within your Reg 123 list
• Golden thread
GOLDEN THREAD
From plan to delivery
Devising CIL spending list:
A draft Reg 123 is now part
of the examination
Relevant Plan
Infrastructure
Evidence
CIL
Infrastructure
Evidence
Funding Gap
Project List
Regulation
123 List
123 LIST- Post Examination
:
• Reg 123 list - should be based on the draft list
examined with the charging schedule
• Need to explain the reason for any change
• Appropriate local consultation
• Where a change to the regulation 123 list would have
a significant impact on viability evidence requires a
review of the charging schedule
Implications on Council Resources
Education
Transport
Education
Transport
Community
Facilities
Green space
Health
Education
The greater demand on and for Council resources to deliver
Neighbourhoods
Localism Act:
• localism principles – the money should benefit
those who take the development.
(incentivisation)
CIL and Neighbourhood Planning
Member involvement in delivery
• Get involved early in Infrastructure
prioritisation
• Decide how best you can use all income from
development to aid growth
• Understand the implications of s106 vs CIL
• Work with neighbourhoods and local
communities
Is CIL right for you?
Decisions
• What will you seek from CIL ?
• What will you seek from s106 ?
• How will you spend your new homes bonus
and business rate retention on?
• Who do you need to be working with?




County
Health authority
Neighbouring authority
Parish
Tough decisions
• CIL might give you enough money for that long
awaited – politically popular- skating rink
BUT
Is that the best way to make your new development
sustainable and acceptable to the community?
OR should you give the CIL money to your
neighbouring authority for a new transport link in
their area that improves access for the new growth in
your area?
Governance
• Review your infrastructure priorities
• Set up your council procedures and delegation
agreements for CIL
• Create the necessary CIL management
structure.
• How will you work with other organisations.
• Enter into memoranda of co- operation with
other bodies e.g. neighbouring authority
What should be happening
•
•
•
•
Working on your Local plan
Infrastructure planning
Viability
Are you and your officers talking to your:
– county and parish
– developers
– communities
– neighbours
– infrastructure providers
What will success look like?
PAS web site
Community Infrastructure Levy - web pages:
http://www.pas.gov.uk/community-infrastructure-levy
Case studies:
http://www.pas.gov.uk/web/pas1/3-communityinfrastructure-levy-cil//journal_content/56/332612/6073804/ARTICLE