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Councillor briefing
Developer contributions:
Community Infrastructure Levy,
S106 obligations, viability
Date: FEB 2015 www...
What is PAS ?
• PAS is a DCLG grant-funded programme but
part of the Local Government Association
• Governed by a ‘sector ...
Programme
Presentation:
– Viability as a consideration
– Types of developer contributions
– S106 Planning Obligations
– Co...
Growth and Infrastructure
When you need to consider viability:
• Local Plans /core strategy
• Other policies affecting the cost of development
propo...
It is all about delivery
• Growth
• Viability – including developer/landowner motivation
• Mitigation - Infrastructure
• C...
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
servi...
Money money money
There is only so much - how much?
• What will bring development forward?
• You need to have information ...
Developer and other contributions
• S106 obligations
• Community Infrastructure Levy (CIL)
• Highway contributions ( s38 a...
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...
S106 Obligations
• S106 is not replaced by CIL but..
• Viability - reality – pre 2008 and post 2008
• Legislation -pre and...
S106 - tests
• If the development is capable of being charged CIL,
the S106 obligation must meet these legal tests:
• NECE...
Do your s 106 obligations currently
meet these tests?
• Most basic tariffs are already contrary to the
regulations (they d...
S106 obligations
• Site specific mitigation measures
• For pooled contributions up to April 2015/CIL
adoption, then for up...
Delivery and viability of development
• "Where obligations are being sought or
revised, local planning authorities should ...
Renegotiation of s106 A
• Amended Regulation (Feb 2013) to set out a
procedure for amending any planning
obligations enter...
Renegotiation of s 106BA
• Changes in the Growth and Infrastructure Act
that require a council to renegotiate previously
a...
Appeals
• Under Section 106B of the Town and Country
Planning Act 1990
• Under section 106 BC- Appeal on affordable
housin...
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
C...
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 ...
Regulation 122 Regulation 123
Timing From April 2010 From adoption of charging schedule or
6th
April 2015 whichever is ear...
What are you doing?
The Minister of State, Department for
Communities and Local Government
(Brandon Lewis):
• Affordable housing and tariff ch...
Affordable Housing and tariff-
threshold
• 10-units or less, and which have a maximum
combined gross floor space of 1,000 ...
Rural designations
• In designated rural areas- authorities may choose to
implement a lower threshold of 5-units or less,
...
No change-
• Not applicable to rural exception sites
• Affordable housing and tariff style
contributions should not be sou...
Vacant buildings
• “ A financial credit, equivalent to the existing
gross floor space of any vacant buildings
brought back...
Autumn Budget Statement
1.141…taking steps to speed up section 106
negotiations, including revised guidance,
consulting on...
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 deve...
What is CIL for?
• To help pay for infrastructure needed to
support new development
• But not to remedy existing deficienc...
Charging CIL – some basics
• £ per square metre on net additional (internal)
floorspace
• Rates can vary by geographic are...
When does it apply?
• To all development that involves ‘buildings that
people normally go into’
• Development over 100sqm ...
Why set a CIL?
• Money for infrastructure through charging
nearly all new development -a little from
almost everyone (so f...
CIL- positive economic effect
• “The levy is expected to have a positive
economic effect on development across a
local pla...
Setting a CIL
• Identify the aggregate infrastructure funding
gap- Is a CIL necessary?
• What rate is viable to charge?
• ...
What you need to set a CIL?
• Up to date development plan is desirable
• Evidence on infrastructure funding gap –
aggregat...
Strike the Appropriate balance
Between
– the desirability of funding the infrastructure gap to
support the development of ...
Viability - rate setting:
• Strategic approach
• Look at the effect on the whole area
• The rate may put some development ...
Differential rates
• Different between uses (not just use classes)
• Different across the geographic area
• Different by s...
Different rates for different authorities
• £70 per sq Metre – flat rate – based
on residential growth.
• residential char...
Members role
• Make sure you know what is necessary to aid
delivery of growth in your area. Make sure
your priorities are ...
Exemptions etc
• Social housing relief
• Buildings used for charitable purposes-
exempt
• Discretionary relief for charita...
Exceptional Circumstances
• It is very difficult to get
• It is not a negotiated amount
• Should not be considered when se...
How is the levy paid?
• Usually cash contribution but can be payment
in kind- infrastructure and/or land
• Falls due on co...
What has PAS learnt from the early CIL
authorities?
Those that succeed have:
• Councillor and management team support
• Ef...
What has PAS learnt from the early CiL
authorities?
• There is no one way to DO a CIL
• Remember the basics
• Infrastructu...
Who has a CIL?
• There are 56 CIL’s adopted,
• A further 10 are through examination, and 28
submitted for examination, (Oc...
Questions?
Spending CIL – For Charging
Authorities
• It must be on infrastructure needed to support the
development of the area
• It ...
Purpose of the Reg 123 list
• “double dipping” is a concern for Developers
• Reg123 is the requirement for a published lis...
GOLDEN THREAD
From plan to delivery
Devising CIL spending list:
A draft Reg 123 is now part
of the examination
123 LIST- Post Examination
:
• Reg 123 list - should be based on the draft list
examined with the charging schedule
• Need...
The greater demand on and for Council resources to deliver
Implications on Council Resources
Education
Education
Transport...
Neighbourhoods
Localism Act:
•localism principles – the money should benefit
those who take the development.
(incentivisat...
CIL and Neighbourhood Planning
Member involvement in delivery
• Get involved early in Infrastructure
prioritisation
• Decide how best you can use all inc...
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 b...
Tough decisions
• CIL might give you enough money for that long
awaited – politically popular- skating rink
BUT
Is that th...
Governance
• Review your infrastructure priorities
• Set up your council procedures and
delegation agreements for CIL
• Cr...
What should be happening
• Working on your Local plan
• Infrastructure planning
• Viability
• Are you and your officers ta...
What will success look like?
PAS web site
Community Infrastructure Levy - web pages:
http://www.pas.gov.uk/community-infrastructure-levy
Case studies:
...
Developer Payments- Community Infrastructure Levy, S106 agreements and Viability (February 2015)
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Developer Payments- Community Infrastructure Levy, S106 agreements and Viability (February 2015)

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Developer Payments- Community Infrastructure Levy, S106 agreements and Viability (February 2015)

  1. 1. Councillor briefing Developer contributions: Community Infrastructure Levy, S106 obligations, viability Date: FEB 2015 www.pas.gov.uk
  2. 2. 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”
  3. 3. Programme Presentation: – Viability as a consideration – Types of developer contributions – S106 Planning Obligations – Community Infrastructure Levy • Questions & discussion
  4. 4. Growth and Infrastructure
  5. 5. 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
  6. 6. It is all about delivery • Growth • Viability – including developer/landowner motivation • Mitigation - Infrastructure • Community expectations • Policy requirements – e.g. affordable housing
  7. 7. Basic elements of viability assessments
  8. 8. Policy costs Including: • materials • sustainability codes • BREEAM • Affordable housing • On-site 106 contributions
  9. 9. Developers costs • Contaminated land • Poor ground conditions • Green field costs – connecting to infrastructure and services. • Materials • Fees • Marketing • Profit (risk) • Finance
  10. 10. 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
  11. 11. Developer and other contributions • S106 obligations • Community Infrastructure Levy (CIL) • Highway contributions ( s38 and s278 Highways Act) • New Homes Bonus • Retention of business rates
  12. 12. S106- Planning Obligations www.pas.gov.uk
  13. 13. 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.
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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)
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. DCLG s106BA and BC Guidance • Overview of what evidence is required.
  23. 23. 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
  24. 24. 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.
  25. 25. 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 Summary – key regulations
  26. 26. What are you doing?
  27. 27. The Minister of State, Department for Communities and Local Government (Brandon Lewis): • Affordable housing and tariff changes
  28. 28. Affordable Housing and tariff- threshold • 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)
  29. 29. 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)
  30. 30. 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) •
  31. 31. 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)
  32. 32. 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)
  33. 33. Questions?
  34. 34. Community Infrastructure Levy www.pas.gov.uk
  35. 35. 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
  36. 36. 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)
  37. 37. 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)
  38. 38. 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
  39. 39. 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
  40. 40. 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
  41. 41. 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
  42. 42. 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
  43. 43. 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.
  44. 44. 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.
  45. 45. 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)
  46. 46. 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.
  47. 47. 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.
  48. 48. Exemptions etc • Social housing relief • Buildings used for charitable purposes- exempt • Discretionary relief for charitable investments • Self build • Instalments policy • Exceptional circumstances (where scheme can’t afford to pay it) but conditions apply
  49. 49. Exceptional Circumstances • It is very difficult to get • It is not a negotiated amount • Should not be considered when setting rates
  50. 50. 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
  51. 51. 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
  52. 52. 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
  53. 53. 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 (?)
  54. 54. Questions?
  55. 55. 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.
  56. 56. 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
  57. 57. GOLDEN THREAD From plan to delivery Devising CIL spending list: A draft Reg 123 is now part of the examination
  58. 58. 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
  59. 59. The greater demand on and for Council resources to deliver Implications on Council Resources Education Education Transport Education Transport Community Facilities Green space Health The more comprehensive the Reg 123 List
  60. 60. Neighbourhoods Localism Act: •localism principles – the money should benefit those who take the development. (incentivisation)
  61. 61. CIL and Neighbourhood Planning
  62. 62. 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
  63. 63. Is CIL right for you?
  64. 64. 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
  65. 65. 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?
  66. 66. 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
  67. 67. 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
  68. 68. What will success look like?
  69. 69. 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-community-infrastructure-lev journal_content/56/332612/6073804/ARTICLE

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