This document provides information about developer contributions through Section 106 obligations, the Community Infrastructure Levy (CIL), and the New Homes Bonus. It discusses the tests for Section 106 contributions and when CIL can apply. It also outlines the process for setting a CIL rate, including identifying infrastructure needs, viability evidence, and balancing funding with development viability. Exemptions, spending requirements, and governance are also summarized. Lewes District Council is undertaking technical work to inform future CIL charging schedules. The New Homes Bonus provides financial incentives for new housing but is being offset by cuts to local authority funding from central government.

1. ● Developer Contributions – Community
Infrastructure Levy (CIL) & S106 obligations
● New Homes Bonus
October 2012
Town & Parish Council Conference, Peacehaven

2. 1 Developer and other contributions
• S106 obligations
• Community Infrastructure Levy (CIL)
• Highway contributions (s38 and s278
Highways Act)

3. 2 S106 Obligations
• S106 is not replaced by CIL
• Old reality – pre 2008
• New reality-post 2008:
Times have changed – viability
Times have changed - legislation

4. 3 The tests for S106 contributions:
• If the development is capable of being charged
CIL, the S106 obligation must meet these 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
(2010 CIL Regulations)

5. 4 S106 obligations
• Site specific mitigation measures
(e.g. highway and drainage works)
• For pooled contributions up to April 2014/CIL
adoption
• Then for up to five obligations where
infrastructure not funded by CIL
• Key date: April 2014 – scope of S106
restricted after that time

6. 5 What is a CIL?
• A mechanism for developer contributions
• Set by development type and zone
• A charge per square metre of floorspace
• Not site specific: contribution goes into a pot:
not specifically for particular sites
• Set by Local Planning
Authority via a CIL
Charging Schedule

7. 6 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 can decide what (and that
can change over time)

8. 7 Charging CIL – some basics
• £ per square metre on net additional (internal)
floorspace
• Rates can vary by area or use ( or both)
• Due when the development starts
• It is index linked
• The landowner is responsible for paying it

9. 8 When can 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

10. 9 Why set a CIL?
• Money for infrastructure through charging a
wider range of new development -a little from
almost everyone (so fairer)
• There is a lack of government or other money
to provide infrastructure
• It is set out in a schedule based on evidence
(so more transparent)
• Developers have certainty
• Changes to s106 – legal tests and pooling

11. 10 Setting your CIL
• Identify the infrastructure funding gap: what
infrastructure do you need to support planned
development?
• Then see what CIL rate it is viable to charge
• Check out the consequences of the rate you
are seeking on key uses
• Make sure that your rate is backed by robust
evidence
• Consult, independent examination

12. 11 What you need to set a CIL?
• Up to date development plan – not necessarily
a core strategy
• Evidence on infrastructure funding gap
• Evidence on viability
• All evidence is „appropriate available
evidence‟

13. 12 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.

14. 13 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 rates can only
be differentiated on viability grounds.

15. 14 Differential rates
• Different between uses (not just use classes)
• Different across the area
• Both or neither
• All differential rates must be based on viability
evidence (not policy objectives)

16. 15 Emerging CIL rates from frontrunner authorities
Housing Retail Offices
LB Westminster £200 - £560 £560 £200 - £400
LB Redbridge £70 £70 £70
Portsmouth £105 £53 £0
Newark & Sherwood £60 - £75 £100 £0
Colchester £120 £90 - £240 £0
LB Croydon £120 £120 £20
Mid Sussex £150 - £235 £0 - £100 £0
Wealden £110 - £180 £20 - £100 £0
All figures £ per square metre internal floorspace

17. 16 Exemptions etc
• Social housing relief
• Buildings used for charitable purposes-
exempt
• Discretionary relief for charitable investments
• Instalments policy
• Exceptional circumstances (where scheme
can‟t afford to pay it), but conditions apply

18. 17 Spending CIL
• Must be spent on infrastructure needed to
support the planned development of the area
• It can be spent on infrastructure outside your
area, and be spent by another body
• “Meaningful proportion” passed onto towns
and parishes (DCLG)
• It is advisable to publish a list of the
infrastructure you intend to use CIL for (Reg
123 list)

19. 18 How is the levy paid?
• Usually cash contribution
• Exceptionally, land contribution can be
considered to offset CIL liability
• Falls due on commencement of the
development: but can agree to payment by
installments

20. 19 Governance
• Review your infrastructure priorities annually
• Set up council procedures and delegation
agreements for CIL
• Create the necessary CIL management
structure.
• Involvement of other organisations?
(counties, towns & parishes)
• Enter into memoranda of co-operation with
other bodies (e.g. neighbouring authorities)

21. 20 What are we doing at LDC?
• Joint technical work with other East Sussex
authorities, Brighton & Hove, SDNPA
• Preparing high level CIL Economic Viability Study
• Each authority will need to do further detailed work
• Will inform CIL charging schedules by each authority
over next 12 - 18 months.
• Need to get LDC/SDNPA Core Strategy in place first.

22. 21 New Homes Bonus (NHB)
• Financial incentive to local authorities to promote
new housing development
• NHB based on council tax for each additional home
built, or brought back into use
• DCLG payment formula assessed annually
• NHB began for 2011/12 financial year: will build up
gradually over six years
• Spending NHB: wholly at discretion of local planning
authority
• Details on www.communities.gov.uk

23. • LDC received £211,341 in 2011/12
£519,450 in 2012/13
£730,791 TOTAL
• NHB money held by LDC in ring-fenced reserve
• Spending so far:
– Neighbourhood Planning £70,000
– Newhaven University Technical College Bid
£29,000
– Democratic Conversations Action Plan £10,000
• But, new NHB income offset by more significant
DCLG cuts in financial support for local authorities.
Even deeper cuts expected next year and beyond.

24. 22 Questions?