1. Community Infrastructure Levy
and Development Appraisals
Presentation to
Squires, Sanders (UK) LLP
by Vail Williams LLP
Chris Cave, Partner, Development Consultancy
James Lacey, Partner, Planning Consultancy
Thursday 19 January 2012

2. Vail Williams LLP
Who are we?
• Chris Cave – Partner: Responsible for Birmingham office
and the firm’s Development Consultancy team - based in
Birmingham.
30 years experience of retail, office, industrial, leisure
and residential developments.
• James Lacey – Partner: Leads Planning team – based in
Reading
12 years of representing commercial and residential
developers and corporate and private landowners

3. Planning and Development –
What we will cover
• The new Community Infrastructure Levy (CIL) and
comparison with S106 costs and its implications on the
development process.
• How the CIL is being introduced and the process?
• Development appraisals what are they and how are they
used?
• What are the basics?
• Where is the market today and how does Development
Consultancy and the appraisal system play its part?
• Example of the difference between CIL and S106 and the
implications on development viability.

4. Planning - CIL
• “CIL” – Background
• The process
• Emerging figures
• Current consultations

5. Community Infrastructure Levy (‘CIL’)
Background
“CIL” came into force in April 2010. Allows LA’s in England &
Wales to:
3. Raise an estimated additional £1 billion a year of funding for
local infrastructure by 2016 (source: ‘CIL’ an overview 2011,
CLG)
5. Deliver funding for a wide range of infrastructure projects (in
addition to affordable housing or, SPA contributions)
7. Funds: safer road schemes, flood defences, schools, hospitals
and other health and social care facilities, play areas, parks,
green spaces, district heating systems, police stations, leisure
centres and other community safety facilities.

6. The Process
• MUST HAVE UP TO DATE CORE STRATEGY thereafter they
can prepare a charging schedule rate(s) per sq.m.
• Consultation on the charging schedule – lack of engagement
• Rates must be supported by evidence which relates to the
viability of new development – lack of input into the two
examinations to date
• Examination to ensure the rates support rather than harm new
development. Binding report – Newark & Sherwood and
Shropshire only two.

7. The aim
‘Creates a fairer and transparent system to ensure proportionate
levels of contributions are paid on developments of 100 sq.m. or
more.’ (CLG guidance) (net gain)

8. Phase 1 – Emerging “CILs”
Proposed Levy Charges Per m2 Of Development
Development
Class
Residential £70 £0 - £120 £250; £265 - £575 £40 in towns or £105 £0 - £75
in the Vauxhall £80 in rural areas
Nine Elms
Battersea
opportunity area;
£0 in Roehampton
Offices £70 £20 inside the £100; £0 in £0 £0 £0
metropolitan centre Roehampton
of the Borough;
£0 elsewhere
Business / £70 £0 - £20 £0 £0 £0 £0 - £20
Industrial /
Warehouses
Small Retail £70 £120 £100; £0 in £0 £53 for all in-centre £75 - £100 for
Roehampton projects of less schemes under
than 280 sq metres 500 sq metres
Large Retail / £70 £120 £100; £0 in £0 £105 £100 - £125
Supermarkets Roehampton
Assembly and £70 £120 £0 £0 £105 £0
Leisure

9. Local Authority Charge Variations (Residential)

10. Current consultation

11. So what does this mean for the developer?
• The responsibility to pay the levy runs with the ownership
of the land. Developers / landowners need to be made
aware of the ‘CIL’ contributions which are emerging.
• The “CIL” would be payable upon the commencement of
development and would exclude SPA , affordable housing
etc which are in addition.

12. Development Appraisals –
Who are they for? What are they?
• Land Owners – Usually a residual appraisal to produce a site
value.
• Developers – a means of targeting and tracking profit and
negotiating S106 and CIL contributions. Means of presenting
and tracking development viability and non viability.

13. The Basics - what’s needed?
• Scheme – what is it, floor areas, etc?
• Values – research into yields rents capital values
• Costs -
- Planning
- S106/S278 (CIL)
- Build Costs and Professional Fees
- Marketing Promotion
- Voids/Disposal Assumptions
- Finance

14. What else?
• Local Authority Planning Application Fee's
• Flood Risk Assessment
• Topographical Surveys
• Geotechnical Surveys
• Sustainability
• Highways
• Bats, Newts, Badgers, etc

15. Rubbish In/Rubbish Out
• The valuer should not assume the answer is correct
• A development appraisal is simply a valuation format,
so:
1. Validate the assumptions
2. Check the cash flow – are costs and income occurring
at the right time?
3. Does the resultant residual match knowledge of site
values in a particular location? If not, why not?
4. Will the market actually support the development

16. Where is the development market today, is
there one?
• Development Finance - the elephant in the room
• Tenant Demand - another elephant
• Offices - at rents less than £20 per sq ft there is no site value - that’s
most of the UK, but London, Thames Valley are viable.
• Industrial - viable but land values are probably less than half of 2007.
• Retail - food never stopped - town centres and out of town down to
location.
• Residential -
• Recovering, major house buyers are active but concentrating on
housing not apartments private developers are struggling for cash
• Affordable housing no government grants for RSL’s has reduced
land values by up to a third.

17. ‘CIL’ Case Study – Portsmouth City Council
Assumptions:
• Undeveloped Proposal Current S106 ‘CIL’ charge
site. contributions (April onwards)
50 x 3 bed
• Affordable houses (4,000 £854,750 £973,029
housing via sq.m.)
S106.
900 sq.m. B1 £8,955.00 £0
Office
Total £863,705.87 £973,029

18. And Finally – is it viable?
Don’t believe everything you hear.
• The Government wants developers to convert offices
into flats.
• But there is a huge overhang of vacant flats e.g.
• Birmingham 453
• Bristol 1000+
• Leeds 289
• Manchester 746
• Southampton 759
Source Rightmove 17/1/2012

19. Making commercial sense of property
vailwilliams.com
Chris Cave - Partner, Development Consultancy James Lacey - Partner, Planning Consultancy
Telephone: +44 (0)121 654 1065 Telephone: +44 (0)1483 446826
Mobile: +44 (0)7887 626354 Mobile: +44 (0)7909 966836
Email: ccave@vailwilliams.com Email: jlacey@vailwilliams.com