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Similaire à Councillor briefing - Developer contributions - Community Infrastructure Levy, S106 obligations, viability
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Councillor briefing - Developer contributions - Community Infrastructure Levy, S106 obligations, viability
- 1. Councillor briefing Developer contributions: Community Infrastructure Levy, S106 obligations, viability Date: April 2015 www.pas.gov.uk
- 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. Programme Presentation: – Viability as a consideration – Types of developer contributions – S106 Planning Obligations – Community Infrastructure Levy • Questions & discussion
- 4. When you need to consider viability: • Local Plans • Other policies affecting the cost of development proposals • Community Infrastructure Levy • Planning applications • S106 obligations
- 5. It is all about delivery • Growth • Viability – including developer/landowner motivation • Mitigation - Infrastructure • Community expectations • Policy requirements – e.g. affordable housing
- 6. Basic elements of viability assessments
- 7. Policy costs Including: • materials • sustainability codes • BREEAM • Affordable housing • On-site 106 contributions
- 8. Developers costs • Contaminated land • Poor ground conditions • Green field costs – connecting to infrastructure and services. • Materials • Fees • Marketing • Profit (risk) • Finance
- 9. 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
- 10. 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. 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.
- 13. S106 can: • be subject to conditions, • specify restrictions definitely or indefinitely, • And in terms of payments the timing of these can be specified in the obligation. If the s106 is not complied with, it is enforceable against the person that entered into the obligation and any subsequent owner. The s106 can be enforced by injunction.
- 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. 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. Do your s 106 obligations currently meet these tests? • Most basic tariffs are 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.
- 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. S106 changes – pooling restrictions • 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.
- 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. Renegotiation of s 106BA • Changes in the Growth and Infrastructure Act that require a council to renegotiate previously agreed affordable housing levels • viability of affordable housing requirements only • not reopen any other planning policy considerations or review the merits of the scheme
- 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. Recent changes Ministerial statement in November 2014 introduced changes to - Size of development for which you seek affordable housing contribution - Size of development for which you can seek a financial contribution (tariff) - Treatment of vacant buildings
- 23. Affordable housing 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 (also applies to all residential annexes and extensions)
- 24. 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 6-10 units should be sought as a cash payment only and be commuted until after completion of units within the development.
- 25. 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.
- 26. Vacant buildings credit • A 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. • Does not apply to vacant buildings which have been abandoned.
- 27. Speeding up s 106 • Autumn Budget statement • Consultation -Section 106 Planning Obligations – speeding up negotiations • March 2015 changes to PPG- Extensive additional advice to improve implementation of s106 and add clarity
- 28. s106– starter homes - change March 2015 • Starter homes- LPAs should not seek affordable housing contributions ( but can still seek contributions to mitigate the development including infrastructure)
- 30. What is a Community Infrastructure Levy (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
- 31. 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)
- 32. 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)
- 33. When does it apply? • To all development that involves ‘buildings that people normally go into’ • Development >100sqm gross internal floorspace • A single dwelling (even under 100sqm) (but not subdivisions of dwellings) • Includes permitted development • Once set, you can’t pick and choose which developments to charge • Exceptions include self build: annexes and extension
- 34. 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
- 35. 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
- 36. Setting a CIL • Identify the aggregate infrastructure funding gap - is a CIL necessary? • What rate is viable to charge? • Understand the impact of the rate on key uses • Ensure the rate is backed by evidence • Consultation required • Independent examination
- 37. What you need to set a CIL? • Up to date development plan is desirable • Evidence on infrastructure funding gap • Evidence on viability • All evidence is ‘appropriate available evidence’ • Rates should be consistent with viability evidence across the area
- 38. Strike the appropriate balance Between –the desirability of funding the infrastructure gap to support the development of the area and –the potential effects (taken as a whole) of the imposition of CIL upon the economic viability of development across the area.
- 39. 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.
- 40. 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)
- 41. Different rates for different authorities £70 per sqm – flat rate – based on residential growth •residential charges: – rural - £80m2, urban -£40m2 •office/industrial uses – £0m2 charge. •4 residential rates, 3 employment rates– high level of differentiation by area and use.
- 42. 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.
- 43. 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
- 44. Exceptional Circumstances • It is very difficult to get • It is not a negotiated amount • Should not be considered when setting rates
- 45. 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; you can agree to payment by instalments
- 46. 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
- 47. 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
- 48. Source: Savills (as at 23rd March 2015) Progress on CIL Implementation (England & Wales)
- 49. 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.
- 50. 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
- 51. GOLDEN THREAD From plan to delivery Devising CIL spending list: A draft Reg 123 is now part of the examination
- 52. 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
- 53. 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
- 54. Neighbourhoods Localism Act: •localism principles – the money should benefit those who take the development. (incentivisation)
- 55. CIL and Neighbourhood Planning
- 56. 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
- 57. Is CIL right for you?
- 58. 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 Neighbouring authority Parish
- 59. Tough decisions • CIL might give you enough money for that politically popular item 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?
- 60. 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
- 61. 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
- 62. 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
Notes de l'éditeur
- This is a large and thorough presentation. Feel free to just use the bits which are most relevant to you
- If you want you plan to be deliverable you want to make sure that implementing the policies in it do not make development across the plan area unviable. Policies on design, affordable housing, open space, sustainability etc can all have a cost to the developer- NPPF also highlights the issue of viability. Para 173-177 [You need to remember: That if the existing use value of the site is higher or the same as the desired use ( when all costs to implement the scheme have been taken off) the site will not come forward.] When setting a CIL you need to be sure that you do not risk the overall growth of your area by pushing the viability ceiling. Planning applications – to achieve the design, the affordable housing and the developer contributions you may have to review a viability assessment submitted by the developer. NPPF: Ensuring viability and deliverability Para 173 – last slide 177. It is equally important to ensure that there is a reasonable prospect that planned infrastructure is deliverable in a timely fashion. To facilitate this, it is important that local planning authorities understand district-wide development costs at the time Local Plans are drawn up. For this reason, infrastructure and development policies should be planned at the same time, in the Local Plan. Any affordable housing or local standards requirements that may be applied to development should be assessed at the plan-making stage, where possible, and kept under review.
- ‘It is all about delivery’ Often delivery is about viability – will that development come forward – - Is there a profit to be made for the developer : Is the new use/ development worth more than the existing use /development – be careful of the traps- for example old and tatty industrial might be worth more that the cost of the proposed use. It must be worth redeveloping The developer will consider: How much will the development cost, how much can I sell it for and Is it worth the risk. If it isn’t going to make any money for the developer it is highly unlikely that they will bring it forward. Developers profit is the reason they do it – the higher the risk the higher level of profit they, and their banks, will expect them to build into their calculations. At present, in quite a risky environment, it is over 20% for a lot of developments and even higher. Banks are not lending unless there is a significantly high profit margin demonstrated. This is all based on risk – there is no one percentage that fits all – it will depend on a lot of risk factors.
- Profit is a cost as it accounts for the level of risk and banks will not lend without what they consider to be the amount of profit to cover the risk.
- These are all costs to the developer that will eat into the viability – but are there other costs other than those in the adopted plan that the developer should know about before they buy the site. It might seem that building to higher carbon reduction standards will result in a higher value unit for the development but except in a few anecdotal cases this has not been proved.
- Remedial works to clean or remove or cap contaminated land Sites riddled with former earth works, unstable land – need for piling etc Installation of on site and off site infrastructure – brown field sites are already close to connections to infrastructure Green field sites may require bigger land take – less developable area due to parks, play areas, schools, community facilities, location of utilities etc. Large investment in new utilities may be required. e.g. Dover large site- 5750 units and supporting development. At the core strategy stage it was good in terms of all constraints and apparently deliverability with affordable housing. However, it is at the end of the line for utilities- Issue with the need for a new trunk water main. Electricity supply cannot accommodate all the development and a change to a roundabout is required so the cost of infrastructure is seriously bringing into question the deliverability including affordable housing.
- Ultimate question do you want this site developed now? – If so do you need to compromise and by how much? What are your priorities? When the developer comes forward to you and says this site is not viable if I have to provide affordable housing and s106 do you say OK provide half the affordable housing and half the s106 – you might, or do you say come back when the viability has changed. You need to assess whether the development is contrary to your policies and the other material circumstances ( one of which will be current viability) What basic infrastructure is required e.g. the road junction into the site and water and sewerage. What mitigation is required? What is the basic minimum for ‘place making’ – e.g. public open space. It is about the decisions you need to make – do you need this housing site to come forward now – are there other sites that can come forward now. You need to have an eye on your housing land supply. CIL will also change your decision, at the moment you can negotiate s106 but CIL is a set charge only able to be varied on very specific grounds– you will still be able to negotiate site specific s106. You need to decide what you collect from CIL and what from s106.
- S106 planning obligations or planning agreement are the most common type of developer contribution that people think of. Historically most councils have negotiated s106 on large housing or mixed use schemes. It does not usually apply to single housing plots or most commercial development. CIL is the levy that authorities can choose to develop and adopt where all additional building floor space ( with some notable exceptions – social housing) will be subject to the charge. CIL should give developers certainty it can be built into the land values ( eventually). There cannot be double counting between s106 and CIL – you cannot collect for the same thing. Section 278 Agreements – Highways Act 1980 - Developer Funded Improvements Works to the Existing Highway Where highway objections to proposals can be overcome by improvements to the existing highway, developers can enter an agreement that requires them to pay for or undertake such works. These works may include minor highway realignments, roundabouts, traffic signals, right-turning lanes, passing bays, etc. Prior to the commencement of construction, developers are requested submit full construction drawings for approval and enter into a Section 278 Agreement with a Bond to cover the full road construction. Developers are advised that without such an Agreement in place they may not commence any works within the public highway Section 38 Agreements – Highways Act 1980 - New Housing Estate Roads Usually most authorities require that prior to the commencement of construction, developers are requested to submit full construction drawings for approval and enter into a Section 38 Agreement with a Bond to cover the full road construction costs. Without such an Agreement in place developers will be required to deposit monies with the Council under the Advance Payments Code.If developers do go ahead without having got agreement any works and any construction undertaken may prejudice the future adoption of the estate roads concerned New Homes Bonus The New Homes Bonus commenced in April 2011, and will match fund the additional council tax raised for new homes and empty properties brought back into use, with an additional amount for affordable homes, for the following six years. It is based on the council tax of additional homes and those brought back into use, with a premium amount for affordable homes, and paid for the following six years. Retention of business rates – On 1 April 2013 a new system of business rates retention began in England. Before April 2013 all business rate income collected by councils formed a single, national pot, which was then distributed by government in the form of formula grant. Through the Local Government Finance Act 2012, and regulations that followed, the Government gave local authorities the power to keep up to half of business rate growth in their area by splitting business rate revenue into the ‘local share’ and the ‘central share’. The central share is redistributed to councils in the form of revenue support grant in the same way as formula grant. Local share taxbase growth is retained within local government.
- Reality was that pre 2008 developers did not argue much about developer contributions/106 requests because the values and viability of their sites were generally rising. A big impact on viability was the time a development spent in planning – it was cheaper for them just to agree to the contributions/ s106 than spend time arguing. Developers as we all know just stopped building in some areas because the viability just wasn’t there. Lowest level of housebuilding now for around 100 years SO developers are less likely to accept unreasonable developer contribution requests as they are closer to the viability threshold in uncertain times. They will not bring the site forward – you will not be able to realise your local plan/core strategy. In addition, the legislation has changed for s106’s, there are not only policy tests in the NPPF and the legal tests introduced by the 2010 CIL regs. There are more and more appeal decisions where s106’s are not considered reasonable. Post April 2015 – no pooling of 5 or more projects or types of infrastructure. So where does that leave you – you need to be able to evidence why a developer contribution through s106meet the tests and m ake sure they are not affected by pooing restriction . – see next slide
- For development capable of being charged CIL– Not for other s106 obligations e.g. affordable housing, habitats except infrastructure for habitats ( visitor centre) The Community Infrastructure Levy regulations 2010 (as amended): Limitation on use of planning obligations 122.—(1) This regulation applies where a relevant determination is made which results in planning permission being granted for development. (2) A planning obligation may only constitute a reason for granting planning permission for the development if the obligation is— (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. (1) NPPF: 204. Planning obligations should only be sought where they meet all of the following tests: ●necessary to make the development acceptable in planning terms; ● directly related to the development; and ● fairly and reasonably related in scale and kind to the development. 205. 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.
- Have you done an audit? Do you know how many s106 you have had in the past and for what ‘types’ of development? The pooling restriction will force authorities to become more project specific ( the down side is that you will need to spend it on the project – or give it back – so you need to be sure that that is the appropriate project.
- After 1 April 2015, you will not be able to have a planning obligation as a reason for granting / refusing planning permission where you have already pooled 5 or more of the same obligation. You may be in the position that you cannot mitigate a proposed scheme as you do not have a s106 or CIl mechansim with which to achieve the requirement – e.g. flood relief scheme pooling for all local development. It take a year but usually more like 18 months to get a CIL to examination. April 2015 – pooling restrictions for 5 or more s106 start. CIL regulations as amended (bold added)
- The Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992 set out the procedure for making an application to amend planning obligations, including standard forms. PPG - Paragraph: 009Reference ID: 23b-009-20140306 Can an agreed planning obligation be changed? Planning obligations can be renegotiated at any point, where the local planning authority and developer wish to do so. Where there is no agreement to voluntarily renegotiate, and the planning obligation predates April 2010 or is over 5 years old, an application may be made to the local planning authority to change the obligation where it “no longer serves a useful purpose” or would continue to serve a useful purpose in a modified way (see Section 106A of the Town and Country Planning Act 1990). In addition, Section 106BA of the 1990 Act (inserted by the Growth and Infrastructure Act 2013) allows applications to be made to modify the affordable housing requirements of any Section 106 agreement regardless of when it was signed. This review must be based on economic viability and cannot take into account other aspects of the planning consent. It addresses affordable housing requirements only. . Paragraph: 011Reference ID: 23b-011-20140306 Can there be an appeal against a refusal to change a planning obligation (Section 106 agreement)? Applications made to local planning authorities to modify a planning obligation, which pre dates April 2010 or is over 5 years old, may result in refusal or non-determination. If so, an appeal may be made. An appeal to the Planning Inspectorate under section106B of the Town and Country Planning Act (1990) must be made within 6 months of a decision by the local authority not to amend the obligation, or within 6 months starting at the 8 weeks from the date of request to amend if no decision is issued. An appeal to the Planning Inspectorate on affordable housing viability under section 106BC of the 1990 Act must be made within 6 months of a decision by the local authority not to amend the obligation, or within 6 months commencing with the date which is 28 days (35 days if the Mayor of London is involved) from date of request to amend if no decision is issued. Further guidance can be found on Gov.uk titled “Section 106 affordable housing requirements: review and appeal.”
- This can apply to any type of building that is vacant – not just residential. Only the net increase makes an affordable housing contributions
- View the changes to the practice guidance following the response to the consultation. View the government response to consultation: Section 106 Planning obligations – speeding up negotiations (Student accommodation and affordable housing contributions). View the original consultation. Changes include: Involve communities in s106 policy Does not now say public art is unnecessary More open book advice and making information available to the public Advice on discussion and negotiation encouraging early engagement – pre app Encouraging two tiers to work together Use of standardised templates More timely approach Encouraging collaborations and shared specialist Advice on negotiation and appeal Making it very clear that ministerial statements are national policy and generally minor changes throughout for clarity.
- Paragraph: 012Reference ID: 23b-012-20150326 Are there any circumstances where infrastructure contributions through planning obligations should not be sought from developers? …. Additionally local planning authorities should not seek section 106 affordable housing contributions, including any tariff-based contributions to general infrastructure pots, from developments of Starter Homes. Local planning authorities will still be able to seek other section 106 contributions to mitigate the impact of development to make it acceptable in planning terms, including addressing any necessary infrastructure. Revision date: 26 03 2015
- The aim is to allow local authorities to raise funds from developers to fund a wide range of infrastructure that is needed as a result of new development. Almost all development has some impact on the need for infrastructure, services and amenities, so it should contribute to the cost. Planning Act says that authorities can only spend CIL on providing infrastructure to support the development of their areas: “Infrastructure” legally includes (so the list in the Act is not exhaustive): flood defence, open space, recreation and sport, roads and transport facilities, education and health facilities CIL Regulations 2010 removed affordable housing, which will continue to be funded by S106s Localism Act clarifies that CIL can be spent on the ongoing costs of providing infrastructure (Maintenance, Operational and Promotional); Update: Act - 2008 CIL Regulations – April 2010 Last regulations update – Feb 2014 Statutory guidance now contained in NPPG - http://planningguidance.planningportal.gov.uk/blog/guidance/community-infrastructure-levy/ Localism Act 2011
- NOTE: Neighbourhood proportion- 15% or 25% where there is a neighbourhood plan – there are broader spending tests for neighbourhood proportion.
- CIL is charged on net additional floorspace – so any floorspace that has recently been in use ( 6 months use in the last 3 years prior to pp being granted) Reg 40 11(2)contains a part that has been in lawful use for a continuous period of at least six months within the period of three years ending on the day planning permission first permits the chargeable development Will be charged on most buildings that people use – not just housing. Unlike floorspace calculations that are normally carried out in planning for CIL internal measurements are required The definition of commencement of development is the same as already exists in planning legislation. Development is to be treated as commencing on the earliest date on which any material operation begins to be carried out on the relevant land. The Index is the : The All- in tender price index of construction cost published by Building cost information service of the RICS The collecting authority issue a liability notice setting out the requirements to pay the levy and encourages someone to assume liability – ultimately the owner of the land is liable – the liability transfers when the land is sold – the liability runs with the land. Existing permissions will never be caught. Nor will any permission granted before a charging schedule is brought into effect locally
- CIL will apply to all development that has been granted planning permission either through a planning application, permitted development, Local development order, neighbourhood development order, parliament etc. It does not include development where planning permission is granted for a limited period. All buildings that people normally go into over 100 sq m or single dwelling even if less than 100 sq m. All measurement are internal. A final net charge of £50 or less will not be collected. CIL will apply to all developments in an area not just ones selected by the authority. However, it may be that the authority give some developments a zero rate which will have been justified by viability evidence.
- Tariffs and pooling inoperable from 6 April 2015 (but not re. Crossrail) to allow transitional arrangements ( although many tariffs have failed to meet the s106 tests since 2010 Regs introduced); Existing permissions will never be caught. Nor will any permission granted before a charging schedule is brought into effect locally; Under powers in the Planning Act, the CIL Regulations change the use of planning obligations (Section 106) by: Making statutory the Circular 5/05 policy tests governing the use of planning obligations for permissions involving buildings, from April 2010 (Reg 122) Preventing double charging via s106 for infrastructure to be funded from CIL, from the point at which CIL is introduced (Reg 123(2)) GPDO development liable from 6 April 2013;
- Nearly all development - Net additional floor space of buildings that people use – exceptions, self build houses, annexes and extensions; social housing, charities and charity exceptions that you can decide whether to give (Investment state aid) Does not include changes of Use e.g. barn conversions. Buildings that exist and are being demolished are taken off the overall level of floor space.- This is limited to buildings that have been used for 6 months in the last 3 years (Reg 40, 11 (2))contains a part that has been in lawful use for a continuous period of at least six months within the period of three years ending on the day planning permission first permits the chargeable development. You do not need to be specific about your infrastructure when you are setting your charging schedule although changes to the guidance seek to ensure that there is a clear thread running through from your plan, to your infrastructure evidence, to your draft CIL spending list ( REG 123) to your final list. You should have infrastructure planning from your core strategy/Local plan – this will be the basis of you calculating your Infrastructure gap. The guidance says that you should use your development plan to identify infrastructure and ultimately CIL spending. The level of gap will be way above the viable level of setting the CIL. You will need to look at the level of viability for all your uses – the temptation is to concentrate on housing – the level you then try to set may have some unintended consequences for other uses. You cannot just set a nil rate for uses because you don’t want to bother about them or you want to encourage them as this would look like state aid. You need to be able to justify your rate – it should be evidence based. The uses that you should concentrate on are the ones that are important for you to deliver as part of your plan CIL gives developers certainty- they can build it in to their purchase price of land or sites ( however, a note of caution, there are sites with higher existing use values that might not come forward)
- This plan should identify the overall scale of development anticipated for the plan period; or you can work on a local plan and CIL in tandem. It is possible to progress a CIL to examination without a development plan – however you need to have all the relevant evidence much of which you will have for your plan. See PAS paper- http://www.pas.gov.uk/web/pas1/3-community-infrastructure-levy-cil/-/journal_content/56/332612/6747702/ARTICLE The CIL examination is not expected to re-open the soundness of an adopted DPD or any infrastructure planning that underpins it :- Paragraph: 016Reference ID: 25-016-20140612…. Information on the charging authority area’s infrastructure needs should be drawn from the infrastructure assessment that was undertaken as part of preparing the relevant Plan (the Local Plan in England, Local Development Plan in Wales, and the London Plan in London). .. The Community Infrastructure Levy examination should not re-open infrastructure planning issues that have already been considered in putting in place a sound relevant Plan.
- DUTY to strike a balance The desirability of funding from CIL (in whole or in part) the actual and expected total cost of infrastructure to support the development of the area… …taking into account other actual and expected sources of funding for local infrastructure; and The potential effects (taken as a whole) of the imposition of CIL upon the economic viability of development across its area. London boroughs, in having regard to economic viability, must consider any approved Mayoral CIL.
- NPPG- Paragraph: 019Reference ID: 25-019-20140612) CAs decide how to present their appropriate available evidence on the potential effect of CIL on economic viability and show how that has informed the charge rate(s); This is unlikely to be comprehensive or exhaustive – a reasonable and pragmatic approach, not ‘rocket science’; Should use area-based approach involving a broad test of viability across their area - with where appropriate some sampling of sites; ( Strategic approach and should not be focussed on specific development sites unless that is a strategic site and you are sure you will not fall foul of state aid rules No requirement to use any of the valuation and viability models available, but it may assist in defending CIL rates; Regulation 14 recognises that the CIL rate set may put some development at risk – this is a judgement for the CA: A CA must look at the potential effects of charges “taken as a whole” on the viability of development “across its area”. Evidence may show that proposed rates may make a particular development on any given site unviable But, unless that development threatens the delivery of the plan as a whole the duty ( appropriate balance) in Reg 14 may still be met Can recoup up to 5% admin
- CAs may set differential rates of CIL (Reg 13): Differential rates 13.— (1) A charging authority may set differential rates— (a) for different zones in which development would be situated; (b) by reference to different intended uses of development. (c) by reference to the intended gross internal area of development; (d) by reference to the intended number of dwellings or units to be constructed or provided under a planning permission. (2) In setting differential rates, a charging authority may set supplementary charges, nil rates, increased rates or reductions. In any case only if the rates are based on the economic viability evidence Rates by intended use are not constrained to Use Classes – e.g. by Greenfield Brownfield, if supported by evidence. Geographical zones boundaries should reflect the evidence and not only administrative convenience. Caution is needed in setting differential rates: Selective advantage to a particular sector or group needs to be avoided to minimise risk of notifiable State aid (under EU competition law) – this is the responsibility of the CA; It is harder to ensure State aid compliance where rate patterns are complex - be consistent in the way evidence on viability informs the treatment of a category or zone CAs should not set ‘zero rates’ or ‘exempt’ any category of development or area unless this is genuinely supported by evidence. Charge rates should not impact disproportionately on any particular sector or small group of developers (Paragraph: 021Reference ID: 25-021-20140612) A charging authority that plans to set differential rates should seek to avoid undue complexity. Charging schedules with differential rates should not have a disproportionate impact on particular sectors or specialist forms of development. Charging authorities should consider the views of developers at an early stage.
- Differentiation allows for varying circumstances (by sector and geography) thereby protecting the bulk of development. It is also based on the decisions that the individual council takes in terms of how complicated it want to have a rate structure and how close to the ceiling of each uses/locations viability.
- When deciding on rates and differential rates it is important to decide what are the delivery priorities – and to have that in mind when making decisions. You must decide your rates based on viability and not policy e..g. you cannot actively encourage one sector by zero rating it as that is state aid. However, you can make decisions about how close to the viability ceiling and how much differentiation you make. How much risky for how much extra CIL income?
- NPPG- Social housing- Paragraph: 122Reference ID: 25-122-20140612 Charities - Paragraph: 110Reference ID: 25-110-20140612 Self build - Paragraph: 135Reference ID: 25-135-20140612 Instalments - Paragraph: 047Reference ID: 25-047-20140612 ‘………If a charging authority wishes to set its own levy payment deadlines and/or offer the option of paying by instalments […], it must publish an instalments policy on its website and make it available for inspection at its principal offices. If the charging authority wishes to publish a new instalments policy, or withdraw the policy, it must give at least 28 days notice before the new policy takes effect and/or old policy is withdrawn. Some planning permissions may be implemented in phases, in which case charges may be payable over an extended period of time (see more information on phased payments).’ Instalments - Paragraph: 055Reference ID: 25-055-20140612 .
- Execeptional circumstances: Paragraph: 129Reference ID: 25-129-20140612 What is exceptional circumstances relief? Charging authorities may offer relief from the levy in exceptional circumstances where a specific scheme cannot afford to pay the levy. A charging authority wishing to offer exceptional circumstances relief in its area must first publish a notice of its intention to do so. A charging authority can then consider claims for relief on chargeable developments from landowners on a case by case basis, provided the conditions set out in Regulation 55 (as amended by the 2013 and 2014 Regulations) are met: a section 106 agreement must exist on the planning permission permitting the chargeable development and the charging authority must consider that paying the full levy would have an unacceptable impact on the development’s economic viability and the relief must not constitute a notifiable state aid Relief must not constitute notifiable state aid – so would not work for most big developers. CA can decide whether or not to give exemption to make it viable. The Charging Authority can decide to turn exceptional circumstances on and off at any time For exceptional circs it does not issue a policy, but simply issues a statement that it is offering exceptional circumstances ( E.C.) relief and the date on which it is offering relief. If it wishes to withdraw its offer of E. C. relief it must give a statement to the effect and stating the last day on which the collecting authority will accept claims for relief. This date must be at least 14 days after the date the statement is issued. (This provision is contained within Regulation 56 of the CIL Regulations 2010.)
- Payment in Kind – NPPG - Paragraph: 061Reference ID: 25-061-20140612 Under what conditions may a land or infrastructure agreement be entered into? - Paragraph: 062Reference ID: 25-062-20140612 Where a charging authority chooses to adopt a policy of accepting infrastructure payments, they must publish a policy document which sets out conditions in detail. This document should confirm that the authority will accept infrastructure payments and set out the infrastructure projects, or types of infrastructure, they will consider accepting as payment (this list may be the same list provided for the purposes of Regulation 123). Before a land payment agreement is entered into, relevant charging authorities must be satisfied that the criteria in Regulation 73 (as amended) are met. Similarly, before entering into an infrastructure payment agreement, they must be satisfied that the criteria in Regulation 73A (inserted by the 2014 Regulations) are met. Where the levy is to be paid as land or infrastructure, a land or infrastructure agreement must be entered into before development commences. This must include the information specified in Regulation 73A. Paragraph: 063Reference ID: 25-063-20140612- Land that is to make up a payment in kind may contain existing buildings and structures. Land or infrastructure must be valued by an independent valuer who, in the case of land, will ascertain its ‘open market value’, and in the case of infrastructure the cost (including related design cost) to the provider. This will determine how much liability the ‘in-kind’ payment will off-set. Payments in kind must be provided to the same timescales as cash payments, or otherwise on an agreed basis, subject to the provisions in the regulations and any other state aid considerations. View further details about state aid. Land and infrastructure may be given to charging authorities in instalments, in the same way as cash can be given in instalments. The same rules on payment periods apply. Paragraph: 064Reference ID: 25-064-20140612 Payments in kind may only be made with the agreement of the liable party, the charging authority, and any other relevant authority that will need to assume a responsibility for the land or infrastructure. Authorities must refer back to the relevant regulations (including Regulations 73, as amended, and 73A) when considering adopting a policy on accepting payments in kind and in considering entering into and in drawing up relevant land or infrastructure agreements. Please note: Reg 73A – 7 (b) it is satisfied that the infrastructure to be provided— (i) is relevant infrastructure, and (ii) is not necessary to make the development granted permission by the relevant permission acceptable in planning terms;
- It is advisable to publish a list of the infrastructure you intend to use CIL for (Reg 123 list) – If you don’t you cannot collect s 106 for anything. We will look at the requirements associated with a Reg 123 list next. NPPG spending - Paragraph: 071Reference ID: 25-071-20140612
- Double dipping – is where the developer is paying for infrastructure through s 106 and also through CIL. The regulation 123 list has always stopped this from happening but developers were still concerned and felt that it was too loose and that double dipping would happen – to address these concerns there has been a tightening of the guidance around regulation 123 list an a clear thread clarifies what CIL is to be spent on.
- The new CIL guidance has modified importance and use of the Regulation 123. Firstly there is more information and restrictions on producing the 123 list. One of the most important principles introduced by the new Guidance is what we refer to a the Golden Thread between the Local Plan and the Reg 123 list and CIL collection and investment process.
- Consideration should be given to the implications of receiving CIL financial payments instead of s106 on the councils resources to deliver.
- Localism Act 2011 Nick Boles announcement January 2013
- NPPG - Paragraph: 072Reference ID: 25-072-20140612 What is the neighbourhood portion of the levy? Fifteen per cent of Community Infrastructure Levy charging authority receipts are passed directly to those Parish and Town Councils (in England) and Community Councils (in Wales) where development has taken place (see Regulation 59A for details). Where chargeable development takes place within the local council area, up to £100 per existing council tax dwelling can be passed to the Parish, Town or Community Council (see Regulation 58A for details) this way each year to be spent on local priorities (see Regulation 59C for details). Areas could use some of the neighbourhood pot to develop a neighbourhood plan where it would support development by addressing the demands that development places on the area. In England, communities that draw up a neighbourhood plan or neighbourhood development order (including a community right to build order), and secure the consent of local people in a referendum, will benefit from 25 per cent of the levy revenues arising from the development that takes place in their area. This amount will not be subject to an annual limit. For this to apply, the neighbourhood plan must have been made (see section 61E of the Town and Country Planning Act 1990 as applied to neighbourhood plans by section 38C of the Planning and Compulsory Purchase Act 2004) before a relevant planning permission first permits development (as defined by Regulation 8, as amended by the 2011 Regulations and the 2014 Regulations of the Community Infrastructure Levy Regulations). This higher amount will also apply when the levy is paid in relation to developments which have been granted permission by a neighbourhood development order (including a community right to build order) (see related guidance here). Neighbourhood planning does not apply in Wales, so neither does the enhanced neighbourhood funding element linked to it.
- With the changes to the regs and guidance it is now important to work out what you will spend CIL on and what you will seek s106 from. This has implications for the rates that you develop. CIL is only one potential source of infrastructure funding and will not pay for all the infrastructure necessary to support your plan. Thin early about how it may work with other funding streams to aid growth – which with then contribute to future earning. The s 106 vs CIL decision is based on local circumstance – ask officers to set out the pros and cons for your area and type of development. Pulling together or match funding with parishes may deliver better infrastructure that supports the local community – ward councillors can play a vital role in working with communities to determine funding of local infrastructure.
- Is CIL right for you? – With the pooling limitation coming in in April 2015 CIL likely to be essential for most authorities as without it there will be no mechanism to event mitigate the impact of some sites. Suitability of CIL may depend on the type of development you are expecting in your area. Are you expecting any development at the moment- Do you have any development viability in your area? – if so what for? Will it be worth doing? Do you need to be ready when things pick up? How much s106 will you lose from non pooling of s 106. Will s 106 still suit you better?
- You need to make the decision about what you seek from CIL when you are planning your CIL – you should consult on a draft CIL Infrastructure list ( Reg 123 list). Your officers should be discussing infrastructure delivery with developers to determine the most effective way of delivery- some infrastrcuture may be considered by the developer ( and the council) to be best provided by them –e.g. mains services, open space or mitigation through s 106 obligations or through CIL (more strategic). The cost of all methods of infrastructure delivery need to be considered as part of the viability of development and the CIL setting process. You will not be able to use a planning obligation as a reason for granting consent when you have already entered into 5 or more contributions ( adopting of CIL or after April 2015- whichever is sooner)– even now the wording of s 106 agreements is important as year zero is April 2010. Reg 123 - 3) A planning obligation Other than through requiring a highway agreement to be entered into, (“obligation A”) may not constitute a reason for granting planning permission to the extent that— (a) obligation A provides for the funding or provision of an infrastructure project or provides for the funding or provision of a type of infrastructure; and (b) five or more separate planning obligations that— (i) relate to planning permissions granted for development within the area of the charging authority; and (ii) which provide for the funding or provision of that project, or provide for the funding or provision of that type of infrastructure, have been entered into before the date that obligation A was entered into on or after 6th April 2010.
- When setting up procedures remember that circumstances change – make sure the arrangements can be flexible enough to take on board changes. E.g. windfall site of 2000 units and business development comes in on a former MOD site. Ideally you would like to collect the CIL but you know that this site will need a lot of on site facilities – schools, POS, community facilities and you think these should be provided through s106. changing the reg 123 – CIL spending list – has become more difficult but it is still flexible. In the management of Cil this is a corporate matter – all those involved in collection and spending should understand it and be clear of their role. Do you have regular meeting with neighbouring authorities or with utilities – do you have a Local Strategic partnership? What do you need to set up to discuss delivery of the infrastructure you need for development of your area – even if you are relying on someone else to provide it. What mechanisms or agreements do you need to put in place? This is all new to most authorities – the idea of giving money to another body rather that using for services/facilites that are provided by you.
- You need a plan Infrastructure planning – you should have this as part of the local plan/ core strategy process. CIL is not asking you to redo things unless they are out of date. Viability – what evidence does the authority have already – can this be reused The guidance requires you to talk to County councils and developers – try to understand their issues and seek information from them Talk to your communities/parishes - what would help them accept development – what are their priorities How can you work with them to provide infrastructure.