● Developer Contributions – Community Infrastructure Levy (CIL) & S106 obligations

● New Homes Bonus

October 2012Town & Parish Council Conference, Peacehaven

1 Developer and other contributions

• S106 obligations

• Community Infrastructure Levy (CIL)

• Highway contributions (s38 and s278 Highways Act)

2 S106 Obligations

• S106 is not replaced by CIL

• Old reality – pre 2008

• New reality-post 2008: Times have changed – viabilityTimes have changed - legislation

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)

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

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 PlanningAuthority via a CIL Charging Schedule

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)

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

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

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

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

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’

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 economicviability of development across thearea.

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.

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)

15 Emerging CIL rates from frontrunner authorities

Housing Retail Offices

LB Westminster

LB Redbridge

Portsmouth

Newark & Sherwood

Colchester

LB Croydon

Mid Sussex

Wealden

£200 - £560

£70

£105

£60 - £75

£120

£120

£150 - £235

£110 - £180

£560

£70

£53

£100

£90 - £240

£120

£0 - £100

£20 - £100

£200 - £400

£70

£0

£0

£0

£20

£0

£0

All figures £ per square metre internal floorspace

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

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)

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

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)

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.

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

• 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.

22 Questions?