Planning Matters Spring 2008

Community Infrastructure Levy - It is coming! 
The current timetable is to issue the draft regulations for consultation in autumn this year and finalise them around spring 2009 to bring the whole system to life (provided the bill has survived which it won’t if there is a change of Government before the autumn)!  The vociferous opposition to the previous proposals, the Planning Gain Supplement, seem to have melted away.  Or is it that the development industry has bowed to the inevitable and is now just going to make the best of it?

It will be some time before any actual levies are demanded.   Local authorities have to decide whether to take up the charge and if they do, have to set about identifying development in the local plan period and the associated infrastructure. Once identified, delivery and funding strategies for each item will have to be produced.   CIL is not expected to fund infrastructure in its entirety but because it will apply with few exceptions (such as householder development) it is expected to raise contributions that at the moment are not caught by the system.

Current funding sources including the new Regional Infrastructure Funds will still be on stream.   It is intended that CIL will be paid on implementation, but there is a power for phased payments.   Actual calculation of the amount due can only be done once most details of the development have emerged.  The aim is to make the system more transparent and certain than the current negotiation of planning agreements on a site-by-site basis.  But CIL will put the actual quantification of contribution well beyond the issue of outline consent.

The legislation makes it clear that the aim is to ensure that costs incurred in providing infrastructure for development can be funded (wholly or partly) from the uplift in value of land due to the grant of planning permission (Section 174). Regulations will ensure it is not set at a level which inhibits development. The examples given, Horley and Milton Keynes, where rooftax tariffs have successfully enabled forward funding of infrastructure and are clearly largely greenfield, uncontaminated sites.  Substantial uplifts are expected from unlocking the development potential.   The usefulness of CIL in more difficult areas may be more problematic.  It may be that in these areas, the work necessary to set up CIL and the prospect of catching some value from small sites, may help to galvanise public sector bodies in drawing up funding strategies even if CIL pays only a small part.

It is at the sub regional level that CIL may really shine.  Provision of hospitals, secondary education, new bypasses and motorway junctions may well benefit from the pooling of CIL contributions over a wider area. Problem areas will still benefit from such infrastructure even if they have made few contributions.

There seem to be two key questions: how can local authorities be sure at the time they grant planning consent that the necessary infrastructure will be provided in a timely fashion?  What if there is a slowdown in housing starts which will delay CIL contributions? As a matter of public law, councils need to know that mitigation will be in place in line with the application proposals or Environmental Impact Assessment. Attaching a Grampian condition preventing development until the item is provided, will not be acceptable if the developer does not control the delivery.  

Similarly, the developer will not invest large sums unless it is certain that schools and other major infrastructure, whether on or off site, will be coming forward.   One solution may be to enlist the aid of one of the existing bodies such as RDAs or English Partnerships to forward fund the infrastructure, recouping the cost from CIL in due course. 

Alternatively, the developer may fund certain items in exchange for a reduction in other contributions.  In other words, a Section 106 agreement may give the developer the opportunity to fund and control the delivery of certain infrastructure on the basis that affordable housing or some other element becomes a CIL item in its place. There will clearly be a great opportunity for development bodies, both public and private, to work together with CIL providing an additional element of flexibility.

While details of the project are still being ironed out it is difficult to know what drafting changes are needed to basic planning and development documents. How can a developer avoid being double charged?   Should contracts require a developer to be reimbursed if he agrees to provide infrastructure which will clearly be on the CIL list?   How long should Councils be able to sit on money before it is returned to the paying party or should they be allowed a rolling programme where no specific contribution is earmarked for a specific purpose?  

We are advising our clients on how to protect themselves in long-term contracts in view of the current uncertainties.   If you would like to know please contact john.moritz@cobbbetts.com