Development Viability and Delivering Infrastructure Gilian Macinnes June 2019 19/09/2019

Delivering Growth with Infrastructure (& Affordable Housing) 19/09/2019

Planning for Infrastructure What is the type and quantum of your growth? How will you deliver your growth- with infrastructure? Local plan policies requiring delivery? funding? Site specific policies Topic specific policies– e.g. transportation, digital What are your priorities? How will you deliver priorities? Infrastructure Funding Statement 19/09/2019

Affordable Housing and Infrastructure The cake is only so big…. 19/09/2019

Economic viability of a scheme The fundamental issue in considering viability assessments in a town planning context is whether an otherwise viable development is made unviable by the extent of planning obligations or other requirements. Source: ‘Financial Viability in Planning’, RICS

National Planning Policy Framework (NPPF 2) ‘Plans should set out the contributions expected from development. This should include setting out the levels and types of affordable housing provision required, along with other infrastructure (such as that needed for education, health, transport, flood and water management, green and digital infrastructure). Such policies should not undermine the deliverability of the plan.’ (para. 34) ‘Where up-to-date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. It is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage. The weight to be given to a viability assessment is a matter for the decision maker, having regard to all the circumstances in the case, including whether the plan and the viability evidence underpinning it is up to date, and any change in site circumstances since the plan was brought into force. All viability assessments, including any undertaken at the plan- making stage, should reflect the recommended approach in national planning guidance, including standardised inputs, and should be made publicly available.’ (para.57)

What is Viability ?– NPPF/PPG 2019 Viability assessment is a process of assessing whether a site is financially viable, by looking at whether the value generated by a development is more than the cost of developing it. This includes looking at the key elements of gross development value, costs, land value, landowner premium, and developer return. Paragraph: 010 Reference ID: 10-010-20180724 Planning Obligations PPG Are planning obligations negotiable? Yes. Plans should set out the contributions expected from development towards infrastructure and affordable housing. Where up to date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. Planning obligations can provide flexibility in ensuring planning permission responds to site and scheme specific circumstances. Where planning obligations are negotiated on the grounds of viability it is up to the applicant to demonstrate whether particular circumstances justify the need for viability assessment at the application stage. The weight to be given to a viability assessment is a matter for the decision maker. Paragraph: 010 Reference ID: 23b-010-20190315 Revision date: 15 03 2019

Returns & Risk v Maximum Benefit in the Public Interest In plan making and decision making viability helps to strike a balance between the aspirations of developers and landowners, in terms of returns against risk, and the aims of the planning system to secure maximum benefits in the public interest through the granting of planning permission. Paragraph: 010 Reference ID: 10-010-20180724 Are planning obligations negotiable? Yes. Plans should set out the contributions expected from development towards infrastructure and affordable housing. Where up to date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. Planning obligations can provide flexibility in ensuring planning permission responds to site and scheme specific circumstances. Where planning obligations are negotiated on the grounds of viability it is up to the applicant to demonstrate whether particular circumstances justify the need for viability assessment at the application stage. The weight to be given to a viability assessment is a matter for the decision maker. Paragraph: 010 Reference ID: 23b-010-20190315 Revision date: 15 03 2019 19/09/2019

What planning viability is not: Site value/market value –based on price paid transactions that do not deliver the planning policies and do meet the policy costs Market value – transactions – what the fool is prepared to pay Paragraph: 010 Reference ID: 10-010-20180724

NPPF 2019 & PPG 2019 viability Creates an approach : Proportionate, Simple, transparent & publicly available

The Residual Valuation based approach Step 1: Gross Development Value (The combined value of the complete development) LESS Cost of creating the asset, including a profit margin (Construction + fees + finance charges + Developer’s Profit, CIL, s106, CfSH etc.)  = RESIDUAL VALUE   Step 2: Residual Value v Existing Use Value Note: Identify the plus + EUV or Current Use Value (CUV) (make sure it is for the lawful use) or Alternative Use Value (AUV) Plus + = Threshold or benchmark land value. BLV> EUV = viable Describe the two stage process applied to the Local Plan. GDV should include things like grant. GDV can be area-wide or site specific. Residual value tells you nothing in itself in order to viability test the residual you need to compare it to the EUV. This is where professional judgment needs to be made, it is not a calculation. In terms of the quality of your inputs it is not difficult to agree prices with developers - if this is not done then we have reservations about the robustness of the evidence. Courtesy of HDH planning

Viability – Plan making When?- site selection, creation of policy (and developing CIL) Engagement and collaboration with site owners/ promoters/ developers Understand infrastructure requirements and costings Iterative process SHLAA /SHELAA- Are the sites viable ?– Is there enough of a premium? - Have the promoters taken into account all costs including infrastructure, abnormal costs & full compliance with existing/proposed policy ? Whole plan viability – typology based, sampling & strategic site assessment CIL/s 106 viability Standardised methodology How should plan makers and site promoters ensure that policy requirements for contributions from development are deliverable? The role for viability assessment is primarily at the plan making stage. Viability assessment should not compromise sustainable development but should be used to ensure that policies are realistic, and that the total cumulative cost of all relevant policies will not undermine deliverability of the plan. It is the responsibility of plan makers in collaboration with the local community, developers and other stakeholders, to create realistic, deliverable policies. Drafting of plan policies should be iterative and informed by engagement with developers, landowners, and infrastructure and affordable housing providers. Policy requirements, particularly for affordable housing, should be set at a level that takes account of affordable housing and infrastructure needs and allows for the planned types of sites and development to be deliverable, without the need for further viability assessment at the decision making stage. It is the responsibility of site promoters to engage in plan making, take into account any costs including their own profit expectations and risks, and ensure that proposals for development are policy compliant. The price paid for land is not a relevant justification for failing to accord with relevant policies in the plan. Paragraph: 002 Reference ID: 10-002-20180724

Viability for Plan making Based on typologies Important that the typologies at plan making represent those likely to come forward at planning applications stage Important that infrastructure costs are inputs into the viability assessment to calculate benchmark land value

Gross Development Value Aff Housing, enviro, design, etc All income from a Scheme CIL, S106 Aff Housing, enviro, design, etc Construction Site Remediation Abnormals Etc. Fees Design Engineer Sales Etc. Profit Developers Builders Land Existing / Alternative Land Value + uplift

PPG - Standard Method- Standard Income -3 elements Market Housing Affordable Housing Other Uses

PPG – Standard Method- Standard Costs-7 headings + 1 extra build costs abnormal costs site-specific infrastructure costs cost of all relevant policy requirements including contributions towards affordable housing and infrastructure, Community Infrastructure Levy charges, and any other relevant policies or standards finance fees contingency + developer’s return How should costs be defined for the purpose of viability assessment? Assessment of costs should be based on evidence which is reflective of local market conditions. As far as possible, costs should be identified at the plan making stage. Plan makers should identify where costs are unknown and identify where further viability assessment may support a planning application. Costs include: build costs based on appropriate data, for example that of the Building Cost Information Service abnormal costs, including those associated with treatment for contaminated sites or listed buildings, or costs associated with brownfield, phased or complex sites. These costs should be taken into account when defining benchmark land value site-specific infrastructure costs, which might include access roads, sustainable drainage systems, green infrastructure, connection to utilities and decentralised energy. These costs should be taken into account when defining benchmark land value the total cost of all relevant policy requirements including contributions towards affordable housing and infrastructure, Community Infrastructure Levy charges, and any other relevant policies or standards. These costs should be taken into account when defining benchmark land value general finance costs including those incurred through loans professional, project management, sales, marketing and legal costs incorporating organisational overheads associated with the site. Any professional site fees should also be taken into account when defining benchmark land value explicit reference to project contingency costs should be included in circumstances where scheme specific assessment is deemed necessary, with a justification for contingency relative to project risk and developers return See related policy: National Planning Policy Framework paragraph 57 Paragraph: 012 Reference ID: 10-012-20180724 Revision date: 24 07 2018

Developer return (Profit) Plan making PPG – Profit - 15-20% Alternative figures- require evidence – scale & risk profile Site specific – assess -scale & risk profile “Potential risk is accounted for in the assumed return for developers at the plan making stage. It is the role of developers, not plan makers or decision makers, to mitigate these risks…” Paragraph: 018 Reference ID: 10-018-20180724 How should a return to developers be defined for the purpose of viability assessment? Potential risk is accounted for in the assumed return for developers at the plan making stage. It is the role of developers, not plan makers or decision makers, to mitigate these risks. The cost of fully complying with policy requirements should be accounted for in benchmark land value. Under no circumstances will the price paid for land be relevant justification for failing to accord with relevant policies in the plan. For the purpose of plan making an assumption of 15-20% of gross development value (GDV) may be considered a suitable return to developers in order to establish the viability of plan policies. Plan makers may choose to apply alternative figures where there is evidence to support this according to the type, scale and risk profile of planned development. A lower figure may be more appropriate in consideration of delivery of affordable housing in circumstances where this guarantees an end sale at a known value and reduces risk. Alternative figures may also be appropriate for different development types. See related policy: National Planning Policy Framework paragraph 57 Paragraph: 018 Reference ID: 10-018-20190509 Revision date: 09 05 2019 See previous version

Existing Use Value ... EUV is the value of the land in its existing use. Existing use value is not the price paid and should disregard hope value. Existing use values will vary depending on the type of site and development types. EUV can be established in collaboration between plan makers, developers and landowners by assessing the value of the specific site or type of site using published sources of information such as agricultural or industrial land values, or if appropriate capitalised rental levels at an appropriate yield (excluding any hope value for development). Paragraph: 015 Reference ID: 10-015-20190509 What is meant by existing use value in viability assessment? Existing use value (EUV) is the first component of calculating benchmark land value. EUV is the value of the land in its existing use. Existing use value is not the price paid and should disregard hope value. Existing use values will vary depending on the type of site and development types. EUV can be established in collaboration between plan makers, developers and landowners by assessing the value of the specific site or type of site using published sources of information such as agricultural or industrial land values, or if appropriate capitalised rental levels at an appropriate yield (excluding any hope value for development). Sources of data can include (but are not limited to): land registry records of transactions; real estate licensed software packages; real estate market reports; real estate research; estate agent websites; property auction results; valuation office agency data; public sector estate/property teams’ locally held evidence. See related policy: National Planning Policy Framework paragraph 57 Paragraph: 015 Reference ID: 10-015-20190509 Revision date: 09 05 2019 See previous version Previously: Existing use value (EUV) is the first component of calculating benchmark land value. EUV is the value of the land in its existing use together with the right to implement any development for which there are policy compliant extant planning consents, including realistic deemed consents, but without regard to alternative uses. Existing use value is not the price paid and should disregard hope value. Existing use values will vary depending on the type of site and development types. EUV can be established in collaboration between plan makers, developers and landowners by assessing the value of the specific site or type of site using published sources of information such as agricultural or industrial land values, or if appropriate capitalised rental levels at an appropriate yield. Sources of data can include (but are not limited to): land registry records of transactions; real estate licensed software packages; real estate market reports; real estate research; estate agent websites; property auction results; valuation office agency data; public sector estate/property teams’ locally held evidence.-2018 PPG 10-015

Land Value - Benchmark Land Value Benchmark Land Value – EUV + - Existing Use Value plus a premium The premium – minimum return at which a reasonable land owner would sell. The Premium – is the incentive in comparison with other options available ( e.g. …?) Iterative processive – collaboration Any data used should reasonably identify any adjustments necessary to reflect the cost of policy compliance (including for affordable housing), or differences in the quality of land, site scale, market performance of different building use types and reasonable expectations of local landowners. How should the premium to the landowner be defined for viability assessment? The premium (or the ‘plus’ in EUV+) is the second component of benchmark land value. It is the amount above existing use value (EUV) that goes to the landowner. The premium should provide a reasonable incentive for a land owner to bring forward land for development while allowing a sufficient contribution to fully comply with policy requirements. Plan makers should establish a reasonable premium to the landowner for the purpose of assessing the viability of their plan. This will be an iterative process informed by professional judgement and must be based upon the best available evidence informed by cross sector collaboration. Market evidence can include benchmark land values from other viability assessments. Land transactions can be used but only as a cross check to the other evidence. Any data used should reasonably identify any adjustments necessary to reflect the cost of policy compliance (including for affordable housing), or differences in the quality of land, site scale, market performance of different building use types and reasonable expectations of local landowners. Policy compliance means that the development complies fully with up to date plan policies including any policy requirements for contributions towards affordable housing requirements at the relevant levels set out in the plan. A decision maker can give appropriate weight to emerging policies. Local authorities can request data on the price paid for land (or the price expected to be paid through an option or promotion agreement). See related policy: National Planning Policy Framework paragraph 57 Paragraph: 016 Reference ID: 10-016-20190509 Revision date: 09 05 2019 See previous version To define land value for any viability assessment, a benchmark land value should be established on the basis of the existing use value (EUV) of the land, plus a premium for the landowner. The premium for the landowner should reflect the minimum return at which it is considered a reasonable landowner would be willing to sell their land. The premium should provide a reasonable incentive, in comparison with other options available, for the landowner to sell land for development while allowing a sufficient contribution to fully comply with policy requirements. Landowners and site purchasers should consider policy requirements when agreeing land transactions. This approach is often called ‘existing use value plus’ (EUV+). In order to establish benchmark land value, plan makers, landowners, developers, infrastructure and affordable housing providers should engage and provide evidence to inform this iterative and collaborative process. Paragraph: 013 Reference Reference ID: 10-013-20190509 Previously: The premium (or the ‘plus’ in EUV+) is the second component of benchmark land value. It is the amount above existing use value (EUV) that goes to the landowner. The premium should provide a reasonable incentive for a land owner to bring forward land for development while allowing a sufficient contribution to comply with policy requirements. Plan makers should establish a reasonable premium to the landowner for the purpose of assessing the viability of their plan. This will be an iterative process informed by professional judgement and must be based upon the best available evidence informed by cross sector collaboration. For any viability assessment data sources to inform the establishment the landowner premium should include market evidence and can include benchmark land values from other viability assessments. Any data used should reasonably identify any adjustments necessary to reflect the cost of policy compliance (including for affordable housing), or differences in the quality of land, site scale, market performance of different building use types and reasonable expectations of local landowners. Local authorities can request data on the price paid for land (or the price expected to be paid through an option agreement). Paragraph: 016 Reference ID: 10-016-20180724 Revision date: 24 07 2018

Benchmark Land value-EUV+ - collaborative process …In order to establish benchmark land value, plan makers, landowners, developers, infrastructure and affordable housing providers should engage and provide evidence to inform this iterative and collaborative process. Paragraph: 013 Reference ID: 10-013-20180724 Collaborate process needs to be based on standardised methodology – comparable physical and policy compliant sites (not price paid)

Benchmark land value should: be based upon existing use value. allow for a premium to landowners- – minimum return at which a reasonable land owner would sell. reflect the implications of abnormal costs; site-specific infrastructure costs planning policy costs (s106/CIL); and professional site fees. Existing use value should be informed by market evidence of current uses, costs and values. Market evidence can also be used as a cross-check of benchmark land value but should not be used in place of benchmark land value. In plan making, the landowner premium should be tested and balanced against emerging policies. In decision making, the cost implications of all relevant policy requirements, …should be taken into account. Excerpts from: Paragraph: 014 Reference ID: 10-014-20190509 What factors should be considered to establish benchmark land value? Benchmark land value should: be based upon existing use value allow for a premium to landowners (including equity resulting from those building their own homes) reflect the implications of abnormal costs; site-specific infrastructure costs; and professional site fees Viability assessments should be undertaken using benchmark land values derived in accordance with this guidance. Existing use value should be informed by market evidence of current uses, costs and values. Market evidence can also be used as a cross-check of benchmark land value but should not be used in place of benchmark land value. There may be a divergence between benchmark land values and market evidence; and plan makers should be aware that this could be due to different assumptions and methodologies used by individual developers, site promoters and landowners. This evidence should be based on developments which are fully compliant with emerging or up to date plan policies, including affordable housing requirements at the relevant levels set out in the plan. Where this evidence is not available plan makers and applicants should identify and evidence any adjustments to reflect the cost of policy compliance. This is so that historic benchmark land values of non-policy compliant developments are not used to inflate values over time. In plan making, the landowner premium should be tested and balanced against emerging policies. In decision making, the cost implications of all relevant policy requirements, including planning obligations and, where relevant, any Community Infrastructure Levy (CIL) charge should be taken into account. Where viability assessment is used to inform decision making under no circumstances will the price paid for land be a relevant justification for failing to accord with relevant policies in the plan. Local authorities can request data on the price paid for land (or the price expected to be paid through an option or promotion agreement). See related policy: National Planning Policy Framework paragraph 57 Paragraph: 014 Reference ID: 10-014-20190509 Revision date: 09 05 2019 See previous version Changed : be informed by market evidence including current uses, costs and values wherever possible. Where recent market evidence is used to inform assessment of benchmark land value this evidence should be based on developments which are compliant with policies, including for affordable housing. ...This is so that historic benchmark land values of non-policy compliant developments are not used to inflate values over time. How should plan makers set policy requirements for contributions from development? Plans should set out the contributions expected from development. This should include setting out the levels and types of affordable housing provision required, along with other infrastructure (such as that needed for education, health, transport, flood and water management, green and digital infrastructure). These policy requirements should be informed by evidence of infrastructure and affordable housing need, and a proportionate assessment of viability that takes into account all relevant policies, and local and national standards, including the cost implications of the Community Infrastructure Levy (CIL) and section 106. Policy requirements should be clear so that they can be accurately accounted for in the price paid for land. To provide this certainty, affordable housing requirements should be expressed as a single figure rather than a range. Different requirements may be set for different types or location of site or types of development. See related policy: National Planning Policy Framework paragraph 34 Paragraph: 001 Reference ID: 10-001-20190509 Change- ‘or locations of site' 19/09/2019

Viability assessment- in decision making? Where a viability assessment is submitted to accompany a planning application this should be based upon and refer back to the viability assessment that informed the plan; and the applicant should provide evidence of what has changed since then. The weight to be given to a viability assessment is a matter for the decision maker, having regard to all the circumstances in the case.. Paragraph: 008 Reference ID: 10-008-20190509 How should a viability assessment be treated in decision making? Where a viability assessment is submitted to accompany a planning application this should be based upon and refer back to the viability assessment that informed the plan; and the applicant should provide evidence of what has changed since then. The weight to be given to a viability assessment is a matter for the decision maker, having regard to all the circumstances in the case, including whether the plan and viability evidence underpinning the plan is up to date, and site circumstances including any changes since the plan was brought into force, and the transparency of assumptions behind evidence submitted as part of the viability assessment. Any viability assessment should reflect the government’s recommended approach to defining key inputs as set out in National Planning Guidance. See related policy: National Planning Policy Framework paragraph 34 Paragraph: 008 Reference ID: 10-008-20190509 Revision date: 09 05 2019 See previous version

Viability assessment-decision making? 3 Rules Refer back to plan-wide viability assessment. LPA to determine weight. If the LPA accept a Viability assessment it must be based on recommended approach (PPG). Standardised inputs - Compare and Contrast: Plan-wide viability assessment Developer’s appraisal Now – up to date data

Paying the right price? In buying the site (or agreeing an option) – the ‘developer’ should have taken into account all the policy costs (s106 etc) and other material considerations in what they paid. The price should be the minimum return for the reasonable landowner taking into account the policy context 19/09/2019

Mapping Growth How do you create a great place? What does this mean for your authorities infrastructure? Transportation Highways Education Social and community facililties Sports facilities etc etc 19/09/2019

Funding Infrastructure Includes: District Community facilities Sports & recreational facilities County Council 70-80% of Infrastructure to support growth Highways and transportation Education – nursery, primary, secondary, special needs YC Hertfordshire – youth work Libraries Waste management Adult social care Flood, fire etc etc Health 19/09/2019

How do you fund infrastructure ? S106 – limitations – payment – or in kind Community Infrastructure Levy S278 – highways Education – Basic needs – Education Skills and Funding Agency Health – Government funding Capital budgets Local Enterprise Partnership (LEP) Central Government funding pots received on 25 March 2019 Access to match funding? Access to Government funding 19/09/2019

It is all about delivery What is the best approach to delivering infrastructure to deliver development – s106 – CIL – s278 – a combination? Knights Park – houses, school, shops, transport -Dandara Homes 19/09/2019

So what is the best way to deliver? That depends on your circumstances… Your growth Your infrastructure What is strategic and what is not Berkeley Homes -

S106 for Infrastructure - benefits Understood by everyone Direct mitigation – addresses the site issues e.g. flooding, provision of a primary school More directly related to the value of the site On-site delivery – in kind Developer as the delivery agent https://www.legislation.gov.uk/ukpga/1990/8/section/106 When should discussions on planning obligations take place? Discussions about planning obligations should take place as early as possible in the planning process, including at the pre-application stage. This will prevent delays in finalising those planning applications which are granted subject to the completion of planning obligation agreements. Can planning obligations or heads of terms be on a local list? Local planning authorities are encouraged to inform and involve all parties with an interest in the land and relevant infrastructure providers, including county councils where appropriate, at an early stage to prevent delays to the process. Paragraph: 025 Reference ID: 23b-025-20150326 Revision date: 26 03 2015 How can relevant infrastructure issues be taken into account during discussions on planning obligations? Local planning authorities are encouraged to work with relevant infrastructure providers at an early stage of the planning process when planning obligations are being discussed in order to prevent delays to the agreement of planning obligations. For two tier council areas this should include county councils who provide services such as education. County councils can also be statutory consultees in the planning application process as set out in table 2 of the planning guidance. Paragraph: 026 Reference ID: 23b-026-20150326 PROS

Benefits of s106 - continued Developers know where their money is being spent/contribution is going Placemaking value - Berkeley Homes 106F1Planning obligations. (1)Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to in this section and sections 106A [F2to 106C] as “ a planning obligation ”), enforceable to the extent mentioned in subsection (3)—  (a)restricting the development or use of the land in any specified way; (b)requiring specified operations or activities to be carried out in, on, under or over the land; (c)requiring the land to be used in any specified way; or (d)requiring a sum or sums to be paid to the authority [F3(or, in a case where section 2E applies, to the Greater London Authority)] on a specified date or dates or periodically. [F4(1A)In the case of a development consent obligation, the reference to development in subsection (1)(a) includes anything that constitutes development for the purposes of the Planning Act 2008.] (2)A planning obligation may— (a)be unconditional or subject to conditions; (b)impose any restriction or requirement mentioned in subsection (1)(a) to (c) either indefinitely or for such period or periods as may be specified; and (c)if it requires a sum or sums to be paid, require the payment of a specified amount or an amount determined in accordance with the instrument by which the obligation is entered into and, if it requires the payment of periodical sums, require them to be paid indefinitely or for a specified period. (3)Subject to subsection (4) a planning obligation is enforceable by the authority identified in accordance with subsection (9)(d)— (a)against the person entering into the obligation; and (b)against any person deriving title from that person. (4)The instrument by which a planning obligation is entered into may provide that a person shall not be bound by the obligation in respect of any period during which he no longer has an interest in the land. (5)A restriction or requirement imposed under a planning obligation is enforceable by injunction. (6)Without prejudice to subsection (5), if there is a breach of a requirement in a planning obligation to carry out any operations in, on, under or over the land to which the obligation relates, the authority by whom the obligation is enforceable may— (a)enter the land and carry out the operations; and (b)recover from the person or persons against whom the obligation is enforceable any expenses reasonably incurred by them in doing so. (7)Before an authority exercise their power under subsection (6)(a) they shall give not less than twenty-one days’ notice of their intention to do so to any person against whom the planning obligation is enforceable. (8)Any person who wilfully obstructs a person acting in the exercise of a power under subsection (6)(a) shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale. (9)A planning obligation may not be entered into except by an instrument executed as a deed which— (a)states that the obligation is a planning obligation for the purposes of this section; [F5(aa)if the obligation is a development consent obligation, contains a statement to that effect;] (b)identifies the land in which the person entering into the obligation is interested; (c)identifies the person entering into the obligation and states what his interest in the land is; and (d)identifies the local planning authority by whom the obligation is enforceable. [F6and, in a case where section 2E applies, identifies the Mayor of London as an authority by whom the obligation is also enforceable] (10)A copy of any such instrument shall be given to the [F7authority so identified ][F7local planning authority so identified and, in a case where section 2E applies, to the Mayor of London] . (11)A planning obligation shall be a local land charge and for the purposes of the M1Local Land Charges Act 1975 the authority by whom the obligation is enforceable shall be treated as the originating authority as respects such a charge. (12)Regulations may provide for the charging on the land of— (a)any sum or sums required to be paid under a planning obligation; and (b)any expenses recoverable by a local planning authority [F8or the Mayor of London] under subsection (6)(b), and this section and sections 106A [F9to 106BC] shall have effect subject to any such regulations. (13)In this section “ specified ” means specified in the instrument by which the planning obligation is entered into and in this section and section 106A “ land ” has the same meaning as in the M2 Local Land Charges Act 1975.  [F10(14)In this section and section 106A “ development consent obligation ” means a planning obligation entered into in connection with an application (or a proposed application) for an order granting development consent. ]] PROS

Disadvantages of S106 CONS Cannot be sought for 10 units or less or 1000 SqM ( or 5 units or less in rural area) Negotiated Not known by the developer upfront time consuming & skills required are you able to achieve/maximise on all sites? (less with new NPPF/PPG?) Lacking transparency ( But Infrastructure Funding Statement will improve this) Can local planning authorities draw on other resources and expertise in considering planning obligations? It may be appropriate in some cases to consider collaborative agreements to make use of the skills of officers from other local planning authorities or contractual arrangements to make use of external third party experts so that planning obligations can be agreed quickly and effectively. Local planning authorities and developers may want to discuss the provision of extra resources to enable the speedy determination of planning obligations, for example when handling large and possibly detailed planning applications. Paragraph: 029 Reference ID: 23b-029-20150326 Revision date: 26 03 2015 CONS

Disadvantages of s106 CONS Need to pay back after – X Years ( usually 5) if not spent Needs to be specified in the obligation– and paid back if it is not used for that purpose e.g. Health Do local planning authorities have to pay back unspent planning obligations? Local planning authorities are expected to use all of the funding received by way of planning obligations, as set out in individual agreements, in order to make development acceptable in planning terms. Agreements should normally include clauses stating when and how the funds will be used by and allow for their return, after an agreed period of time, where they are not. Paragraph: 010 Reference ID: 23b-010-20140306 Revision date: 06 03 2014 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. Appeals under section 106BC on affordable housing viability will still be considered if: an application was made under section 106BA before the end of 30 April 2016; and all procedural requirements are met. Such an appeal to the Planning Inspectorate 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. Guidance continues to apply to applications and subsequent appealsprovided an application was submitted before the end of April 2016. Paragraph: 011 Reference ID: 23b-011-20160519 Revision date: 19 05 2016 See previous version Are there any circumstances where infrastructure contributions through planning obligations should not be sought from developers? As set out in the Starter Homes written ministerial statement of 2 March 2015, starter homes exception sites should not be required to make affordable housing or tariff-style section 106 contributions. There are specific circumstances where contributions for affordable housing and tariff style planning obligations (section 106 planning obligations) should not be sought from small scale and self-build development. This follows the order of the Court of Appeal dated 13 May 2016, which give legal effect to the policy set out in the written ministerial statement of 28 November 2014 and should be taken into account. These circumstances are that; contributions should not be sought from developments of 10-units or less, and which have a maximum combined gross floorspace of no more than 1,000 square metres (gross internal area) in designated rural areas, local planning authorities may choose to apply a lower threshold of 5-units or less. No affordable housing or tariff-style contributions should then be sought from these developments. In addition, in a rural area where the lower 5-unit or less threshold is applied, affordable housing and tariff style contributions should be sought from developments of between 6 and 10-units in the form of cash payments which are commuted until after completion of units within the development. This applies to rural areas described under section 157(1) of the Housing Act 1985, which includes National Parks and Areas of Outstanding Natural Beauty affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension to an existing home Paragraph: 031 Reference ID: 23b-031-20161116 Revision date: 16 11 2016 See previous version Do the restrictions on seeking planning obligations apply to Rural Exception Sites? The restrictions on seeking planning obligations contributions do not apply to development on Rural Exception Sites – although affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension within the curtilage of the buildings comprising an existing home. Paragraph: 013 Reference ID: 23b-013-20160519 What are tariff-style contributions? Some authorities seek planning obligations contributions to pooled funding ‘pots’ intended to provide common types of infrastructure for the wider area. Planning obligations mitigate the impact of development which benefits local communities and supports the provision of local infrastructure. In applying the planning obligations local planning authorities must ensure that these meet the three tests that are set out as statutory tests in the Community Infrastructure Levy Regulations 2010 and as policy tests in the National Planning Policy Framework. These are: that they are necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. For sites where the threshold applies, planning obligations should not be sought to contribute to pooled funding ‘pots’ intended to fund the provision of general infrastructure in the wider area. Paragraph: 014 Reference ID: 23b-014-20160519 CONS

Disadvantages of s106 CONS The need to meet the legal tests can be a significant limitation 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 Do local planning authorities have to pay back unspent planning obligations? Local planning authorities are expected to use all of the funding received by way of planning obligations, as set out in individual agreements, in order to make development acceptable in planning terms. Agreements should normally include clauses stating when and how the funds will be used by and allow for their return, after an agreed period of time, where they are not. Paragraph: 010 Reference ID: 23b-010-20140306 Revision date: 06 03 2014 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. Appeals under section 106BC on affordable housing viability will still be considered if: an application was made under section 106BA before the end of 30 April 2016; and all procedural requirements are met. Such an appeal to the Planning Inspectorate 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. Guidance continues to apply to applications and subsequent appealsprovided an application was submitted before the end of April 2016. Paragraph: 011 Reference ID: 23b-011-20160519 Revision date: 19 05 2016 See previous version Are there any circumstances where infrastructure contributions through planning obligations should not be sought from developers? As set out in the Starter Homes written ministerial statement of 2 March 2015, starter homes exception sites should not be required to make affordable housing or tariff-style section 106 contributions. There are specific circumstances where contributions for affordable housing and tariff style planning obligations (section 106 planning obligations) should not be sought from small scale and self-build development. This follows the order of the Court of Appeal dated 13 May 2016, which give legal effect to the policy set out in the written ministerial statement of 28 November 2014 and should be taken into account. These circumstances are that; contributions should not be sought from developments of 10-units or less, and which have a maximum combined gross floorspace of no more than 1,000 square metres (gross internal area) in designated rural areas, local planning authorities may choose to apply a lower threshold of 5-units or less. No affordable housing or tariff-style contributions should then be sought from these developments. In addition, in a rural area where the lower 5-unit or less threshold is applied, affordable housing and tariff style contributions should be sought from developments of between 6 and 10-units in the form of cash payments which are commuted until after completion of units within the development. This applies to rural areas described under section 157(1) of the Housing Act 1985, which includes National Parks and Areas of Outstanding Natural Beauty affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension to an existing home Paragraph: 031 Reference ID: 23b-031-20161116 Revision date: 16 11 2016 See previous version Do the restrictions on seeking planning obligations apply to Rural Exception Sites? The restrictions on seeking planning obligations contributions do not apply to development on Rural Exception Sites – although affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension within the curtilage of the buildings comprising an existing home. Paragraph: 013 Reference ID: 23b-013-20160519 What are tariff-style contributions? Some authorities seek planning obligations contributions to pooled funding ‘pots’ intended to provide common types of infrastructure for the wider area. Planning obligations mitigate the impact of development which benefits local communities and supports the provision of local infrastructure. In applying the planning obligations local planning authorities must ensure that these meet the three tests that are set out as statutory tests in the Community Infrastructure Levy Regulations 2010 and as policy tests in the National Planning Policy Framework. These are: that they are necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. For sites where the threshold applies, planning obligations should not be sought to contribute to pooled funding ‘pots’ intended to fund the provision of general infrastructure in the wider area. Paragraph: 014 Reference ID: 23b-014-20160519 CONS

A Limitation- The Legal Tests & the Supreme Court Case Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Company Limited: “..a planning obligation, which is to contribute funding, to be a material consideration in the decision to grant planning permission, there must be more than a trivial connection between the development and the intervention or interventions which the proposed contribution will fund. The planning obligation which Elsick entered into could not be a relevant consideration in the grant of the planning permission. In my view, it was not within the power of the planning authority to require a developer to enter into such an obligation which would be irrelevant to its application for permission as a precondition of the grant of that permission. “ https://www.supremecourt.uk/cases/uksc-2016-0157.html https://cornerstonebarristers.com/news/supreme-court-reviews-planning-obligations/

Benefits of CIL The infrastructure project you spend it on can be strategic – it can have a ’trivial’ relationship with the development No payback period – you can save it up for as long as necessary ( no getting caught out!) Not project or type of infrastructure specific You can spend it where you want (as long as it supports the delivery of your growth) The use of CIL is very flexible PROS

Benefits of CIL You can collect it from all scales of development – less than 11 units- a little from all small development does add up No negotiation required – its fixed – it’s a tax No need to draft s106 agreements – so no hold up on decision making https://www.legislation.gov.uk/ukpga/1990/8/section/106 PROS

Benefits of CIL The amount to be paid is fairly clear and transparent to the applicant prior to application CIL cannot be appealed on grounds of viability CIL was made for sharing Its clear you can give it to another body to spend and it can be spent outside the administrative area of the LPA It addresses cross boundary growth delivery It can aid delivery of cross boundary infrastructure PROS

Benefits of CIL – Land - ‘Payment in Kind’ 73.— (1) A charging authority may accept one or more land payments in satisfaction of the whole or part of the CIL due in respect of a chargeable development Payment in kind 73.— (1) A charging authority may accept one or more land payments in satisfaction of the whole or part of the CIL due in respect of a chargeable development. (2) A land payment is an acquisition of land from a person who would be liable to pay CIL in respect of a chargeable development on commencement of that chargeable development. (3) Where CIL is paid by way of a land payment the amount of CIL paid is an amount equal to the value of the acquired land. (4) Paragraph (1) is subject to the following provisions of this regulation. (5) A charging authority must aim to ensure that acquired land is used for a relevant purpose. (6) A charging authority may not accept a land payment unless— (a) the chargeable amount payable in respect of the chargeable development is greater than £50,000; (b) the acquired land is acquired by the charging authority or a person nominated by the charging authority (with that person’s agreement); (c) the person from whom the land will be acquired has assumed liability to pay CIL in respect of the chargeable development; and (d) an agreement to make the land payment is entered into before the chargeable development is commenced. (7) The agreement mentioned in paragraph (6)(d)— (a) must be in writing and state the value of the land to be acquired; and (b) may not form part of a planning obligation entered into under section 106 of TCPA 1990. (8) Where a person other than the charging authority is to acquire the land, the charging authority may not enter into the agreement mentioned in paragraph (6)(d) unless it is satisfied that the person acquiring the land intends to use it for a relevant purpose. … PROS

Disadvantages of CIL CONS Delivery Agent = Local Planning Authority Do you have the skills? (Or do you know someone who does?) Is this the most efficient and cost effective method of delivery? CONS

Disadvantages of CIL CONS Delivery Agent = Local Planning Authority CIL Infrastructure ‘in Kind’- doesn’t work for most 73A… (7) A charging authority may not accept an infrastructure payment unless— (a) it is satisfied that P— (i) has, or is likely to have, sufficient control over the land on which the infrastructure is to be constructed to enable P to provide the infrastructure, and (ii) has provided the charging authority with evidence that P has obtained, or will be likely to be able to obtain, any relevant statutory authorisations that are necessary to enable the infrastructure to be constructed; (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;... Infrastructure payments 73A.—(1) If a charging authority has made infrastructure payments available in its area it may accept one or more infrastructure payments in satisfaction of the whole or part of the CIL due in respect of a chargeable development. (2) An infrastructure payment is the provision of one or more items of infrastructure by a person (P) who would be liable to pay CIL in respect of a chargeable development on commencement of that development. (3) Where CIL is paid by way of an infrastructure payment the amount of CIL paid is an amount equal to the value of the infrastructure provided. (4) Paragraph (1) is subject to the following provisions of this regulation. (5) A charging authority must aim to ensure that the infrastructure provided through an infrastructure payment will be used to support the development of its area. (6) A charging authority may accept an infrastructure payment relating to infrastructure to be provided outside its area if it considers that the infrastructure will support the development of its area. (7) A charging authority may not accept an infrastructure payment unless— (a) it is satisfied that P— (i) has, or is likely to have, sufficient control over the land on which the infrastructure is to be constructed to enable P to provide the infrastructure, and (ii) has provided the charging authority with evidence that P has obtained, or will be likely to be able to obtain, any relevant statutory authorisations that are necessary to enable the infrastructure to be constructed; (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;… Payment in kind Can the levy be paid ‘in kind’ rather than in cash? There may be circumstances where the charging authority and the person liable for the levy will wish land and/or infrastructure to be provided, instead of money, to satisfy a charge arising from the levy. For example, where an authority has already planned to invest levy receipts in a project there may be time, cost and efficiency benefits in accepting completed infrastructure from the party liable for payment of the levy. Payment in kind can also enable developers, users and authorities to have more certainty about the timescale over which certain infrastructure items will be delivered. Subject to relevant conditions, and at its discretion, an authority may enter into an agreement for a land payment to discharge part or all of a levy liability. Charging authorities may also enter into agreements to receive infrastructure as payment. Paragraph: 061 Reference ID: 25-061-20140612 Revision date: 12 06 2014 Under what conditions may a land or infrastructure agreement be entered into? 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: 062 Reference ID: 25-062-20140612 What can be covered by a land or infrastructure agreement? 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: 063 Reference ID: 25-063-20140612 Who needs to be party to land or infrastructure agreements? 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. Charging and collecting authorities and any other relevant authorities should agree the infrastructure projects or types which will form part of an authority’s infrastructure payment policy and the terms of any relevant infrastructure payment agreement entered into. 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. An authority wishing to amend or withdraw its policy on land or infrastructure payments must give appropriate notice, in line with the regulations. Paragraph: 064 Reference ID: 25-064-20140612 CONS

Disadvantages of CIL CONS Less transparent for Developers (although Infrastructure Funding Statement will improve this) Netting off of “in – use” floorspace to reduce payment Reg 40 … “in-use building” means a building which— (i) is a relevant building, and (ii) 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; CONS

CIL Factors Exemptions – e.g. self build Neighbourhood proportion

What is your growth profile going to be? All small scale – lots of sites less than 11 units Large strategic sites – Garden communities Large greenfield sites Edge of settlement growth Brownfield land - Small Brownfield land- medium A mixture of site types? What are your main typologies? What does this mean for your approach to developer contributions?

Your growth - 2 Is your growth focused on individual settlement? Is that a large addition to the settlement – how will you make the place? Is it a small amount of incremental growth What is the geographic spread of your growth? Is your growth close to your boundaries? Where will the impact of that growth be?

Is your growth a mixture of typologies? Will your viability affect your developer contributions choices?

What infrastructure does your growth require? What is the infrastructure impact of your growth? What you require may/will determine your contributions strategy Does your growth require large strategic infrastructure? Is your infrastructure requirements improving and extending existing facilities? Is the infrastructure in your administrative area? Is the infrastructure closely related to the development site?

Use both CIL and s106?

How much infrastructure will developer contributions fund? 19/09/2019

Other funding? Community Housing Fund Status: Open for bidding The Community Housing Fund aims to support an increase in housing supply in England by increasing the number of additional homes delivered by the community-led housing sector. Status: Open for bidding Close date: 31/12/2019 23:59:59 Actions: Create a new CHF bid or Existing bidders sign in here

Your non – housing growth What about other land uses – impact on infrastructure? CIL – viability evidence are other uses not viable? Can some sites contribute to s106?

What are your priorities? What infrastructure do you need to deliver your growth How can you fund from developer contributions What are joint duty to co-operate priorities What can you more effectively fund by working together? Are you taking a strategic approach to CIL or a proportion of your CIL? 19/09/2019

Infrastructure Funding Statement 19/09/2019

Q & A – 19/09/2019

Contact me gilian@gmacinnes.co.uk 0771 4394046 Website- gmacinnes.co.uk Twitter: @gilianGMAC Gilian Macinnes Associates can advise you on all aspects of planning and place making. If you are a local planning authority (LPA) or other public service we will help you build capacity and improve your planning and place making services to deliver effective outcomes for your community. If you are a development Industry organisation Gilian Macinnes Associates can improve your knowledge of planning, place making and working with LPAs, aid your interaction with Council’s, LPAs and communities to deliver development. In addition, in times of stretched LPA resources, Gilian Macinnes Associates can be appointed by you to work with Councils to increase their capacity to deliver your projects. Gilian Macinnes (Director) has worked in Local Government for over 30 years -the majority of which was delivering planning on the ground and managing planning services; and more recently, with the Planning Advisory Service, advising English LPAs delivering improvement programmes, seminars, and councillor and officer training. She was appointed to the Government’s CIL Review Panel in October 2015. Gilian is a very well respected expert, communicator and trainer in planning and related areas. Gilian is was a member of the DCLG Viability Expert group (2017)