Assessing Development Viability In Difficult Times: The Local Authority Perspective Anthony Hodge & Victoria Carr Cheshire West and Chester Council

Demand/Supply Forecast population increase by 11% (ONS) SHMA concluded an annual shortfall of circa 2,700 market dwellings and 1,300 affordable dwellings pa 2010/ new homes completed, of which 306 were affordable homes which benefited from public sector subsidy. As a consequence, in 2010/11 only 348 market homes were completed

Affordability December 2006 December 2007 December 2008 December 2009 December 2010 December bed Prices (Flat) £94,203£102,967£92,789£94,672£82,566£87,722 2 bed Prices (Flat) £139,378£139,760£137,001£128,731£134,764£124,578 2 bed Prices (House) £136,967£141,759£137,785£136,243£140,121£132,343 3 bed Prices (House) £174,504£177,937£180,126£177,379£180,307£170,809 4 bed Prices (House) £301,609£322,208£306,409£311,571£304,973£302,033 Source: Hometrack Average Property Prices in Cheshire West and Chester

Affordability

A Developers View Affordable housing requirements too onerous Viability assessments – local authority in the dark Commercially sensitive information Timescale Members

Fixing the Process Appointed in-house resource (MRICS) Introduction of service to key teams Lead on viability negotiations and assessments Provides direct advice to Development Management Development of Viability Checklist, Values and Costings Database, Use of viability software One point of contact, one consistent approach

Handling Assessments How can we ensure that we are in a strong negotiating position? Build a strong evidence base of local costs and values Talk to the market Keep track of approved developments (did they achieve the values anticipated?) Strong Market Knowledge = Strong Negotiating Position

Handling Assessments Internal note - initial guidance to Development Management Seek specialist advice where necessary

Site Issues Long-term developments & Marginal Sites Use of software to ‘build in’ uplift Use of overage clauses in sc106-some reluctance

Some Examples Rural Housing Sites, Cheshire (affordable housing) Costs for historic building-sourced from generic report Commercial Site, Northwich (sc106) Evidence provided in relation to abnormal costs Checked with site-owner at time of purchase, some of these were known abnormals at time of site purchase Worked with Agents to negotiate value inputs All third party cost quotes provided

……..but is it just about viability 6,000 units with planning approval Schemes for 3,000 units coming into the system