COMMUNITY INFRASTRUCTURE LEVY (CIL) - PROPOSED ROTHER DISTRICT (DC) CHARGING SCHEDULE

Background

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6313/1897278.pdf

"Communities should reap the benefits of new development in their area and these reforms will put in place a fairer system for funding new infrastructure while also providing certainty for industry. Too little of the benefits of development go to local communities, and our ambition is to correct that with a reformed levy under genuine local control." Minister Greg Clark in late 2010

"Communities with approved neighbourhood development plans will receive 25% of any CIL raised from housing developments within their area. The money will be paid directly to parish and town councils, which can use it to back their priorities for their communities, although they would be expected to work with the local planning authorities."

Planning Minister Nick Boles on 11 Jan 2013

In August 2014, Rother DC circulated its intention to introduce the CIL to part-replace the existing means of securing developers' contributions using S106 procedures. Rye Town Council is now invited to AGREE these comments on the Rother DC proposals.

Summary of Main Changes since August 2014
- Para 3: Benefits of CIL: still no mention of benefits to those councils Neighbourhood Planning
- Para 5: Change to justification: £49m costs; perceived £32m income from CIL; therefore funding gap. Detailed justification of gap has been adjusted in a separate analysis. (£49m = education - 15m; transport 5m; community infrastructure , including Rother Eastern Tidal Walls = 30m)
- Para 8: Inclusion that CIL rates to be reviewed after 3 years
- Para 9: Rates reduced: Zone 2 residential from £160 to £135
- Para 16: Inclusion that further relief policy to be published later
- Para 20: Inclusion that councils with NP receive 25% of levy
- Appx 2: Draft 123 list amended to be less specific. There is a need to ensure that the categories are complete because change will require public consultation.
- IDP:
o It is noted that there is nothing planned by way of improvements to the A259 corridor east of Hastings.
o An assumption is that if the business case for fast Javelin (HS1) succeeds, then the infrastructure project to introduce the service would be funded by Central Government.

What are the Key Questions?

When the last draft was circulated there was extensive discussion in the community about the justification for CIL and how infrastructure related to development should be funded. The RNPSG has re-visited some of the key questions.

Should there be Developers' Contribution for related infrastructure?

Almost all developments have some impact on the need for infrastructure, services and amenities. Therefore as the majority of new build residential development is zero rated for VAT, it is only fair that such development pays a share of the cost. It is also right that those who benefit financially from successful planning proposals should contribute some of that gain to the community.

Why is CIL proposed to part-replace the current S106 Procedure?

The Government considers that CIL would be fairer, faster, more certain and transparent than the current system of planning obligations to contribute. Presently, contributions are negotiated on a 'case-by case' basis.
Statistics show that under the current system of developers' contributions only 6% of all planning permissions nationally (usually the largest schemes) have contributed to the cost of supporting infrastructure. Through CIL, all but the very smallest building projects will contribute.

Rye TC NOTES that the Government suggests that there are a range of benefits accrued from the CIL process, including that the Levy:

a) collects contributions from a wider range of developments, providing additional funding to allow local authorities to carry out a range of infrastructure projects that support growth and benefit communities;
b) provides those parishes with Neighbourhood Plans (NP) a receipt of 25% of the CIL to spend on local infrastructure projects. For Rye, some guidance on the likely receipts to 2028 would be from:
- dwellings:
 160 dwellings; deduct around 60 likely to come forward as planning proposals before CIL introduction, balance say 100.
 Average dwelling is 88-100sq m X £135 = around £12k
 100 dwellings x 12k = £1.2m;
 25% of receipts to Rye to 2028 = around £300k
- commercial development. This is more difficult to estimate because of the differing types of contributions, that might be negotiated. But, Rother DC has advised that some 25% of any CIL collected would pass to Rye TC for recorded local infrastructure projects. What is possible is to catalogue the sort of infrastructure that has been or will be funded by developers' contributions as below:

Valley Park: SUDS installation, roads, recreational equipment, cycle and footpaths and planting.

Former Tilling Green School Site: Roads and green space and planting, affordable housing, community centre and flood mitigation.

Former Lower School Site: Roads, planting and Station Approach improvements. (The Javelin proposal now makes uncertain any talk of rail crossing improvements in this category of works).

Former Freda Gardham School Site: Affordable housing, roads and pathways, planting and flood defence improvements.

Rock Channel and Strand: Roads and pathways, riverside walks, planting and affordable housing.

Rye Harbour "Saltings": contamination clearance, roads and compensating nature reserve assets.

c) gives authorities greater flexibility to set their own priorities on projects benefitting the wider community affected by development, unlike S106 funds which require a direct link between a contributing development and an infrastructure project;

d) provides developers with clarity about the level of contributions which are required from any development and provides transparency for local people;

e) is non-negotiable and therefore should save time by removing the need for negotiations between the local authority and developers as occurs under S106. f) requires Rye TC to make a local Infrastructure Delivery Plan as an adjunct to the Neighbourhood Plan. Site assessments will inform infrastructure requirements and involve liaising with the relevant agencies - EA, Highways etc. Examples would be the Eastern Rother Tidal Wall for Frieda Gardham, the community centre for Tilling Green or a suitable access arrangement for the Lower School Site.

g) is being adopted fairly slowly by the 433 principal authorities in England and Wales. This is partly attributed to the government extending the deadline for S106 pooling contributions until April 2015. Post April 2015 it is expected that many authorities will put more resource into getting CIL adopted, because LPAs will wish to secure the advantage of infrastructure contributions under CIL from developers. The legislative framework is expected to work against them if they do not have CIL in place.

As Rye Town Council is making a Neighbourhood Plan to allow the community to influence growth, it NOTES that it will have the right to receive and spend 25% of CIL contributions on local projects.

Is there an infrastructure funding gap in Rother District?
On the figures provided in the revised Rother DC analysis - particularly in terms of education capacity, flood defences and transport schemes - Rye Town Council AGREES that there is an infrastructure funding gap, even without considering any infrastructure projects yet to be generated by the Rye NP.

What are the rates for residential uses?

Rye Town Council NOTES that the proposed rate has been reduced (£160 to £135 per sq m) and that "strategic allocations" (Zone 4) have been omitted. However it continues to emphasise that the level of CIL must be "appropriate" because of the risk that it might render future development non viable and therefore deter development.

Will not the charges increase house prices? A common misconception is that CIL will drive up local house prices. While development economics are complicated, the prices of new houses are usually set by agents with regard to comparable existing properties and market forces. CIL will either reduce the profits of developers or, more likely in the longer term, the price that they pay for the land. CIL could be regarded as a development land tax, giving local communities some of the uplift in land values as a consequence permission to build. Rother DC advises that CIL rates assume substantial returns to landowners, ranging from at least £700,000 per hectare in Bexhill to £1.3m per hectare in most rural areas. It is also estimated that the CIL charge will be a small percentage of the total build costs and significantly lower than the affordable housing contribution. CIL is not seen as impacting significantly on developers' profit margins (industry standard being 20%). It is likely to be landowners who will see a correction in future land deals.

What are the rates for non-residential development?

Rye Town Council NOTES that the proposed charges remain in the upper part of the band being set by Councils. Rye TC NOTES that high rates of CIL should not discourage development (reducing employment opportunities and local tax revenues) by increasing the cost (freehold or leasehold) of commercial property.
Rye Town Council NOTES that there will be an instalment procedure for developers' contribution.

What is the discretionary and exceptional relief policy?

Rye Town Council NOTES that some details are published as before, but others will come separately. It RECOMMENDS that it be consulted about what more will be included.

For example, while it is important to exempt those developments, which would be rendered uneconomic by the levy, does Rother DC have in mind to exempt some sort of "strategic" developments as other Councils are doing? Rye Town Council RECOMMENDS that it is consulted, to avoid it being denied the levy from developments in its NP.

What is in the draft 123 list?

Rye Town Council NOTES the changes in the draft Infrastructure R123 list. Further it notes that any significant change would have to go to public consultation. It is expected that all infrastructure projects emerging from the Rye NP are likely to be covered in the draft list of categories, such as education, health, community infrastructure and transport.

Are there any omissions from the proposed schedule?

S106 versus CIL?

National guidance indicates that the CIL will run in tandem with some residual Section 106 obligations. Rye Town Council NOTES the remarks in the draft schedule about the intention not to "double dip" (applying both CIL and S106). However, for many, what is not clear is the precise relationship between these two charges. Professional planners acknowledge that the rules for the future application of CIL and residual s106 are complex. On the assumption that CIL is agreed, section 106 planning obligations will continue to be secured, although application will be scaled back. Site-specific planning obligations will be sought where infrastructure:
 does not appear on the Regulation 123 list;
 does not conflict with the Regulation 123 pooling restriction, that limits the pooling of s106 payments to no more than five planning obligations; and
 fulfils the planning obligation tests set out in Regulation 122.
Many councils have attempted to clarify the position by producing a typical guidance chart below. Rye Town Council continues to RECOMMEND that Rother District Council produces some similar clarification, perhaps along the lines of that below.

Comparing CIL and s.106 - Typical Explanatory Chart
Infrastructure funded by CIL
Infrastructure funded by S106
Provision, improvement, replacement, operation or maintenance of education facilities
Provision, improvement, replacement,
operation or maintenance of health care facilities
Provision, improvement, replacement,
operation or maintenance of clearly
identified infrastructure projects, such as transport.
Provision, improvement, replacement,
operation or maintenance of public open space
S106 for affordable housing
S106 for standard site /design mitigation
Development specific mitigation
Public Realm projects or types that are pre-defined.
Employment and skills training
Provision, improvement, replacement,
operation or maintenance of public sports and leisure
Provision, improvement, replacement,
operation or maintenance of community facilities (as identified in the Neighbourhood Plan)

What are the means for Enforcement and Appeals?

Rye TC NOTES that there is no explanation of enforcement and appeals. The draft schedule makes it clear that "CIL is non-negotiable" and that there are significant powers and penalties to deal with failure to pay: Stop Notices, surcharges, late payment interest and prison terms.

Rye TC RECOMMENDS that Rother DC advises on those situations where appeals by developers might be possible, which it understands might include circumstances where officers have incorrectly:

 calculated the amount of CIL. (Before making the appeal the developer must first request an internal review by the Council).
 apportioned liability between landowners.
 determined Charitable Relief.
 applied surcharges.
 determined the date at which any development has commenced.
 issues a Stop Notice for non-payment.