Q3. Do you agree with the proposed residential CIL charging zones?

One size does not fit all. To simply daw a line between say, east and west or north and south does not reflect a fair assessment of vale. There are many areas to the east of Rother with high value properties, there are many not so. The same may be said in the western part of Rother. Any charging might be based perhaps on local rateable values, these may well vary in one street. Simple will not work and there is no good in pretending or suggesting it will.

The Bexhill strategic allocations are where most of the housing for the district will be delivered. It is because of this development that much of the infrastructure will be required. Without the road improvements around Bexhill (incl. the link road) this and could not come forward for development. Thus is seems fair that a higher CIL is charged. The land value will be greatly enhanced by the provision of the infrastructure and the viability analysis should take this into account.

Different rates are appropriate due to the differing types of location and type of development relevant to each.

PDCS Q3 - Do you agree with the proposed residential CIL charging zones?

Bovis Homes Ltd are content that strategic allocations have their own charging zone.

PDCS Q4 - Do you agree with the proposed CIL charge rates for residential uses?

Bovis Homes Ltd are in the process of preparing a masterplan for the Strategic Allocation at North East Bexhill. As soon as the scheme's parameters/development quantums are agreed with the Council, a cost and viability model will be prepared to test the scheme's viability and impact of CIL taking into account the local housing market conditions, a greater understanding of site development costs and S106 requirements not covered by CIL.

Due to unforeseen delays in agreeing the scheme's parameters, this cost and viability information will not be available before the preliminary CIL Consultation deadline on the 26 September 2014. It is therefore not yet possible to confirm whether the Council's proposed CIL rate of £100 per square metre for strategic allocations renders the NE Bexhill scheme unviable. However, experience on CIL rates in other comparable value areas would seem to suggest that the rate may be on the high side, particularly as education provision is excluded from CIL (reg 123 list). Bovis Homes Ltd therefore wish to reserve the right to provide a more definitive answer on site viability based on an agreed masterplan and up-to-date cost/market condition information through further consultation processes and potentially written statements prior to the CIL examination and at the hearing.

PDCS Q6 - Do you support the introduction of an instalment policy in Rother for CIL payments?

Bovis Homes Ltd consider it essential to introduce an instalment policy for strategic allocations. Without such an approach, the initial CIL liability may render the scheme unviable.

PDCS - Q7. Do you have any views on whether the District Council should introduce a discretionary and exceptional relief policy?

Bovis Homes Ltd consider it essential for local discretion on CIL charging, particularly on strategic allocations to take account of viability issues should they arise and should the Council's prioritise affordable housing provision over CIL receipts.

PCDS - Q8 Do you agree with the proposed Regulation 123 list?

Bexhill Homes Ltd do not agree with education facilities directly related to development being excluded from CIL. If related education facilities are required, which is the case in NE Bexhill, effectively the landowners/developers are being charged twice, to fund education facilities related to their development and other education provision elsewhere in Bexhill. The education 'bill' is very significant and a key component of determining viability. All education facilities should be provided through CIL

Most Charging Authorities introducing CIL are developing charging zones to cater for differing land and property values. Rye Town Council agrees with the principle of zones, but would like to understand how they have been designed in Rother District.

Introduction
Gladman Developments has considerable experience in the development industry in a number of sectors including residential and employment land. Gladman are aware that Rother Council have a Local Plan which has recently been found sound (subject to modifications) and that alongside this the Council are in the process of preparing a Community Infrastructure Levy for the area. This Consultation is for the PDCS stage of the CIL.

CIL is intended to have a positive effect on development. The latest CLG guidance notes that "The levy is expected to have a positive economic effect on development across a local plan area. When deciding the levy rates, an appropriate balance must be struck between additional investment for infrastructure to support development and the potential economic effect on the viability of developments...This balance is at the centre of the charge setting process" (Section 2.2, CLG Guidance, 2014).

In accordance with the latest CIL Regulations, the Council is required to strike an appropriate balance between the desirability of funding from CIL and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across the local authority area. The Council must consider the impact of CIL together with the policies contained in the Local Plan on
developments within the borough when deciding an appropriate CIL rate.

Setting the levy at the appropriate rate will be key to ensuring that development comes forward in your local authority area and subsequently that the Local Plan is implemented. These representations address some key areas that local planning authorities must consider when preparing their CIL charging schedule, drawing on recent guidance produced by the CLG.

Funding gap / evidence base
Local planning authorities need to be able to demonstrate the infrastructure need and subsequent funding gap and must ensure that the level of total CIL receipts that could be generated through the levy reflects these true needs and the proposals in the Local Plan. The CIL should not be used by Council's as a mechanism for creating an unrealistic 'wish list' of infrastructure projects in their area.

When establishing a funding gap that CIL receipts are intended to contribute towards filling, it is vital that the Council take account of every possible income stream. This has to include an accurate assessment of future New Homes Bonus and council tax and business rates receipts generated as a result of new developments allocated in the Local Plan, as well as central government funding streams. This should also include an assessment of statutory undertakers' asset management plans, as these companies will at some stage be upgrading their systems/facilities. This also needs to be taken account of when assessing the infrastructure requirements of the authority.

The Council need to have an up to date, robust evidence base that fully justifies the infrastructure needs based on the amount of development that is required. Information on these infrastructure needs should, wherever possible, be drawn directly from the infrastructure planning that underpins the Development Plan, as this should identify the quantum and type of infrastructure required to realise their local development needs. If the authority's infrastructure planning is weak or out of date then the Council should undertake an exercise to refresh this. If the evidence base is not complete, robust and up to date the charging schedule will be unsound and the local planning authority will have difficulty adequately demonstrating their funding gap and subsequent CIL requirements.

The CLG guidance notes that: "Charging authorities should be able to show and
explain how their proposed Community Infrastructure Levy rate or rates will contribute towards the implementation of the relevant Plan, and support development across their area. Charging authorities will need to summarise their economic viability evidence. This evidence should be presented in a document (separate from the charging schedule) that shows the potential effects of the proposed levy rate or rates on the economic viability of development across the authority area" (Section 2:2:2:3, CLG Guidance, 2014).

It is important that in calculating the level of infrastructure the authority needs as a result of development the Council distinguishes between new and existing demands. New houses do not always create new pressure on infrastructure as evidence shows that a large proportion will be occupied by people already living in the borough, attending local schools, and registered with local GP surgeries. They will therefore require less infrastructure provision compared to new residents in the borough.

The available guidance makes it clear that CIL is expected to have a positive economic effect on development across an area in the medium to long term. As outlined in recent Inspector's Letters to East Devon District Council (April 2014), the CIL charging rates should not be set at such a level that would threaten development, and must be based on robust evidence and assumptions. The rate will also need to be appropriate over time, bearing in mind land values, market conditions and the wider economic climate change rapidly. The viability impact of incremental policy obligations, such as stepped Code for Sustainable Homes targets, must be assessed and reflected in the charging schedule.

The Council needs to ensure that they have a full understanding of the potential costs of infrastructure projects needed to meet the infrastructure needs. Gladman believe that it is inappropriate to set the levy based on a partial understanding of these infrastructure costs and in particular if the total money needed for infrastructure is unknown.

Differential charging rates
The CLG guidance notes that the use of differential charging rates can be an appropriate approach where there is clear viability evidence to justify this. The CIL regulations allow charging authorities to apply differential rates in a flexible way, to help ensure the viability of development is not put at risk.

The rules around the use of differential rates in the Charging Schedule are clear: they can only be applied in relation to different geographical zones in which development would be situated, related to different types of development, and/or scales of development. Furthermore as the Government's CIL guidance and inspectors have made clear, differential rates should be set "based on economic viability considerations alone, rather than any planning or any other public policy related choices" (Paragraph 14, Newark and Sherwood EIP report, August 2011), and "CIL is not intended to be a planning policy tool" (Paragraph 23, Huntingdonshire EIP report, April 2012). Charging schedules with differential rates should not have a disproportionate impact on particular sectors or specialist forms of development.

It is integral when setting differential rates for different geographical areas that these differential rates are based on accurate, up to date housing market intelligence forming the evidence base for this decision.

Discretionary Relief
Regulation 55 of the CIL Regulations allows local authorities to grant relief for exceptional circumstances from liability to pay CIL. Such provision should be factored into the Council's CIL and will avoid rendering sites with specific and exceptional cost burdens unviable should exceptional circumstances arise.

Payments in Kind
Regulations 73 and 73A of the CIL Regulations provides a mechanism for local authorities to accept infrastructure payments, or payments in kind, for land or infrastructure to be provided instead of money to satisfy a charge arising the levy. An allowance for infrastructure payments should therefore be made available by the Council, recognising that there may be time, cost and efficiency benefits in accepting land or infrastructure from parties liable for payment of the levy.

Requirement to consult
As with Local Plans, local planning authorities have an obligation to consult at various stages of the CIL preparation process. However, the guidance does not provide details as to the format that this consultation must take or length of the consultation period. Gladman echo the CIL guidance and would urge your local authority to engage with local developers and others in the property industry early and throughout the process. This will help your authority to gain opinions from the market to feed into the preparatory work.

Once the charging schedule is ready for Examination the local authority must publish the draft schedule for a further stage of formal public consultation. In accordance with the CIL Guidance this must be for a period of at least four weeks, although it is considered good practice to allow at least six weeks, and longer if the issues under consideration are particularly complex.

Examination
As outlined in Section 2:2:5:1 of the 2014 CLG guidance the charging authority must appoint the examiner. The examiner must be independent and have the appropriate qualifications and experience. The guidance confirms that a Planning Inspector would fulfil these criteria.

Conformity with the National Planning Policy Framework (NPPF)
The NPPF provides the current central government planning policy and requirements for local planning authorities to meet. The NPPF places emphasis on sustainable development and in particular ensuring that the objectively assessed needs of an area are met through the requirements and policies within the new Local Plan.

It is fundamental that the Council ensures that the proposed levy rates are realistic and not set too high. Arbitrarily high rates may jeopardise the delivery of housing schemes within the area. This would be contrary to the Government's aim outlined in the Framework to "significantly boost the supply of housing", as schemes may not come forward due to viability issues.

The Council's CIL charging rates must not threaten the overall delivery of the Local Plan, by making sites unviable. This point is reiterated in the CLG guidance, which states that "Charging authorities should set a rate which does not threaten the ability to develop viably the sites and scale of development identified in the relevant Plan" (Section 2:2, CLG Guidance, 2014).When testing the impact of CIL it is vital that the assumptions that underlie the standard residual valuation approach used to test the impact on viability of CIL are realistic and accurate.

This should include abnormal costs, contingency costs, preliminary costs, and developer profit, which should reflect the current level of risk perceived in the market.

Gladman would urge the Council to adopt an instalments policy for CIL payments as this will give developers the flexibility to pay contributions in line with development phasing schemes and will facilitate cash flow and therefore development viability. With this in mind, in accordance with Regulation 8(3A) of the CIL Regulations the Council should also accept the phasing of planning permissions, with each phase treated as a separate chargeable development.

Gladman also remind the Council of the need to review CIL tariffs once these have been set. The economic climate will inevitably change over the course of the plan period and as such the levy rates that can be set whilst ensuring development remains viable will also change. In accordance with the CLG guidance "Charging authorities must keep their charging schedules under review and should ensure that levy charges remain appropriate over time. For example charging schedules should take account of changes in market conditions, and remain relevant to the funding gap for the infrastructure needed to support the development of the area" (Section 2:2:6:3, CLG Guidance, 2014).

Gladman believe that the Council need to have a clear understanding of the level of residential development to be brought forward in the plan period when preparing the charging schedule as this will directly influence the scale of CIL that will be generated. Without this the charging schedule will not reflect the relevant and true infrastructure needs of the area.

Consultation on the Preliminary Draft Charging Schedule and Draft R123 List

I am writing on behalf of Marchfield (Strategic Land) Ltd in response to the consultation on the Rother District Council Preliminary Draft Charging Schedule and Draft R123 List. The relevant forms are enclosed and the representations are shown below.

Q1. Do you agree that Rother District Council should introduce a CIL?
No comment at this stage.

Q2. Do you agree that there is [a] clear infrastructure funding gap?
No comment at this stage.

Q3. Do you agree with the proposed residential CIL charging zones?
The supporting document to the Preliminary Draft Charging Schedule (PDCS) the 'Rother District Council Community Infrastructure Levy Economic Viability Assessment' (PBA, July 2014) states (para. 4.3.24) that:

"The Core Strategy identifies a strategic site at North East Bexhill and the Council considers that two further sites at Battle and Bexhill could also be considered as strategic in nature. Whilst the further site at Bexhill and the one at Battle has not been specifically tested, the Council may want to take a similar approach to North East Bexhill and separately identify them within the charging schedule."

At Bexhill the Local Plan Core Strategy (as proposed to be modified and adopted) identifies a 'Strategic Growth Location' to the north-east of the town, often referred to as 'North-East Bexhill' and two 'Potential Broad Locations for Future Development', one to the north of the town and one to the west, often referred to as 'North Bexhill' and 'West Bexhill'. The North-East Bexhill site is a continuation of the current, saved, allocation in the previous Local Plan. The two Broad Locations are new to the Local Plan Core Strategy.

Clearly, if one Broad Location (North Bexhill) is to be identified as a 'strategic site' then the other Broad Location (West Bexhill) should be similarly identified. No explanation is provided in any of the documentation relating to the PDCS as to why the West Bexhill site has been omitted.

On this basis our client cannot agree with the proposed residential CIL charging zones.

Moreover, the PDCS refers to the three 'strategic sites' as 'strategic allocations' yet the sites at North Bexhill and West Bexhill are only 'Broad Locations' and have not yet been allocated for development, thus the terminology used in the PDCS could be viewed as misleading.

Q4. Do you agree with the proposed CIL charge rates for residential uses?
Funding Gap
The gist of CIL is that a local authority identifies a level of growth and a level of infrastructure investment necessary to support that growth and then, if possible, requires a standard charge from new development to pay for that infrastructure.

However, it is unfortunately inevitable that due to the high cost of infrastructure, there is often a residual funding gap. For instance, in the neighbouring District of Wealdon, where 450 new homes are required every year and where the process of adopting CIL is more progressed, the total cost of all infrastructure is estimated at £67.5m, and with £19.1m of funding already identified it is estimated that CIL would deliver just over half (54%) of the remaining funding required (£26m out of £48.4m), leaving a residual funding gap of £22.4m.

In comparison, the PDCS explains that for Rother, where 335 new homes are required per year, a total infrastructure cost of £172m has been identified, and with £39m of funding already identified it is estimated that CIL would deliver around a quarter (24-26%) of the remaining funding required (£32-36.4m out of £133m), leaving a residual funding gap of £96.6-101m.

The Infrastructure Funding Gap Analysis (RDC August 2014) notes in conclusion that:
"...there will remain a significant shortfall in funding that will need to be found from other sources whose funding has yet to be determined." (RDC emphasis)
Thus our client is concerned that the significance of the residual funding gap could lead to pressure in the future to increase the CIL rate and adversely affect the viability of development proposals. To address this it would appear evident that the Draft Regulation 123 List requires reconsideration to reduce the overall infrastructure cost.

Anticipated Quantum of Development
Whilst the Economic Viability Assessment correctly identifies (para. 3.2.1) the Local Plan Core Strategy requirement for "at least 5,700" new homes between 2011 and 2028, later figures in the Assessment are both inconsistent and appear to reflect the lower housing target expressed in earlier versions of the Core Strategy; for instance (Table 4.7: Distribution of development):

Settlement - Anticipated number of dwellings (incl. affordable)
Bexhill & Hastings Fringe - 2,000
Battle - 400
Rye - 200
Villages - 900
TOTAL - 3,500

and (Table 6.2: Residential potential CIL receipts):

Settlement - Anticipated number of dwellings (incl. affordable)
Bexhill & Hastings Fringe - 2,600
Bexhill - 600
Bexhill Strategic sites - 1,950
Hastings Fringe - 50
Battle - 160
Rye - 120
Villages - 900
TOTAL - 3,780

whereas the figures in the Submission Core Strategy and as proposed to be adopted (Figure 8 / Proposed Modification 7.14) are:

Settlement - Anticipated number of dwellings (incl. affordable)
Bexhill & Hastings Fringe - 2,095-2,330 3,200-3,350
Bexhill - 2,050-2,250 3,100
Hastings Fringe - 45-80 100-250
Battle - 400-440 475-500
Rye - 250-350 355-400
Villages - 950-1,000 1,670
TOTAL - 3,700-4,100 At least 5,700

The modified Local Plan Core Strategy even highlights that (para. 7.50 / Proposed Modification 7.15):
"Taking account of outstanding planning permissions, there is a need to provide for a 4295* dwellings in the District as a whole between 2011 and 2028"

This would suggest that the calculations of the CIL required per area of floorspace has been miscalculated on the assumption that several thousand homes less than are in fact planned will be provided. On this basis it wold appear that the proposed CIL rates could be reduced and yet CIL overall generate the same contribution towards infrastructure funding.

Proposed CIL Rates
With regard to the proposed CIL rates for residential uses, there would appear to be no justification for these. Having analysed the potential maximum (CIL) headroom (Table 4.7) (otherwise referred to as the 'overage'), the Economic Viability Assessment then states (para. 4.4.1) that a CIL charge is set that is well under this point for a number of reasons. It then states (para. 4.4.2) that whilst it would be conceivable to adopt an arithmetic approach to converting the 'overage' into a CIL rate, the Assessment states that PBA "prefer to use our professional judgement based on experience...and make recommendations for the LPA to consider"; no other explanation is given for how the recommended rates were arrived at - in other words the figures appear to have been plucked out of thin air.

On this basis the Assessment (Table 4.8) makes the following recommendations:

Charging Zone, Charging Area, CIL Rate (£ / sqm)
1 - Battle & Rural North & West - £240
2 - Rye & Rural East - £160
3a - Bexhill Central & East - £40
3b - Bexhill West - £200
4 - Strategic Allocations - £100

Whilst the Assessment states that the recommended rate has not been calculated but rather that it is based on a professional judgement, it is notable that the recommended CIL rate is generally between 32-48% (i.e. almost exactly a third to a half) of the overage; it thus appears that the figures recommended do in fact derive from a very crude calculation.

Without any further explanation, the PDCS then proposes (Table 1) different rates for two zones:

Charging Zone, Charging Area, CIL Rate (£ / sqm)
3a - Bexhill Central & East - £100
3b - Bexhill West - £180

On the basis of an average three-bedroom house of circa. 100 sqm this equates to a CIL Levy of:

Charging Zone, Charging Area, CIL Rate (£ / sqm)
1 - Battle & Rural North & West - £24,000
2 - Rye & Rural East - £16,000
3a - Bexhill Central & East - £10,000
3b - Bexhill West - £18,000
4 - Strategic Allocations - £10,000

By way of comparison, the process of adopting CIL in the neighbouring District of Wealdon is more advanced than in Rother. Wealdon abuts two of the proposed charging zones - Zone 1: Battle, Rural North & West, and Zone 3a: Bexhill West.

Whilst the rates proposed for within Rother are, respectively, £240 and £180, the rates chargeable immediately across the District boundary are, respectively, £180 and £110. For an average three-bedroom house of circa. 100 sqm this equates to an additional cost of between £6-7,000.

Throughout the development of the Local Plan Core Strategy the Council emphasised the difficulty in bringing forward residential development within the District. Our client is this concerned that such a high CIL rate, and also such a high cost when compared to the neighbouring District, is likely to result in decreased in the housing market within Rother.
On this basis our client cannot agree with the proposed CIL rates for residential uses.

Q5. Do you agree with the proposed CIL rates for non-residential development?
It is presumed that the references in the PDCS to 'residential uses' are intended to refer to development in Use Class C3 'Dwelling Houses' and that the reference, under 'Non-Residential Development' to 'Assisted Living / Extra Care Housing' is intended to refer to development in Use Class C2 'Residential Institutions'.

It is noted that the CIL Rate for 'Assisted Living / Extra Care Housing' is specified where there is no affordable housing. As affordable housing is not required for solely Use Class C2 proposals, this caveat is not required.

As with the setting of the CIL rates for residential uses, the Economic Viability Assessment has not explained the method by which the recommended figure of £250 / sqm (which is first and only mentioned in the overall report

Recommendations (Table 6.1)) was arrived at. It is thus assumed that as with the recommended residential CIL rate where this appears to be between a third and a half of the overage, the figure recommended in relation to Assisted Living / Extra Care Housing of £250 / sqm is almost exactly half the overage (£498 / sqm, reported in the Assessment as £500 / sqm); no explanation or justification for the proposed rate has been provided.

For a nursing home of up to 3,000 sqm as proposed by our clients on land to the west of Bexhill, this would result in a CIL cost of £750,000, which our clients predict would have a significant effect on the viability of the development and the likelihood of it being delivered.

On this basis our client cannot agree with the proposed CIL rates for non-residential development.

Q6. Do you support the introduction of an instalment policy in Rother for CIL payments?
Yes; however, our client has no suggestions on the form of instalment policy that should be adopted by the Council, but would welcome the opportunity to discuss this matter further and make further submissions should these be considered of assistance, following this consultation or through later consultations.

Q7. Do you have any views on whether the District Council should introduce a discretionary and exceptional relief policy.
Yes; however, as the Council has not made a decision on whether to adopt a discretionary and exceptional relief policy, our client has no suggestions on the form of instalment policy that should be adopted by the Council, but would welcome the opportunity to discuss this matter further and make further submissions should these be considered of assistance, following this consultation or through later consultations.

Q8. Do you agree with the proposed draft R123 list?
The NPPG advises (Paragraph: 096 Reference ID: 25-096-20140612) that:
"Regulation 123 of the Community Infrastructure Levy Regulations...provides for charging authorities to set out a list of those projects or types of infrastructure that it intends to fund, or may fund, through the levy."

However, there is a distinct lack of correlation between the Draft Regulation 123 List of infrastructure and the infrastructure projects listed in the Infrastructure Delivery Plan (IDP) (RDC, June 2014), and many projects identified in the IDP are only listed as being at 'concept' stage, with some even only being described as 'desirable', yet they appear in the Draft Regulation 123 List.

A number of infrastructure projects identified in the Draft Regulation 123 List are also not identified in the IDP as being the recipients of CIL funding; for instance the £130m funding required for the upgrading of the rail line is identified in the IDP as being funded by the DfT, Network Rail and SELEP.

The NPPG also advises (Paragraph: 097 Reference ID: 25-097-20140612) that:
"Where the regulation 123 list includes a generic type of infrastructure (such as 'education' or 'transport'), section 106 contributions should not be sought on any specific projects in that category."
and (Paragraph: 100 Reference ID: 25-100-20140612) that:
"Individual projects on the charging authority's list of infrastructure that it proposes to fund from the levy...cannot be funded by s106 contributions."

The Draft Regulation 123 List as contained within the PDCS contains a number of generic entries such as "bus shelters", "public realm improvements", "improvements to walking and cycling corridors", "public car park facilities", "children and young people's play areas", "Coombe Valley County Park", and so on and notes that exclusions will be facilities required in direct relation to a specific development.

However, it is unclear exactly what is proposed to be funded by direct contribution and what is to be funded through CIL. As such it is not clear to developers whether they will be liable for CIL and for other unspecified facilities that the Council considers to be directly-related to a specific development proposal.

On this basis our client cannot agree with the proposed draft R123 list.

Q9. Do you have any further comments on the PDCS?
No comment at this stage.