Draft Charging Schedule and Draft Regulation 123 List
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Draft Charging Schedule and Draft Regulation 123 List
9
Representation ID: 21797
Received: 26/03/2015
Respondent: Peacock & Smith Ltd
Peacock and Smith on behalf of Wm Morrison object to the proposed CIL rate of £100 or £120/sq. m. for Convenience Retail. The draft CIL charge will put undue additional risk on the delivery and will be an unrealistic financial burden on new development.
Test for a large convenience store of circa 5,000 sqm,
Increased level of developers' profit to reflect risk,
Underestimated build costs assumptions,
Has sensitivity analysis been applied to accommodate costs and values,
The viability appraisals need to allow for marketing and letting/sales costs,
Clarification is required as to the finance rate that has been adopted.
Morrisons have further instructed Aspinall Verdi to review the CIL evidence base. There is concern that the previous comments provided by Aspinall Verdi have not been addressed and that the proposed CIL rate is on the 'margins of viability'. We consider that the draft CIL charge will put undue additional risk on the delivery of any such proposals and will be an unrealistic financial burden on new retail development. This, in turn, poses a significant threat to potential new investment and job creation in the local area at a time of economic recession and low levels of development activity. Our client is concerned that a balance has not been found between infrastructure funding requirements and viability and subsequently the suggested charge will have a significant adverse impact on the overall viability of future retail development in the district.They conclude that the viability study requires further work and revisions. In particular:
We recommend that a further retail typologies are tested, in particular a large convenience store of circa 5,000 sqm.
We would suggest an increased level of developers' profit to reflect the risks involved in retail development.
The build cost assumptions which are approximately 23% cheaper than the BCIS benchmarks we have identified for supermarkets.
Details are required as to how the viability buffer has been calculated and whether this buffer is based on the findings of sensitivity analysis which test the impact of changes in costs and values on the surplus available for CIL.
The viability appraisals need to allow for marketing and letting/sales costs as these are real costs that will be incurred by a developer seeking to bring forward a retail convenience scheme.
Clarification is required as to the finance rate that has been adopted and also the programme assumptions used in the financial model, given that even slight changes in timings can have a significant impact on viability.
The residual land value calculation needs to be reviewed given our comments above and the CIL charging needs to be amended accordingly.
Aspinall Verdi's comments can be viewed by clicking on the following link:
http://www.rother.gov.uk/CHttpHandler.ashx?id=23610
