Posted on May 28, 2013

As many of our CIL blog followers will know, the DCLG consultation on further reforms to CIL closes today. Set out below are our responses to some of the more significant proposals for change to the regulations.

The question numbers refer to DCLG’s consultation paper. For more information contact info@aspinallverdi.co.uk

Question 2 – We are proposing to allow charging authorities to set differential rates by reference to both the intended use and the scale of development. Do you agree with the proposed change?

Yes  –  It is important to allow Charging Authorities the flexibility to charge CIL by zone, use and scale of development as this enables Authorities to refine the ‘appropriate balance’ for development that is likely to come forward in their area.  This should be justified having regard to the Economic Viability evidence.

A further proposal that would be an even better ‘lever’ to enable development, jobs and growth would be to enable Charging Authorities to also differentiate by reference to greenfield and brownfield (previously developed) sites. This would recognise the fundamentally different development economics and risks of development on a greenfield site compared to a brownfield regeneration context (justified by reference to the Economic Viability evidence in the area).  This would be more aligned to the original recommendations of the Baker Report (recommendation 26) on capturing windfall gains which was the pre-curser to Planning Gain Supplement and now CIL.  This would enable Charging Authorities to set different (lower) CIL rates on brownfield sites which would promote sustainable development using existing infrastructure and not stymie regeneration projects.

Question 6 – We are proposing to move the date from when further limitations on the use of pooled planning obligations will apply (to areas that have not adopted the levy) from April 2014 to April 2015. Do you agree?

Yes – The relationship between pooled S106 and CIL does need further clarification and therefore the date for placing limitations on pooled S106s should be extended to April 2105.

Paragraph 36 refers to the use of pooled S106 applying to “types of general infrastructure contributions, such as education and transport”.  This may be the intension, but it is not our understanding of the regulations.  Our understanding of the regulations is that the limitation on pooled S106 relates to all S106s including ones relating to site specific infrastructure.  For example, say a new road by-pass is scheduled in the Regulation 123 List, this would be funded by CIL.  Say then that further estate roads were required to be developed off that by-pass which were not identified in the Reg 123 List.  The Local Authority would have to amend the Regulation 123 List to enable it to spend CIL receipts on the estate roads or the developers would have to fund the road themselves.  This is fine if there are less than 5 developers, but would not be open as a mechanism if there were more than five.

It seems that the rule that pooled S106s have to be limited to five is an arbitrary distinction and it would be more sensible to enable Local  Authorities and any number of developers the flexibility to use pooled S106 as a delivery tool where ‘the infrastructure is not specified in the Regulation 123 List’.

Question 7 – Do you agree that regulation 123 (excluding regulation 123(3)) should be extended to include section 278 agreements so that they cannot be used to fund infrastructure for which the levy is earmarked?

Yes  – This is important to prevent ‘double-dipping’ where Local Authorities charge CIL for an item of infrastructure which is then delivered through s278.

Question 8 – Do you agree that, where appropriate and acceptable to the charging authority, the levy liability should be able to be paid (in whole or in part) through the provision of both land and/or on-site or off-site infrastructure?

Yes  – Again, this is important to enable developers the ability to work with Local Authorities to deliver infrastructure that may be required for a particular scheme and the wider community.   This proposal would enable developers to have ‘control’ over the timing and delivery of essential infrastructure.  It is important that where developers are pro-active and deliver infrastructure that are not penalised by being charged CIL for the same (double-dipping) or other community infrastructure.

Question 9 – Do you agree that actual construction costs and fees related to the design of the infrastructure should be used to calculate the sum by which the amount of levy payable will be reduced, when the levy is paid by providing infrastructure in kind?

Yes  – The costs and design of the infrastructure should be properly assessed by a suitably qualified Quantity Surveyor and/or engineer.  The value of the works and the CIL ‘off-set’ should be published and subject to the same public scrutiny as for CIL receipts.

Question 12 – Do you agree that the phasing of levy payments will make adequate provision in relation to site preparation?

Yes – This needs to be publicised as best practice to developers and Charging Authorities to ensure that developers are aware of the need to phase the construction of the scheme carefully to ensure there is a separate and clearly identified phase 0 (site preparation) and that the phase 1 building does not include any ‘up-front’ demolition or site preparation works.

 

Question 15 – Should we change the regulations to remove the vacancy test, meaning the levy would generally only be payable on any increases in floorspace in refurbishment and redevelopment schemes, provided that the use of the buildings on site had not been abandoned?

Yes – This is an important and very welcome proposal which will help to deliver regeneration as the economy and property market recovers.

Reference was made that the effect of removing the vacancy test would be that CIL revenues are likely to be reduced (paragraph 66). On the contrary, we would suggest that CIL revenues are likely to increase (on net additional floorspace) due to the greater clarity and certainty around the existing building.

Question 20 – Which of the following options do you prefer (a) remove the requirement for a planning obligation which is greater than the value of the CIL charge to be in place, before discretionary relief in exceptional circumstances can be provided, or (b) change the requirement so that the relevant planning obligation must be greater than a set percentage of the value of the CIL charge (for example, 80%), or (c) keep the existing requirement?

Option a) – The rationale for linking Discretionary Relief and the value of the S106 has never been satisfactorily argued.  If a scheme is not viable – it is not viable.  Granting relief up to a limit of another obligation may not make that scheme viable.  Relief will be required up to the amount required to make the scheme viable if the scheme is to be delivered.  We therefore support the proposal to remove the value of the S106 limit.