Document 12927078

Report Title
Community Infrastructure Levy
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Overview and Scrutiny Date: 20th Sept 2011
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Agenda Item No_________________12______
This report outlines the process of securing
contributions towards infrastructure needs in the district
through the development management process. It
explains the Community Infrastructure Levy (CIL), the
process required for its introduction and how CIL might
benefit local communities.
CIL has the potential to raise significant additional
resources to help fund the infrastructure which is
necessary to deliver the growth proposed in the
Council’s adopted development plans. CIL would be a
fairer, more transparent, and potentially a more
administratively efficient mechanism for securing
developer contributions towards infrastructure than
through the existing planning obligations mechanisms.
At present the Council does not have sufficient evidence
in relation to infrastructure and the costs of provision or
the potential impacts of CIL on development viability in
the district which would be required to support CIL
introduction and this work will need to be undertaken
before a CIL could be introduced within the District.
That Scrutiny Committee recommends to Cabinet
that the Council introduces CIL and that the
Planning Policy and Built Heritage Working Party
progresses the detailed work in relation to
infrastructure planning, viability testing, and
preparation of a Draft Charging Schedule.
Cabinet Member(s)
Ward(s) affected : All
Contact Officer, telephone number and email: Mark Ashwell, 01263 516325,
1.1 It is an established part of the planning system that those who secure planning
permission for the development of land should contribute towards meeting the need
for new or improved infrastructure which is required in connection with their
development. Local Authorities are able to secure such contributions either through
the direct provision of infrastructure by the developer or the payment of monies to
deliver that infrastructure. Typically these contributions are made in relation to larger
scale developments and might include both physical and social infrastructure such as
affordable housing, local road improvements, provision for public open space and its
on-going maintenance, funding for additional school places, library facilities and other
public services.
1.2 These contributions have mainly been secured through a process of legal
agreements under Section 106 of the Town and Country Planning Act 1990 where
the Planning Authority agrees to the grant of planning permission subject to the prior
completion of a legally binding agreement to provide the required infrastructure.
Highway improvements can be secured through Section 106 Agreements but are
more often covered by separate agreements with the County Council under Section
278 of the Highways Act.
Current Policy and Approach
Adopted Core Strategy Policy (CT2) and site specific policies in the
Allocations Development Plan recognise that in many instances development will
only be able to proceed if local infrastructure, services and community facilities are
improved. Policy CT2 indicates that such improvements may be required in relation
to development proposals for 10 or more dwellings and that the mechanism for
making contributions (either as direct provision or through a financial contribution) will
be published in a Planning Obligations Supplementary Planning Document (SPD).
This SPD has not yet been produced and contributions are currently negotiated in
accordance with agreed protocols and interim policy guidance.
2.2 In preparing the Core Strategy and the Site Allocations Development Plans it was
recognised that in some parts of the District there are known infrastructure deficits
which are expected to be addressed through the investment programmes of
providers. For example, in some locations upgrades to Sewage Treatment Works will
be necessary before growth can proceed and these would be funded through the
investment programmes of Anglian Water. In these cases approved policies indicate
that development may need to be delayed until these investments have been made.
In relation to affordable housing, educational provision, localised highway
improvements and the provision of public open space, it was proposed that
contributions would be secured through the completion of Section 106 Legal
Agreements negotiated on a case by case basis through the determination of
planning applications. In practice, the small scale of most developments in the
District over the past few years has rarely triggered the need for significant
What is CIL
3.1 The Government has decided that the process of securing developer
contributions through legal agreements has been slow, creates uncertainty, and does
not secure contributions from smaller scale developments - notwithstanding that
these collectively place addition burdens on infrastructure and services. Nationally it
is thought that just 14% of new development makes any significant contribution to
local infrastructure provision associated with new development.
The Government’s preferred approach is therefore to apply a “tariff” on most new
development at the point when planning permission is granted. The Government’s
view is that this tariff (the Community Infrastructure Levy) would be fairer, faster and
a more certain and transparent system. The intention is that levy rates would be set
in consultation with local communities and the development industry, providing
developers with much more certainty ‘up front’ about how much money they would be
expected to contribute. The levy would apply to most new development above
100sqm in size and to all new dwellings, except affordable housing units, and would
therefore spread the ‘burden’ of contributions across a much broader spectrum of
development than has previously been the case.
Importantly, CIL is intended to be directly related to the delivery of the growth
proposed in Development Plans and would operate as a contribution towards, rather
than a replacement of other infrastructure funding. The levy is intended to ‘unlock’ the
growth that is proposed in Development Plans by raising funds that can be spent on
the infrastructure which is necessary to allow this growth to occur. Once set, CIL
would be a non-negotiable tariff which would become payable upon commencement
of development, or other agreed time, and would be recorded as a charge against
the land.
3.2 Government advice states that CIL contributions should not be set at a level that
risks the delivery of the Development Plan objectives by making development
unviable. The guidance also states it would be possible to charge differential rates
within an area to cover viability issues for different types of development (eg
residential, commercial, retail) and across different geographical areas or sub zones.
CIL charging schedules would be subject to consultation and examination in a similar
way to a Development Plan. The Charging Schedule would set out an amount which
the Council would charge for each new square metre of development built within
different categories of development and provide evidence showing why a charge was
necessary and reasonable.
3.3 Affordable and social housing projects, as well as charitable developments,
would be exempt from the levy and there is provision for further local exemptions,
although these would need to be rigorously justified. Currently it is proposed that
developer funded affordable housing would continue to be delivered through planning
obligations under S106 agreements and not CIL, as could other site specific works
such as localised road improvements.
3.4 Regulations have been passed which allow, but do not require, a local authority
to charge a CIL levy. Those local authorities who prepare Development Plans would
be a Charging Authority. In Norfolk the responsibility therefore falls to the District
Councils to prepare a CIL, should they choose to do so. In most circumstances the
Charging Authority will also be the Collecting Authority.
3.5 As part of the recent announcements in the Localism Bill, the Coalition
Government has indicated that neighbourhoods should receive a meaningful
proportion of the funds raised from the CIL. These could pass directly to the local
neighbourhood so community groups could spend the money locally. The precise
mechanism as to how this would work is not clear at this stage although some
authorities are considering the possibility of earmarking an agreed proportion of the
levy for projects / infrastructure proposed at a neighbourhood level.
What is the process for introducing CIL?
4.1 The Charging Authority firstly has the option of whether to introduce CIL, or
simply continue with using the existing planning obligations processes for seeking
developer funding.
Where the local authority opts to go down the CIL route, there is a formal process for
its introduction, which involves developing and adopting a “Charging Schedule”. The
Charging Schedule sets out the infrastructure requirements and the proposed levy on
a per square metre basis for different types of development. The Charging Schedule
is subject to public scrutiny and examination.
Key stages in the preparation process are:
Identifying the total Infrastructure requirement arising from proposed
growth in the area. Any tariff needs to be supported by an understanding of
the Infrastructure that is required to support the development proposed in the
adopted Development Plan. Once the full extent of infrastructure needs are
identified these need to be fully costed. Existing funding sources are
deducted from the overall cost to establish a “funding gap”. The Government
does not require the development industry to fund all new infrastructure but
expects a contribution to be made in so far as it is necessary to allow
development to take place, or to take place earlier than might otherwise have
been the case.
The current North Norfolk Core Strategy adopted in September 2008 is supported
by a high level understanding of infrastructure needs, but did not include a formal
Infrastructure Plan or an understanding of the full costs of provision/availability of
existing funding. A detailed Infrastructure Study would therefore need to be
commissioned to bring this work up to date.
Decide what is in CIL and what is not.
A decision would need to be taken in relation to which types of infrastructure
might be funded via the levy. An authority might decide that some types of
provision, for example small scale site specific works, are best secured through
the existing Section 106 process. There is no prescription in relation to what
should, and should not, be included.
• Preparation of evidence on economic viability.
Any tariff that is set must be subject to viability testing to ensure that it is not set
at a level which would undermine delivery of the Development Plan. A key piece
of evidence at the Examination would be a comprehensive assessment of likely
impacts on development viability including how CIL might impact on different
scales and types of development in different locations.
Formal consultation on the Charging Schedule.
A draft Charging Schedule must be published for a minimum of a four week
consultation period, inviting comment on the proposals by the development
industry and local communities.
Examination in Public – chaired by an Independent Inspector.
Inspectors are appointed by the Planning Authority and need not be a
Government Inspector. The Examination process is similar to that employed in
consideration of LDF Development Plan Documents with the Inspector publishing
his/her findings and making recommendations. The Examination would focus on
the evidence that is produced to support the proposed tariffs. (Core Strategy,
Allocations DPD, Infrastructure Plan, Viability Assessment, Consultation
responses and how the LPA has taken these into account). Whilst Development
Plans are tested for ‘soundness’, Charging Schedules are examined for
The CIL must be the subject of a formal Council resolution to adopt.
Implement and establish administrative processes for collection,
distribution, spending and monitoring.
Administrative processes would need to be established to allow the Council to
collect and distribute CIL. The Council is also required to publish details of what
is collected and how it is spent in its Annual Monitoring Report. CIL need not be
spent for the purposes for which it was collected, Spending Authorities are able to
set their own priorities for expenditure. The regulations anticipate close working
with communities to establish priorities.
What could CIL cover?
5.1 The definition of infrastructure included within the regulations is very broad. The
key principle is that the Infrastructure should be necessary to facilitate growth and
CIL should be a contribution towards provision rather than a substitute for other
5.2 Pending the preparation of an Infrastructure Plan, it is not possible to be definitive
in relation to what might be included within a CIL for North Norfolk. However the Core
Strategy provides a broad understanding of likely infrastructure requirements which
will be necessary to underpin delivery of the Plan. Table 1 (Appendix xxx) is
illustrative of the potential areas which could be considered for CIL contributions.
These should be treated as illustrative at this stage.
How much could CIL raise and how does this compare to the Section
106 process?
6.1 The level at which CIL could be set in North Norfolk will not be known until such
time as a detailed Infrastructure Plan has been produced and CIL levels have been
viability tested. Government estimates that nationally CIL could raise up to £1 billion
in additional funding. As an example, those authorities that have progressed as far as
preparing draft Charging Schedules are suggesting a levy in the range of £50 - £100
per square metre on residential developments. This equates to £3,500 - £7,000 for
each new dwelling based on a typical floor area of 70 sqm per dwelling. The
Government’s own Impact Assessment accompanying the Regulations appears to
anticipate similar levels of charge.
6.2 Up to 5,000 new dwellings may be built in the District over the next 15 years or
so, of which approximately 1,500 could be affordable and therefore exempt from any
levy. Set at the above levels this residential development could contribute between
£12 and £25 million towards infrastructure provision over the 15 year period.
Contributions from other types of development are likely to be substantially less.
6.3 In the last three years just 23 developments in the District have been subject to
Section 106 Agreements. This low number is indicative of the small scale of the
majority of developments which have been approved. There were only 5 examples
where financial payments were made directly to the District Council amounting to
£40,000 towards maintenance of public open space. In the same period around
£100,000 was collected by the County Council towards schools, libraries and the fire
service. These figures exclude financial contributions and physical works undertaken
to the public highway which are often funded under separate agreements with the
County Council. Had CIL been in place over the same period residential development
(based on actual housing completions excluding affordable housing) could have
delivered approximately £5.5 million in contributions if set at the lower £50 per sqm
figure referred to above.
7.1 Historically only a small proportion of new development in the District has made
any contribution towards wider infrastructure needs. The practice has been to seek
contributions only from relatively large scale residential proposals with little or no
contribution from commercial or smaller scale residential schemes. Seeking
contributions from a broader spectrum of development is considered to be both fairer
and has the potential, depending on the level of charge, to make a greater
contribution towards infrastructure needs.
7.2 Notwithstanding the land allocations made in the Site Allocations Development
Plan, much of the future development in the District will continue to comprise small
scale developments not previously liable to contribute. In these cases a CIL levy
would represent an additional cost and this may raise concerns about the continued
viability of smaller scale developments. The regulations envisage that viability testing
would be undertaken on a range of developments (size, type, location) across the
District and that levy rates would be set at a level which would not seriously
undermine delivery of the development plan. However, there is no requirement to
show that all development would continue to be viable following the introduction of a
Levy and consequently it may prove more difficult, following the introduction of CIL to
deliver smaller developments particularly on brownfield sites. In North Norfolk it will
be particularly important to ensure that any CIL does not undermine the viability of
smaller brownfield redevelopment opportunities as these will comprise an important
component of the regeneration of some of the Districts towns.
7.3 Affordable housing contributions from the private development industry are
currently provided on the basis that either the developer and/or the land owner will
subsidise the cost of affordable housing. There is a concern that CIL will add
additional costs which may make it more difficult to secure affordable housing,
particularly as CIL is a non-negotiable payment which will take priority over other
contributions when considering scheme viability. Similarly, it may become more
difficult to secure other site specific infrastructure not covered by CIL contributions
where development viability is marginal. These issues would need to be reflected in
the level of any tariff and taken fully into account in viability testing.
7.4 Using new powers introduced in the Localism Bill, the Government will require
charging authorities to allocate a meaningful proportion of levy revenues raised in
each neighbourhood back to that neighbourhood. This will ensure that where a
neighbourhood accommodates new development, it receives sufficient money to help
it manage those impacts.
7.5 Local authorities will need to work closely with neighbourhoods to decide what
infrastructure they require, and balance neighbourhood funding with wider
infrastructure funding that supports growth.
Financial implications
8.1 There is limited staff resource within the Council to undertake CIL preparation.
Consultancy support is likely to be required in relation to reviewing infrastructure
needs and undertaking viability analysis. There is some financial provision for this
within the existing Planning Policy budget (combined costs estimated at
approximately £50,000) and therefore, if the Council is minded to proceed with the
introduction of a CIL and preparation of a Charging Schedule, it is requested that
authority is provided to procure such technical reports. Government guidance states
that Charging Authorities are able to recover the costs of CIL preparation and
ongoing administration through the CIL charge subject to these not exceeding 5% of
monies collected, although clearly there are some upfront costs which the authority
would need to bear before income from any CIL was to be received.
9.1 Developer contributions towards the provision of infrastructure, whether collected
via Section 106 Agreements or CIL, are an integral part of ensuring the sustainability
of future development.
Equality and Diversity
10.1 CIL would not have an adverse impact on any social group. By making
communities more sustainable, CIL would facilitate economic growth and the
provision of improved neighbourhood infrastructure and so create opportunity for all.
The infrastructure and services that CIL could provide would enhance accessibility
and quality of life for all sectors of society, and could help to deliver new
infrastructure that serves different needs within the community, for example, by
increasing mobility and accessibility. Consequently it is not expected that the
introduction of CIL would raise any particular equality or diversity issues.
Section 17 Crime and Disorder considerations
11.1 This report raises no Section 17 issues.