Please Contact: Emma Denny
Please email: emma.denny@north-norfolk.gov.uk
Please Direct Dial on: 01263 516010
5 July 2013
A meeting of the Cabinet of North Norfolk District Council will be held in the Council Chamber at
the Council Offices, Holt Road, Cromer on Monday 15th July 2013 at 10.00 a.m.
At the discretion of the Chairman, a short break will be taken after the meeting has been running
for approximately one and a half hours. Coffee will be available in the staff restaurant at 9.30 a.m.
and at the break.
Members of the public who wish to ask a question or speak on an agenda item are requested to
arrive at least 15 minutes before the start of the meeting. It will not always be possible to
accommodate requests after that time. This is to allow time for the Committee Chair to rearrange
the order of items on the agenda for the convenience of members of the public. Further information
on the procedure for public speaking can be obtained from Democratic Services, Tel: 01263
516010, Email: democraticservices@north-norfolk.gov.uk
Sheila Oxtoby
Chief Executive
To: Mr B Cabbell-Manners, Mr T FitzPatrick, Mrs A Fitch-Tillett, Mr T Ivory, Mr J Lee, Mr W
Northam, Mr R Oliver, Mr R Wright
All other Members of the Council for information.
Members of the Management Team, appropriate Officers, Press and Public.
If you have any special requirements in order
to attend this meeting, please let us know in advance
If you would like any document in large print, audio, Braille, alternative format
or in a different language please contact us
Chief Executive: Sheila Oxtoby
Corporate Directors: Nick Baker & Steve Blatch
Tel 01263 513811 Fax 01263 515042 Minicom 01263 516005
Email districtcouncil@north-norfolk.gov.uk Web site northnorfolk.org
AGENDA
1.
TO RECEIVE APOLOGIES FOR ABSENCE
2.
MINUTES
(Page 1)
To approve, as a correct record, the minutes of the meeting of the Cabinet held on 10 June
2013.
3.
PUBLIC QUESTIONS
To receive questions from the public, if any.
4.
ITEMS OF URGENT BUSINESS
To determine any other items of business which the Chairman decides should be
considered as a matter of urgency pursuant to Section 100B(4)(b) of the Local Government
Act 1972.
5.
DECLARATIONS OF INTEREST
Members are asked at this stage to declare any interests that they may have in any of the
following items on the agenda. The Code of Conduct for Members requires that
declarations include the nature of the interest and whether it is a disclosable pecuniary
interest.
6.
CONSIDERATION OF ANY MATTER REFERRED TO THE CABINET BY THE
OVERVIEW AND SCRUTINY COMMITTEE OR COUNCIL FOR RECONSIDERATION
To consider matters referred to the Cabinet (whether by the Overview and Scrutiny
Committee or by the Council) for reconsideration by the Cabinet in accordance with the
provisions within the Overview and Scrutiny Procedure Rules or the Budget and Policy
Framework Procedure Rules.
7.
CONSIDERATION OF REPORTS FROM THE OVERVIEW AND SCRUTINY COMMITTEE
To consider any reports from the Overview and Scrutiny Committee, which may be
presented by the Chairman of the Overview and Scrutiny Committee, and determination of
any appropriate course of action on the issues so raised for report back to that committee.
8.
PLANNING POLICY AND BUILT HERITAGE WORKING PARTY
(Page 6)
To receive and consider the minutes of the meeting of the Planning Policy and Built
Heritage Working Party held on 24 June 2013.
The following recommendations were made to Cabinet:
RECOMMENDED TO CABINET
MINUTE 6: NORTH NORFOLK BUILDINGS AT RISK REGISTER
That Cabinet adopts the North Norfolk Buildings at Risk Register, with the possible
inclusion of those buildings contained on the Broads Authority’s list which fall within North
Norfolk, and that subject to investigation of the legal requirements, the list be published on
the Council’s website.
MINUTE 7: HOLT DEVELOPMENT BRIEF:
That Cabinet approves the Holt Development Brief, subject to minor amendments to the
wording as suggested by the Highway Authority, and to ensure internal access roads did
not divide the open space.
MINUTE 9: ANNUAL MONITORING REPORTS AND HOUSING LAND SUPPLY –
PUBLICATION OF AMR AND STATEMENT OF FIVE YEAR SUPPLY OF RESIDENTIAL
DEVELOPMENT LAND
That Cabinet approves the publication of the Annual Monitoring Reports and Statements of
Five Year Land Supply covering the period 2010/13.
MINUTE 10: COMMUNITY INFRASTRUCTURE LEVY
That Cabinet suspends consideration of the potential introduction of the Community
Infrastructure Levy (CIL).
(Please note the Community Infrastructure Levy is considered at Agenda Item 10)
9.
MATERIALS RECYCLING FACILITY
Summary:
(Page 12)
(Appendix 1 – p.28) (Appendix 2 – p.30)
This report outlines the process, outcome and implications of the
procurement which has been undertaken by the eight Norfolk
Councils for the future processing of dry recyclable material collected
at the across Norfolk. The process has been undertaken in
accordance with EU procurement rules to select the most
economically advantageous bidder.
The report also seeks authority to complete the final negotiations
and to enter into a 10 year contract with Norse Commercial Services
Ltd and for this to be then delivered via a Teckal-compliant Joint
Venture Company (JVC) which will be formed involving the company
and all local authorities. (Note: “Teckal”- compliant is a term used in
procurement for certain types of company owned or controlled by
public bodies.)
Conclusions:
The procurement process for the contract to deliver sorting, bulking
and sale of the household recycling material collected across Norfolk
has tested the market and returned a result which provides greater
benefits for residents and the consortium authorities.
The closer ties between the Councils, which have been forged during
the procurement and evaluation process, will be further enhanced
through the operation of the new JVC. This should provide additional
benefits going forward, through closer cooperation and future sharing
of information, experience and best-practice.
The proposed contractual arrangements will deliver reduced costs to
the Council through better service and ease of use to our residents,
along with environmental benefits from increased recycling
Reasons for
recommendations
To ensure that arrangements are put into place to process the dry
recyclates collected in the Council’s area from 1 April 2014.
To achieve an increase in recycling rates.
Recommendations
CABINET
DECISION
Cabinet RESOLVES to inform Council of the following
resolutions:
a) to award to Norse Commercial Services Ltd (“Norse”) a
ten year contract for the recycling of dry recyclable
material (being the enhanced contract with glass) pursuant
to the procurement process carried out, on the basis that
such contract be entered into between the District Councils
of the Norfolk Waste Partnership and the JVC (as defined
below);
b) to approve the entry into a joint venture shareholders’
agreement between the District Councils and Norse on the
basis of the Memorandum of Understanding attached at
Appendix 1 for the purposes of establishing a JVC to be the
contractor under the recycling contract; and
c) to approve the entry into such ancillary documents and
the taking of any further actions as shall be necessary or
appropriate pursuant to the establishment of the JVC and
the award of the recycling contract to the JVC.
d) to grant delegated authority to the Chief Executive
Officer in consultation with the relevant Portfolio Holder to
conclude those agreements and ancillary documents on
behalf of the Council, including any minor changes to
approve the final terms of the Memorandum of
Understanding and Contract with Norse and to conclude
such arrangements between the start date of the new
contract and the commissioning date of the new equipment
to be installed as are appropriate to enable the extended
range of materials to be efficiently and cost effectively
recycled
Cabinet Member(s)
Ward(s) affected
Contact Officer:
Telephone no:
Email:
10.
Cllr J Lee
All
Nick Baker
01263 516221
Nick.baker@north-norfolk.gov.uk
COMMUNITY INFRASTRUCTURE LEVY
(Page 31)
(Appendix A – p. 47)
Summary:
This report explains the Community Infrastructure Levy, how it
relates to the process of securing planning obligations through
Section 106 Agreements as part of the planning process, and
assesses if it is appropriate at this time to introduce a levy in
North Norfolk.
Options considered:
Whether to introduce or not introduce CIL in North Norfolk.
Conclusions:
The evidence indicates that infrastructure is required, that there
is unlikely to be sufficient funding available, and that a system
which requires developer contributions towards funding is
justified.
The growth which is planned in the district can be delivered with
or without CIL. Market conditions remain uncertain and delivery
rates of development are already below required targets. Many
large scale proposals are unable to deliver fully policy compliant
development whilst remaining commercially viable.
On balance it is considered that the introduction of CIL at this
time represents a risk to the development strategy and it is
recommended that consideration of CIL should be suspended
and reconsidered at a future date when there are clearer signs
of economic recovery.
Recommendations:
COUNCIL
DECISION
Reasons for
Recommendations:
Members are asked to consider and RECOMMEND TO
COUNCIL:
That consideration of the potential introduction of CIL is
suspended.
To encourage the delivery of development in the District.
LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW
(Papers relied on to write the report, which do not contain exempt information and which are not published
elsewhere)
Draft Consultant’s reports on Viability and Infrastructure needs.
Cabinet Member(s)
Ward(s) affected
Contact Officer:
Telephone no:
Email:
11.
HOUSING INCENTIVES
Cllr B Cabbell Manners
Cllr T Ivory
All
Mark Ashwell
01263 516325
Mark.ashwell@north-norfolk.gov.uk
(Page 38)
(Appendix A – p. 47) (Appendix B – p.55)
Summary:
This report outlines the slowdown in housing delivery as a
result of the recession and recommends temporary measures
related to evidence on affordable housing components of
planning applications and additionally the introduction of an
incentive scheme for a trial period to incentivise housing
delivery in the district.
Options considered:
Alternative figures for the affordable housing thresholds could
be considered but these would not be based on the viability
evidence.
Conclusions:
Work undertaken in the context of the Community
Infrastructure Levy (CIL) on development viability has
suggested that the Core Strategy policy site size threshold
and affordable housing percentage requirements are not
viable for many locations across the district particularly when
combined with other policy requirements.
This evidence can be taken into account as a material
consideration in the determination of individual planning
applications. As a result, it is suggested that for a temporary
period the Council indicates that the CIL viability evidence will
be regarded as sufficiently material to justify the higher site
size thresholds and lower percentage requirements outlined
in this report and that such proposals need not be subject to
site specific viability assessment.
Furthermore, the evidence in relation to below target housing
completions in the district justifies the introduction of
measures to further incentivise housing development.
Overall, these measures represent a reasonable and
proportionate response to the current down turn in the
housing market. If adopted they should encourage
development in North Norfolk whilst ensuring that the quality
of developments remain acceptable.
Recommendations:
Members are asked to consider and RECOMMEND TO
COUNCIL:
1. That the provisions of the National Planning Policy
Framework, slow housing delivery rates, and the CIL
housing viability evidence are sufficiently material to
justify the revised affordable housing site size
thresholds and percentage requirements outlined in
part 4 of this report in the determination of individual
residential planning applications.
2. That the incentive scheme set out in part 4 is
approved
3. That the measures outlined in the report are widely
advertised within communities and the development
industry.
COUNCIL
DECISION
To encourage higher levels of house building in the District
and help address the identified shortfall in new house
completions.
Reasons for
Recommendations:
LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW
(Papers relied on to write the report, which do not contain exempt information and which are not published
elsewhere)
Consultant’s report on Viability
Cabinet Member(s)
Ward(s) affected
Contact Officer:
Telephone no:
Email:
Cllr B Cabbell Manners
Cllr T Ivory
All
Mark Ashwell
01263 516325
Mark.ashwell@north-norfolk.gov.uk
12.
EXCLUSION OF PRESS AND PUBLIC
To pass the following resolution:
“That under Section 100A(4) of the Local Government Act 1972 the press and public be
excluded from the meeting for the following item of business on the grounds that they
involve the likely disclosure of exempt information as defined in paragraphs _ of Part I of
Schedule 12A (as amended) to the Act.”
13.
PRIVATE BUSINESS
Agenda Item 2__
CABINET
Minutes of the meeting of the Cabinet held on Monday 10 June 2013 at the Council
Offices, Holt Road, Cromer at 10.00am.
Members Present:
Mr B Cabbell Manners
Mrs A Fitch-Tillett
Mr T FitzPatrick
Mr J Lee
Mr W Northam
Also attending:
Mrs A Arnold
Mrs L Brettle
Mrs A Claussen-Reynolds
Mrs P Grove-Jones
Ms B Palmer
Mr R Reynolds
Mr E Seward
Mr N Smith
Mr G Williams
Officers in
Attendance:
12.
The Chief Executive, the Corporate Directors, the Head of Finance,
the Head of Organisational Development, The Head of Assets and
Leisure, the Revenues and Benefits Services Manager and the Policy
and Performance Management Officer.
APOLOGIES FOR ABSENCE
Mr T Ivory and Mr R Oliver
13.
MINUTES
Mr G Jones had requested an amendment to the minutes of 13 May, to show that he
had been present at the meeting. The minutes of the meeting held on 13 May 2013
including the amendment were then confirmed as a correct record and signed by the
Chairman.
14.
PUBLIC QUESTIONS
None received
15.
ITEMS OF URGENT BUSINESS
The Chairman informed Members that, as required under the notification provisions
of the Scheme of Delegation, the Council in conjunction with Crisp Maltings were
seeking leave to appeal against the recent High Court judgment against the
Development Committee’s decision to grant planning permission for a lorry park and
silos at Great Ryburgh (application reference PF/09/0966).
Mr B Cabbell Manners, Portfolio Holder for Planning explained that NNDC had taken
this decision after receiving advice from Counsel that there were strong legal grounds
for an appeal to be made.
Cabinet
1
10 June 2013
1
The Local Member for Great Ryburgh, Mrs A Green said that she strongly opposed
the decision to appeal.
The Chairman said that this item was for information only and there would be no
debate.
16.
DECLARATIONS OF INTEREST
None
17.
2012/2013 OUTTURN REPORT
Mr W Northam, Portfolio Holder for Finance introduced this item. He explained that
the report presented the outturn position for the revenue account and capital
programme for the 2012/13 financial year. As at 31 March 2013, the outturn position
on the revenue account showed an underspend of £185,662, which was being
recommended to be transferred to the Invest to Save earmarked reserve. The
general fund balance remained within the current recommended level.
Mrs P Grove-Jones sought clarification on the different sums of money allocated to
the Handy Man cost centre. The Head of Finance explained that the first sum was
the costs charged to the year and the second sum was for gross direct costs. She
added that the Handy Man was an internal team of three people based in Property
Services.
It was proposed by Mr W Northam, seconded by Mr B Cabbell Manners and
RECOMMENDED to Council
a) The final accounts position for the general fund revenue account for 2012/13;
b) The transfers to and from reserves as detailed within the report (and appendix C)
along with the corresponding updates to the 2013/14 budget;
c) The transfer of the surplus of £185,662 to the Restructuring and Invest to Save
Reserve;
d) The financing of the 2012/13 capital programme as detailed within the report and
at Appendix D;
e) The balance on the general reserve of £1,745,452 at 31 March 2013;
f) The updated capital programme for 2013/14 to 2014/15 and the associated
financing of the schemes as outlined within the report and detailed at Appendix E.
Reasons for the decision:
To approve the outturn position on the revenue and capital accounts for 2012/13 that
will be used to produce the statutory accounts for 2012/13. To provide funding for
ongoing projects and commitments within earmarked reserves as detailed in the main
body of the report and to earmark funding for one-off costs in relation to business
transformation in respect of ICT and Customer strategies.
18.
TREASURY MANAGEMENT ANNUAL REPORT 2012-13
Mr W Northam introduced this item. He said that the report set out the Treasury
Management activities undertaken during 2012/13 compared with the Treasury
Management Strategy for the year. He explained that interest rates had declined
significantly in recent years and this had had an impact on the interest the Council
Cabinet
2
10 June 2013
2
received from its investments. The investment income for the year was £206,481
which compared to a revised budget of £269,000. He concluded by saying that the
Council’s treasury management activities were undertaken in accordance with the
CIPFA Code of Practice on Treasury Management.
It was proposed by Mr W Northam seconded by Mr B Cabbell Manners and
RECOMMENDED to Council
That the Treasury Management Annual Report and Prudential Indicators for 2012/13
be approved.
Reasons for the Decision:
Approval by Council demonstrates compliance with the Codes.
19.
DEBT RECOVERY 2012-13
Mr W Northam introduced this item. He said that this was an annual report detailing
the Council’s collection performance and debt management arrangements for
2012/13. Regarding the collection of Council tax, he praised the staff for achieving
97.9% under very difficult circumstances following problems with new software.
It was proposed by Mr W Northam, seconded by Mr B Cabbell Manners and
RECOMMENDED to Council
To approve the annual report giving details of the Council’s write-offs in accordance
with the Council’s Debt Write-Off Policy and performance in relation to revenues
collection.
Reasons for the recommendation:
To demonstrate that the Council is complying with its Debt Write-off Policy and
performance in relation to debt collection.
20.
ANNUAL REPORT AND AMENDMENT TO ANNUAL ACTION PLAN 2013-14
The Leader and Portfolio Holder for Organisational Development, Mr T FitzPatrick,
introduced this item. He explained that the report presented the key elements of the
draft Annual Report 2012/13. The final version would be published in July 2013. The
Annual Report represented the culmination of the annual planning and reporting
process which ensured that the Council managed its performance in a robust way.
Mr FitzPatrick highlighted a new addition to the Annual Action Plan 2013/14 under
the Localism theme. The new activity would be ‘we will work with Town and Parish
Councils, local organisations and community and voluntary groups to improve health
and wellbeing consistent with the aims of the Health and Wellbeing Board’.
It was proposed by Mr T Fitzpatrick, seconded by Mrs A Fitch-Tillett and
RESOLVED
1) To note the contents of this report.
2) To give authority to the Leader of the Council and the Chief Executive to approve
the final public version of the report.
Cabinet
3
10 June 2013
3
3) To give authority to the Leader of the Council and the Chief Executive to approve
the communications plan for the Annual Report 2012/13.
4) To approve the addition of an activity to the Annual Action Plan 2013/14 as shown
in paragraph 5.2
21.
LEISURE CONTRACT PROCUREMENT
Mr J Lee, Portfolio Holder for Leisure, introduced this item. He explained that the
Council’s current leisure contract was due to expire on 31 March 2014. There was an
option within the current contract to extend the arrangements for up to 5 years and
the report outlined the potential options around the procurement of a new contract
whilst also considering the future of the Splash leisure facility in Sheringham. Mr Lee
said that entering into a contract extension with the current providers DC Leisure
would give the Council the necessary time to explore all of the potential operating
models whilst also engaging with the market, through the production of a Prior
Information Notice (PIN) to help shape any new contract. It would also allow for any
detailed investigations to be undertaken into all of the potential options regarding the
Splash leisure facilities.
It was proposed by Mr J Lee, seconded by Mrs A Fitch-Tillett and
RESOLVED
1.
2.
3.
Approve a contract extension with DC Leisure to enable a full analysis of all
the options available for future contractual arrangements and the potential
redevelopment of the Splash site.
Delegate to the Corporate Director and Portfolio holder for Leisure the power
to progress the arrangements for/and to conclude the appropriate length of
contract extension with DC Leisure to achieve the best outcome for the
Council.
Approve budget provision of £9,000 from the General Reserve to commission
support from Improvement East to facilitate the production of a Prior
Information Notice (PIN) to help consult with the market to explore contract
options.
Reason for the Decision:
To allow for sufficient time to fully explore all of the potential operating models and
procurement options in relation to any new leisure contract whilst potentially
achieving revenue savings on the current contract cost. A contract extension would
also provide the time to assess the options regarding any re-provision of the Splash
facility.
Before the meeting closed, Mr W Northam thanked individual staff in financial
services for their work in relation to the reports discussed, and offered his sincere
thanks, endorsed by Mrs A Fitch-Tillett, to all staff for their commitment and
willingness to support NNDC. The Leader agreed and endorsed these sentiments on
behalf of Cabinet.
The Meeting closed at 10.24 am
Cabinet
4
10 June 2013
4
_______________
Chairman
Cabinet
5
10 June 2013
5
24 JUNE 2013
Minutes of a meeting of the PLANNING POLICY & BUILT HERITAGE WORKING PARTY
held in the Council Chamber, Council Offices, Holt Road, Cromer at 10.00 am when there
were present:
Councillors
Mrs S A Arnold (Vice-Chairman)
M J M Baker
B Cabbell Manners
N D Dixon
Mrs A R Green
Mrs P Grove-Jones
Miss B Palmer
P Williams
D Young
Mrs V Uprichard – observer
Officers
Mr M Ashwell – Planning Policy Manager
Mr P Godwin – Conservation, Design and Landscape Manager
Mr J Williams – Team Leader (Major Developments)
(1)
ELECTION OF CHAIRMAN
It was proposed by Councillor Mrs S A Arnold, seconded by Councillor Miss B
Palmer and
RESOLVED
That Councillor B Cabbell Manners be elected Chairman of the Working
Party.
(2)
APOLOGIES FOR ABSENCE
An apology for absence was received from Councillor P W High.
(3)
MINUTES
The Minutes of the meeting held on 8 October 2012 were approved as a correct
record and signed by the Chairman, subject to the inclusion of Councillor N D Dixon’s
apologies under minute 33.
(4)
ITEMS OF URGENT BUSINESS
The Chairman stated that there were no items of urgent business which he wished to
bring before the Working Party.
(5)
DECLARATIONS OF INTEREST
Councillor B Cabbell Manners declared an interest in respect of items on the agenda
as he was a Trustee in an application which was in process of consideration.
Councillor M J M Baker declared an interest in Minute (7) as he ran a business in
Holt.
Planning Policy & Built Heritage Working Party
1
6
24 June 2013
(6)
NORTH NORFOLK BUILDINGS AT RISK REGISTER
The Working Party considered item 1 of the Officers’ reports in respect of the
adoption of the Council’s own Buildings at Risk Register which explained the process
by which Listed Buildings and Scheduled Ancient Monuments come to be identified
on the register.
The Conservation, Design and Landscape Manager explained that English Heritage
maintained a list of Grade I and II* Listed buildings. The Council’s list would cover all
listed buildings at risk in the District regardless of their grade. He referred to a
number of buildings which were included on the list and the ways in which the
Council was able to assist in their repair or preservation. He emphasised the
importance of listed buildings and heritage assets in contributing to the character of
the District. He also stated that the reuse of such assets contributed to the
sustainability agenda and could very often perform as well as modern buildings.
The Conservation, Design and Landscape Manager stated that the aim of the
Register was not to shame anyone. Its purpose was to list the buildings which the
Council was aware of, which would be updated on a regular basis, and use it to
address any prevailing issues. Wherever possible, the Council would work with
owners to bring about repairs, or through the North Norfolk Historic Buildings Trust
and English Heritage.
The Conservation, Design and Landscape Manager recommended that Cabinet be
requested to adopt the Buildings at Risk register, and suggested that basic
information in respect of buildings on the register be published on the Council’s
website. This was proposed by Councillor M J M Baker and seconded by Councillor
Mrs S A Arnold.
Councillor Mrs S A Arnold updated the Working Party with regard to the Mundesley
Hospital building, which she understood had been purchased.
Councillor Mrs V Uprichard expressed concern as to the power the Council had to
ensure that historic buildings were cared for. She asked whether North Walsham
Parish Church was on the list.
The Conservation, Design and Landscape Manager explained that North Walsham
Parish Church was not in sufficiently poor condition to be on the list. The list would
be monitored and updates made to it as required. The list would be used to address
some of the key buildings and, where necessary, the Council had the powers to deal
with issues arising.
Councillor N D Dixon stated that the Broads Authority maintained a similar list. He
asked if there was merit in including on the Council’s list those buildings which also
fell within the NNDC administrative area. He considered that it was necessary to be
creative and innovative in planning terms as to what could be done to assist people
in saving buildings, rather than just providing financial assistance, and requested
more information on the work the Council was doing in this regard.
Councillor P Williams suggested that a Lottery-funded apprenticeship scheme be
introduced to train people in the traditional skills required to maintain historic
buildings, similar to the millwright apprenticeship run by the Broads Authority.
Planning Policy & Built Heritage Working Party
2
7
24 June 2013
Councillor Mrs S A Arnold requested that the Working Party be updated with regard
to progress. The Chairman suggested that regular updates be provided at
appropriate intervals at future meetings.
Councillor P Williams suggested that a map be included on the website for people to
click on. The Conservation, Design and Landscape Manager stated that he would
need to check the legal position as to how all information could be placed on the
website.
RECOMMENDED
That Cabinet adopts the North Norfolk Buildings at Risk Register, with
the possible inclusion of those buildings contained on the Broads
Authority’s list which fall within North Norfolk, and that subject to
investigation of the legal requirements, the list be published on the
Council’s website.
(7)
HOLT DEVELOPMENT BRIEF
The Working Party considered item 2 of the Officers’ reports which provided a
summary of the representations made in relation to the draft Development Brief for
land at Heath Farm, Hempstead Road, Holt following a recent public consultation
exercise.
The Team Leader (Major Developments) reported that the Highway Authority’s
response had been received and emailed to Members. The number of responses
received from members of the public had been low, but a successful exhibition had
been held in Holt and it was clear that the site was of great interest to local people.
Highway issues had been raised as the main concern.
The Team Leader (Major Developments) presented the Development Brief and
Masterplan. He outlined the issues raised by the Highway Authority, and in
particular, the requirement to prevent the use of Hempstead Road by HGV traffic,
with possible closure of Hempstead Road or physical measures to prevent access by
HGVs. The Highway Authority had suggested changes to the Brief to allow flexibility.
The Highway Authority also did not favour the land earmarked for ‘other residential’
being accessed from Hempstead Road because of poor visibility and lack of
footpaths. However, the Brief indicated possible access through the centre of the
area earmarked for public open space. The Team Leader (Major Developments)
considered that it would be preferable to relocate this access to the edge of the
employment area.
The Team Leader (Major Developments) reported the comments of Councillor P W
High, a local Member, who was unable to attend the meeting. Councillor High
supported the Brief. However, he did not support the closure of Hempstead Road,
but would support restrictions which would prevent access by heavy vehicles.
The Team Leader (Major Developments) stated that no substantial changes to the
Brief were necessary as a result of the consultation exercise. He recommended that
the wording be amended as requested by the Highway Authority and a slight change
made in respect of access from the ‘other residential’ site to avoid crossing the centre
of the public open space. Detailed highway matters would be addressed through
planning applications. He reported that a planning application was being prepared
for a large part of the site earmarked for phases 1 and 2.
Planning Policy & Built Heritage Working Party
3
8
24 June 2013
The Team Leader (Major Developments) recommended that the Brief be referred to
Cabinet with a recommendation for approval.
Public Speaker
Mrs D Dann (Holt Town Council)
Councillor M J M Baker, a local Member, reported that he had spoken to Officers of
Norfolk County Council who appeared to accept that Hempstead Road would not be
closed, accept the pedestrian link to the town centre and that the Hopkins Homes
part of the site would be accessed from Hempstead Road. He stated that there was
a footpath from the entrance to that part of the site which was classified as ‘adequate
or good’. The developers had indicated to him that phase 1 could be expanded
slightly to allow the road through the site to be built in its entirety. He considered
that restrictions and traffic calming would be preferable to closure of Hempstead
Road. This would reduce the amount of traffic using Hempstead Road and improve
pedestrian safety. He considered that it would be necessary to introduce traffic
calming on Charles Road to prevent it being used by HGVs. He considered that the
hopper bus being proposed by the Town Council should be taken into account.
The Team Leader (Major Developments) explained that the physical works to restrict
HGVs included in the brief were non-specific and could include signage.
Councillor P Williams considered that phase 1 should include the link road down to
the industrial estate, with narrowing of the access to Hempstead Road to prevent
HGV access. He supported the provision of a hopper bus. He supported the Team
Leader (Major Developments)’s suggestion for re-routing the access from Hopkins
Homes’ site.
Councillor Mrs S A Arnold considered that the all of the green open space area
should be developed in phase 1.
Councillor M J M Baker stated that whilst he would like to see the open space and
roadway developed as part of phase 1, but it could be expensive and require more
plots to be developed in phase 1 to fund it.
The Team Leader (Major Developments) stated that amendments to the phasing of
development would be acceptable. With regard to the hopper bus, if it were the
expectation that it should be funded by the developer, there may be implications for
financial viability. The Development Brief made provision for public transport and
pedestrian movement through the site. He suggested that hopper bus provision be
addressed through a planning application rather than through the Development Brief.
Councillor D Young supported the views of Councillor M J M Baker regarding
phasing. He referred to the Town Council’s concerns regarding parking, and
considered that very few people would walk into the town centre from the site. He
considered that the hopper bus could be mentioned in the Brief. He considered that
there would be a need for bus access to Hempstead Road.
It was proposed by Councillor M J M Baker, seconded by Councillor P Williams and
Planning Policy & Built Heritage Working Party
4
9
24 June 2013
RECOMMENDED
That Cabinet approves the Holt Development Brief, subject to minor
amendments to the wording as suggested by the Highway Authority,
and to ensure internal access roads did not divide the open space.
(8)
LEGISLATION UPDATE – PUBLICATION OF GROWTH AND INFRASTRUCTURE
ACT
The Working Party noted item 3 of the Officers’ reports which provided an overview
of the provisions of the Growth and Infrastructure Act in relation to land use planning
and explained new allowances for undertaking development without the need to
apply to the Council for planning permission.
The Planning Policy Manager anticipated that the changes in legislation outlined in
the report would start having an impact in a year to eighteen months’ time.
RESOLVED
That the report be noted.
(9)
ANNUAL MONITORING REPORTS AND HOUSING LAND SUPPLY –
PUBLICATION OF AMR AND STATEMENT OF FIVE YEAR SUPPLY OF
RESIDENTIAL DEVELOPMENT LAND
The Working Party considered item 4 of the Officers’ reports which provided an
overview of the main development trends in the District in the period 2011-2013 and
measured performance against adopted Core Strategy policy and corporate
objectives and seeks authority to publish Annual Monitoring reports and Five Year
Land Supply Statements.
Councillor Mrs S A Arnold raised concerns regarding land banking and referred to a
radio report which indicated that the Government intended to bring about the
development of large sites more quickly.
The Planning Policy Manager stated that the Government was considering the
introduction of a land banking tax, but he was unsure as to whether it would progress.
His team was considering incentives which could be used which were linked to oneyear planning permissions and positive measures to ensure delivery of sites.
Councillor Mrs P Grove-Jones referred to the need to create employment
opportunities as well as build houses.
In answer to a question by Councillor P Williams, the Planning Policy Manager stated
that he thought the figures excluded the Broads Authority area as they recorded their
development separately. He would check and contact Councillor Williams direct.
In answer to a question by Councillor N D Dixon, the Planning Policy Manager
explained that the reference in the report to rising values related to increases in
house prices but there was no reported increase in the volume of new-build sales.
Councillor Mrs V Uprichard expressed concern that in the future it might be desirable
to allow large housebuilders to develop sites in order to meet targets, but at the
expense of affordable housing or other benefits. She referred to a site in North
Planning Policy & Built Heritage Working Party
5
10
24 June 2013
Walsham which was being proposed by Hopkins Homes with no affordable housing
or Section 106 contributions.
The Planning Policy Manager explained that the site at North Walsham had been
derelict for a number of years and housing was not being delivered against the target.
There was a balance to be struck between securing delivery now or waiting for
economic recovery. These judgements would be for Development Committee to
make when the application came before it. He stated that it might be necessary to
take a different view in respect of developments in North Walsham than elsewhere in
the District.
Councillor Mrs A R Green asked if there was an advantage in encouraging an
element of self-build on some of the sites. The Planning Policy Manager considered
that self-build was unlikely to achieve the level of building required but it was not
ruled out.
RECOMMENDED
That Cabinet approves the publication of the Annual Monitoring Reports
and Statements of Five Year Land Supply covering the period 2010/13.
(10)
COMMUNITY INFRASTRUCTURE LEVY
The Working Party considered item 5 of the Officers’ reports which provided an
update in relation to the potential introduction of the Community Infrastructure Levy in
the District.
It was proposed by Councillor Mrs S A Arnold, seconded by Councillor M J M Baker
and
RECOMMENDED
That Cabinet suspends consideration of the potential introduction of the
Community Infrastructure Levy (CIL).
The meeting closed at 11.35 am.
Planning Policy & Built Heritage Working Party
6
11
24 June 2013
Agenda Item 9
MATERIALS RECYCLING FACILITY
Summary:
This report outlines the process, outcome and
implications of the procurement which has been
undertaken by the eight Norfolk Councils for the future
processing of dry recyclable material collected at the
across Norfolk. The process has been undertaken in
accordance with EU procurement rules to select the
most economically advantageous bidder.
The report also seeks authority to complete the final
negotiations and to enter into a 10 year contract with
Norse Commercial Services Ltd and for this to be then
delivered via a Teckal-compliant Joint Venture Company
(JVC) which will be formed involving the company and
all local authorities. (Note: “Teckal”- compliant is a term
used in procurement for certain types of company
owned or controlled by public bodies.)1
Conclusions:
The procurement process for the contract to deliver
sorting, bulking and sale of the household recycling
material collected across Norfolk has tested the market
and returned a result which provides greater benefits for
residents and the consortium authorities.
The closer ties between the Councils, which have been
forged during the procurement and evaluation process,
will be further enhanced through the operation of the
new JVC. This should provide additional benefits going
forward, through closer cooperation and future sharing
of information, experience and best-practice.
The proposed contractual arrangements will deliver
reduced costs to the Council through better service and
ease of use to our residents, along with environmental
benefits from increased recycling
Reasons for
recommendations
To ensure that arrangements are put into place to
process the dry recyclates collected in the Council‟s area
from 1 April 2014 to achieve an increase in recycling
rates.
12
Recommendations
Cabinet RESOLVES to inform Council of the
following resolutions:
a) to award to Norse Commercial Services Ltd
(“Norse”) a ten year contract for the recycling
of dry recyclable material (being the enhanced
contract with glass) pursuant to the
procurement process carried out, on the basis
that such contract be entered into between the
District Councils of the Norfolk Waste
Partnership and the JVC (as defined below);
b) to approve the entry into a joint venture
shareholders’ agreement between the District
Councils and Norse on the basis of the
Memorandum of Understanding attached at
Appendix 1 for the purposes of establishing a
JVC to be the contractor under the recycling
contract; and
c) to approve the entry into such ancillary
documents and the taking of any further
actions as shall be necessary or appropriate
pursuant to the establishment of the JVC and
the award of the recycling contract to the JVC.
d) to grant delegated authority to the Chief
Executive Officer in consultation with the
relevant Portfolio Holder to conclude those
agreements and ancillary documents on behalf
of the Council, including any minor changes to
approve the final terms of the Memorandum of
Understanding and Contract with Norse and to
conclude such arrangements between the start
date of the new contract and the
commissioning date of the new equipment to
be installed as are appropriate to enable the
extended range of materials to be efficiently
and cost effectively recycled .
Cabinet Member(s)
Ward(s) affected
Contact Officers:
Telephone no:
Email:
Cllr J Lee
All
Nick Baker
01263 516221
Nick.baker@north-norfolk.gov.uk
13
1
Introduction
1.1
The seven Norfolk district councils are waste collection authorities
(WCAs) and provide a service for the collection of dry recyclable waste
to their respective residents. In addition, some of them also collect this
material from their provision of a trade waste service and most use
community bring banks for the collection of glass to be recycled
Norfolk County Council is the waste disposal authority (WDA), which
also collects a range of dry recyclable material through its household
waste recycling centres (HWRCs). The County Council currently also
pays recycling credits to the WCAs at a set rate per tonne of
recyclables collected from domestic sources.
1.2
The WCAs, acting as a consortium, have an existing commercial
contract with Norfolk Environmental Waste Services Ltd (NEWS) for
the sorting, bulking and sale of the household recycling material
collected across the districts. NEWS is a subsidiary of Norse
Commercial Services Ltd, which is in turn a part of Norse Group, a
holding company wholly owned by Norfolk County Council.
1.3
The existing recycling contract commenced in 2003 and was extended,
within the terms of the contract, to its end date of March 2014. The
materials processed within this contract are paper and card, plastic
bottles, and steel and aluminium cans.
1.4
During 2012 consideration was given to a further extension of the
existing contract but this option was discounted in favour of tendering
the service in the open market. Accordingly, and having taken
guidance from Members via the Norfolk Waste Partnership (NWP),
officers progressed the procurement based on the following principles:
1.5

That it would be better to work together as a consortium to achieve
economies of scale and a better financial position through a
competitive bidding process.

That there is a genuine need to be able to collect a wider range of
materials as consistently requested by the public and Members.

That there is a need to maximise recycling rates, as per the agreed
Norfolk Waste Strategy.

That the future consortium model should be based on all Councils
being equal in terms of the same processing cost per tonne
regardless of location and transport costs.
Officers were therefore instructed to move forward with an EU
compliant procurement process, which would allow a range of contract
options to be considered, giving bidders the opportunity to propose
variant solutions as well as „base‟ bids compliant with the specification.
This meant that a competitive dialogue procurement process was
appropriate, as there was the potential to have to compare a range of
very different proposals and get the best from the market.
14
1.6
The County Council, which was not party to the previous contract,
joined the consortium, to potentially deal with the dry recyclate arising
from its operation of the HWRCs. This was agreed on a “nil obligated
tonnage” basis.
2.
Consortium procurement process
2.1
In February 2012 the NWP agreed the following principles:

Working together is preferred
authorities.

That all Councils would be equal partners in the consortium (this
relates to governance arrangements within the consortium; i.e.
each Council has one vote on decisions).

Services procured must be value for money – economic
imperatives require maximising financial gain.

The local economy will be supported as far as possible, within
procurement rules.

There will be more recycling and less landfill than currently.

Services will be easy for customers to use.

Existing inequities between partners should be addressed whilst
respecting financial pressures on each authority e.g. by the
provision of a mechanism to compensate those who have
furthest to travel to disposal/processing facilities, wherever this
might be located.
to
working as individual
2.2
All Councils agreed, through their own decision making processes that
they would enter into a consortium procurement based on an EU
compliant process to appoint the next contractor for this service area. It
was also agreed that Kings Lynn and West Norfolk Council (KLWN)
would act as the formal Procuring Authority for the purposes of the
legislation and would also provide the project and financial
management for the project.
2.3
In addition, independent, expert support was required for legal
services, waste technical consultancy and procurement advice and all
authorities agreed to fund these in equal share, with KLWN handling
formal instruction, financial payments, etc. Subsequently, Walker
Morris (legal), Birketts (legal), White Young Green (waste technical
consultancy) and ESPO (procurement advice) respectively, were
appointed to support various parts of the project.
2.4
In May 2012 the majority of the Councils within the NWP agreed that
financial stability and therefore guaranteed prices (as opposed to a
more risk–based, market price solution) was the most important issue
for councils going forward. This factor would drive the financial
evaluation model to be used for the procurement process.
15
2.5
The consortium also agreed that, in response to the desire to recycle
an extended range of materials, the new service should include mixed
rigid plastics (e.g. yogurt pots, margarine tubs and food trays) and that
bidders should also provide proposals for a mix of materials both with
and without glass bottles and jars ie to allow glass to be co-mingles
with the other recyclate. This would have the effect of responding to
customer aspirations, diverting more material from landfill and boosting
recycling rates across the county.
2.6
Given the above, much work was undertaken in developing and
agreeing on the form of the contract, specification, etc. and undertaking
a compliant, competitive dialogue process. The dialogue process
involved a number of stages, which concluded with the identification of
a preferred bidder in April of this year.
3.
Bid evaluation
3.1
Whilst a number of bidders had expressed interest and then initial
solutions, at the conclusion of the bidding process, detailed solutions
had been received from two bidders. These solutions were evaluated
by a team consisting of waste management officers from each Council,
along with the appointed consultants and financial support. A preferred
bidder was appointed in consultation with the NWP and following this,
further work was undertaken to test the robustness of the bid in terms
of the business case along with a number of bid clarifications.
3.2
The NWP agreed that financial evaluation of the bid would involve
three areas: guaranteed gate fee, income/profit share proposals and
the robustness of the figures used by each bidder. All of the financial
evaluation process has been peer reviewed by White Young Green, the
Councils‟ advisor on these matters and finance officers, led by King‟s
Lynn and West Norfolk BC.
3.3
To allow contracts of differing structure to be compared, a mechanism
was used whereby, for the guaranteed cost part of the evaluation, each
bidder‟s figures, together with the agreed anticipated tonnage of
material collected, were used to calculate the contract value for each
year.
This annual figure has been adjusted each year to take account of
agreed £/tonne savings relating to the cost of disposal, which will result
from the increased diversion of waste from landfill and to recycling. The
net annual figure is then discounted by 3% each year and the total
contract sum then divided by the number of years in the primary period
for the contract, giving the average annual cost to the Consortium.
Scores are then distributed according to each bidder‟s position in
relation to the best bid, which is awarded 100 points, and the worst bid
which is awarded 0 points, as shown in Table 1 below.
16
Table 1 – summary of the financial evaluation of the bids
Rank
Company
Type
bid
of Materials
Average Discounted
Price
Score
1
Norse
Enhanced
With Glass
£271,937.03
100.00
1
Norse
Variant
With Glass
£271,937.03
100.00
Enhanced
Without
Glass
£397,850.53
95.51
Variant
Without
Glass
£397,850.53
95.51
Variant
Without
Glass
£1,032,530.77
72.87
Variant
With Glass
£1,284,965.01
63.87
Enhanced
Without
Glass
£2,286,127.53
28.16
Enhanced
With Glass
£3,075,531.32
0
3
Norse
3
Norse
5
Bidder B
6
Bidder B
7
Bidder B
8
3.4
Bidder B
The profit/income share proposals, which accounts for 6.5 points out of
an evaluation potential total of 65, were evaluated by examining the
robustness of the proposals and the scale of financial benefits that
would be available to be shared by the Councils. In doing this, the
evaluation team has had to consider the following:
 credibility of the assumptions used,
3.5

completeness, quality, and integrity of information provided,

reasonableness of rates and margins,

acceptability of the level of third-party income assumed,

reasonableness of equity IRR,

reasonableness and robustness of the business case,

completeness of the bid forms/pricing schedules.
The robustness of the figures used by each bidder, accounting for 5.85
points, was evaluated by examining the following:


Cost assumptions;
Asset management plans;
17
 Operational methods and planned efficiencies;
 Market assumptions and projections;
 Income assumptions and projections;
 Strategic and corporate objectives for the Contract;
 Identified dependencies;
 Perceptions and management of Contract risks
 Deliverables from the Contract.
The score for all three of these elements were then added into the
overall scoring grid.
3.6
The future assumptions made by the bidders have been rigorously
cross checked as part of the evaluation process to test their financial,
inflation and waste arisings models, as follows:

3.7
Basket of recyclate materials including likely reduction in paper
over time and resultant change in overall composition
 Inflation basket e.g. fuel, labour; and the resultant impact on
operational costs
 Machinery wear and tear, replacement and capital expenditure
over the period of the contract
The reasons for the differences in the Norse and Bidder B bids were
also analysed and are acceptable to the evaluation team and our
consultants, for the following reasons:
 Transport costs higher for Bidder B
 New glass removal plant for Bidder B
 Exposure to Far East markets for recyclate for Bidder B
 Need to raise capital funding for Bidder B
3.8
As regards the overall evaluation incorporating the quality scoring
elements the summary outcome is shown in Table 2 below –
Table 2 – overall evaluation scores
Ranking
Bidder
Bid type
Service
Score %
1
Norse
Variant (JVC)
With glass
81.03
2
Norse
Compliant
With glass
78.43
3
Norse
Variant (JVC)
Without glass
77.37
4
Norse
Compliant
Without glass
76.07
5
Bidder B
Variant
Without glass
67.56
6
Bidder B
Variant
With glass
62.82
7
Bidder B
Compliant
Without glass
44.02
8
Bidder B
Compliant
With glass
29.19
18
4.
Successful bid
4.1
It is apparent from the evaluation, that the variant solution (ie including
the formation of a JVC) with glass processing included, tendered by
Norse Commercial Services Ltd was the most economically
advantageous tender and the clear „winner‟ based on the evaluation
criteria.
As this solution has also proposed the formation of a joint venture
company (JVC), representatives of the NWP and their legal advisors
met with Norse to determine the headline terms and conditions of the
proposal. These are outlined at 4.3 below.
4.2
The financial assumptions made in this bid have been further crosschecked as part of the evaluation process including the examination of
future trends for a ‟basket‟ of recyclate material, the effects of inflation
and the robustness of the technical and logistic solutions.
4.3
The headline terms of the JVC have been clarified with NORSE by an
officer group from the Officer steering group involving Chief Executives,
representative local authority Leaders with the assistance of Birketts
solicitors LLP (as agreed by the NWP). The key elements are:

Any joint venture company will be constituted with a newly
formed special purpose vehicle, “NEWCO”.

Each of the Councils will be entitled to 7% of the shares in
NEWCO. If any of the Councils do not participate in the joint
venture, their 7% entitlement will be taken-up by Norse.

The Councils will not be permitted to trade the shares held by
them in NEWCO; if any of the Councils leaves the joint venture it
will be required to transfer its shares to Norse at nil cost.

Norse is prepared to allow the assets to remain in, or to the
extent not already owned by NEWCO to be transferred to,
NEWCO in consideration for the Councils paying to Norse an
amount equal to 50% of the net asset value of NEWCO. Total
net asset value of NEWCO in 2013 balance sheet is likely to be
in the region of £4.7m. Norse has confirmed that it is not
prepared to negotiate on the purchase price for the assets.

The Councils will not be required to pay any amount for the
shares in NEWCO if Norse retains the assets of NEWS and
allows NEWCO to operate them for the purposes of the joint
venture.

The Board of NEWCO is to consist of 4 directors appointed by
Norse, and 3 directors appointed by the Councils.

Norfolk County Council must be represented at board level from
one of the 4 directors appointed by Norse. This is linked to
achieving Teckal status.
19

Norse and the Councils will need to negotiate and agree a
shareholders agreement in respect of the shares held by each of
them in NEWCO. This is a key document, as it will contain the
shareholder protections in favour of the Councils (as well as
Norse), it will also regulate how the shares are held and will set
out how NEWCO is to be governed.

Norse has agreed to indemnify NEWCO and the Councils in
respect of any liabilities incurred by NEWCO or the Councils in
connection with the employees at the end of the Recyclables
Contract and/or joint venture arrangements.

Norse has agreed to indemnify NEWCO and the Councils in
respect of any liabilities incurred by NEWCO or the Councils in
connection with the Edgefield landfill site.

Norse is prepared to consult with relevant 'white collar
employees', being those that are essential to the operations of
NEWCO, to see if those employees would be willing to transfer
to NEWCO.

It will be important for the Councils to have visibility over the
financial aspects of NEWCO e.g. the sale price of the raw
materials and who the raw materials are sold to.

The Councils will individually have the opportunity, but not
obligation, to support the development of NEWCO by providing
loans to NEWCO on commercial terms.
4.4
Given that the most economically advantageous bid was received from
Norse Commercial Services Ltd, it is proposed that the contract award
will be made to this entity and thereafter, with the benefit of legal
advice, using a recognised procurement „change mechanism‟ the
contract will then concurrently be placed with a Joint Venture Company
(JVC), who will then deliver it.
5.
Glass recycling
5.1
There were some initial concerns that mixing glass with the other
recycling streams may be detrimental to the overall quality of the sorted
recyclate, in particular the paper product recovered. However, the
Norse solution deals with glass and the potential contamination of other
recyclate using a well developed method statement which has been
verified by our waste management consultants, White Young Green.
The bid‟s pricing reflects modern glass removal technologies and
Norse have independently checked the likely market values for
recyclates with Price Waterhouse Cooper.
The results of these checks have been studied by the evaluation team.
As a result, officers are confident that the recycling credits arising from
the amount of glass collected outweighs the potentially lower prices
that may be received for paper and cardboard which has been comingled with glass.
20
5.2
Assuming this proposal is accepted, and judging by the experience of
other councils who have gone down the route of changing to glass
being co-mingled with other dry recyclates, the existing community
bottle banks will almost certainly become redundant, as residents will
change to the easier option of placing glass containers into their
recycling bin at home.
6.
Financial implications
6.1
The overall financial benefit for the Norfolk Councils involved in this
procurement, arising from the Norse bid, is based on three main
principles, as follows:



6.2
The initial gate fee offered is lower than the existing gate fee
(£21.08/tonne), although it should be acknowledged over the life
of the contact it increases to above this level, but at a rate that is
already known.
a projected „profit share‟ rate is available (based on the joint
venture model) albeit this is not guaranteed. Norse is however
reasonably confident that their business projections are robust
and this has been considered by finance officers.
The districts will be recycling more and disposing of less – as
projected by technical work undertaken by White Young Green
(WYG) and previously presented to the NWP.
The overall “profit share” is made up of two parts:
 An Income Share, when income from the contracted services and
materials reaches a certain point
 A Profit Share, arising from NEWS operations only (but with no
liabilities for closed landfills)
6.3
It should be recognised that the „profit share‟ outlined above is not fixed
or guaranteed and will be dependent on commodity prices and the
return on the investment within any JVC.
6.4
The MRF is located at Costessey, on the outskirts of Norwich. For
Norwich, Broadland and to a large extent, South Norfolk Councils,
recycling collection vehicles can tip directly at the MRF site but for
those located further afield it is necessary to tip collected recyclate at
transfer stations and then bulk haul the material to the MRF. The
operation of these transfer stations attracts some considerable costs,
which are currently borne by the individual Councils concerned.
6.5
The procurement process started with the clear understanding that the
geographical location of Councils should not disadvantage any single
authority going forward; i.e. that the costs per tonne of material and any
profit share arising would be the same for each Council. It was also
considered important that the overall financial position improved for the
consortium as a whole. However, it was always recognised that the
position of individual Councils may well change compared to the
21
existing NEWS contract, as a result of historic contractual issues and
that these changes could be positive or negative.
6.6
Based on an anticipated total annual tonnage of 86,000, used for the
evaluation of the contract, the initial financial evaluation suggests that
three of the districts will be worse off as a result of the new contractual
arrangements compared to the current arrangement.
It is proposed that this differential is addressed by a „smoothing‟
mechanism whereby Councils who improve their position forego some
income. The basis of the smoothing agreement proposed and agreed
by all participating Councils at the NWP meeting on 28 June 2013 is
set out in Appendix 2.
6.7
WYG, the Councils‟ waste management advisor, estimated the
minimum tonnage the Norfolk authorities should expect to collect each
year to be over 96,000 tonnes. This figure was calculated taking into
account „near neighbour‟, similar Councils, who already collected
materials to those proposed under this contract. Officers agreed to
take a more prudent view and the contract evaluation was made using
a figure of 86,000 tonnes (compared to the current total tonnage of
60,000 tonnes). The following table provides a summary of the tonnage
figures and the respective amounts for NNDC.
60,000
86,000
WYG Minimum
Estimate
96,000
7,222
2,617
11,180
12,423
9,839
11,180
12,423
Current
Tonnage (All Authorities)
North Norfolk:
Tonnage - Mixed
Tonnage - Glass
Total Tonnage North
Norfolk
6.8
Evaluated
Due to the effect that additional tonnages have on the financial position
of the Council, which is directly attributable to the impact of additional
recycling credits, the financial position will change between these two
different tonnages. The following table provides a summary of the
estimated financial impact that the different tonnages would have on
NNDC.
Net Position (including
recycling Credits)
Smoothing adjustment Year 1
Net Position Year 1 (new
contract)
Net Benefit
Scenario –
WYG Minimum
Estimate
Tonnage
12,423
£
Scenario Current
Tonnage of
9,839
Scenario Evaluated
Tonnage
11,180
£
£
(546,109)
(526,383)
(578,117)
0
(19,726)
7,131
(546,109)
(546,109)
(570,986)
0
(24,877)
22
Scenario Current
Tonnage of
9,839
Net Position (including
recycling Credits)
Smoothing adjustment Year 2
Net Position Year 2 (new
contract)
Net Benefit
Net Position (including
recycling Credits)
smoothing adjustment Year 3
Net position Year 3 (new
contract)
Net Benefit
Scenario –
WYG Minimum
Estimate
Tonnage
12,423
Scenario Evaluated
Tonnage
11,180
(546,109)
(538,793)
(591,906)
0
(6,585)
5,370
(546,109)
(545,378)
(586,536)
731
(40,427)
(546,109)
(546,060)
(599,981)
0
(39)
3,607
(546,109)
(546,099)
(596,374)
10
(50,265)
6.9
As mentioned above, the actual financial impact will be directly
influenced by the tonnages. The scenarios above assume that NNDC
would be in receipt of a „smoothing‟ adjustment for the first three years
based on the evaluated tonnages (86,000 total). An increase in
recycling material of up to just under 90,000 tonnes in total (assuming
NNDC‟s respective share stays the same) would move the Council
from being in receipt of a „smoothing‟ adjustment to making a
smoothing adjustment.
6.10
In addition to the direct implications of the new contract it is anticipated
that further savings of £8,600 per year relating to the current cost of
collecting glass at bring banks and paper will be achieved.
6.11
Furthermore, the removal of the community bring bank sites currently
used to collect predominantly glass from householders, will
consequentially remove the onward payment of recycling credits to
Parish Councils and other community groups. This will result in a
further revenue saving of approximately £56,000 per annum once the
new contract is in operation.
6.12
It is understood that the new contract will not be fully operational on 1
April and therefore there will be a part year implication in year 1 with a
full year implication commencing from year 2. A forecast of the
implications will be factored into the forthcoming budget process for
2014/15.
7.
Policy Implications.
7.1
The current policy of the Council is to minimise the impact that we have
on our environment through, amongst other measures, recycling more
waste. The proposed contract will enable householders to recycle
more of their waste in the green bin by adding a significant range of
new materials which can be collected, including plastic pots, tubs and
23
trays, tetra pak cartons, aluminium foil and foil trays, along with glass
bottles and jars.
The Council has had a policy of providing brings sites for glass and
paper at both village and supermarket sites. The need for the provision
of these facilities will no longer be necessary as the materials collected
are predominantly glass. When the full service is commenced, it is
proposed that the council will cease to provide bring sites for glass or
paper. Community groups who benefit from such facilities have been
written to, advising them of the likely changes to the current
arrangements.
The financial impact of the contract will also be to make the provision of
commercial recycling more attractive and will encourage businesses
which produce quality materials which may be recycled under the
councils scheme to do so.
It is anticipated that recycling rates will also rise. Clearly, the greater
the amount of waste recycled, the lower the amount of waste that
requires disposal in landfill or potentially other means. This has a
positive environmental outcome.
8.
Implications and Risks
8.1
Financial
There are a number of risks which could arise during the life of this
contract. These include:

change of law – covered by the normal legal approach to such
contracts

material composition and volume changes – the risk is borne by
the contractor, albeit that negative impact is likely to reduce
income to Councils

equipment/technology effectiveness – primarily a risk borne by
the contractor, although the method statements for this have
been studied during evaluation

loss of recycling credit payments – risk to the Councils, but there
is no Government proposal to change the current arrangements.

commodity values and market changes – the risk is borne by the
contractor, albeit that negative impact is likely to reduce income
to Councils. Again, the likely position was examined during
evaluation

delay to the commencement of the contract and increases in
recycling volumes not being achieved as forecast.
24
8.2
Legal
As with any EU procurement, there is a risk of challenge on contract
award and thereafter, depending on how the contract is administered. It
should be recognised that in-depth legal advice has been sought
throughout this process and the Eastern Shires Purchasing
Organisation (ESPO) have provided specialist procurement support.
The proposed JVC will obviously need to be legally compliant and
advice will be taken to ensure that risks in this regard are minimised.
Detailed legal advice has focused on „covering off‟, sharing or
minimising risks given the contract terms, conditions and specification
along with a robust examination of the underlying business case. As
the basic payment mechanism is based on a fixed gate fee and given
the proposal of a JVC, the financial risks, apart from the income share
and profit share outlined above, have been minimised. It should be
recognised that a JVC, by its nature, involves a degree of risk sharing.
The Teckal approach will also need to be considered by legal advisors.
8.3
Environmental – there will be a positive environmental impact from
additional landfill diversion and increased recycling and it is estimated
that at least an additional 2,500 tonnes of waste arising in NNDC will
be diverted from landfill annually based upon the figures produced by
our consultants White Young Green.
9.
Next Steps
9.1
During the period now, in which each Council decides to award the
contract to Norse Commercial Services Ltd, certain matters will need to
be completed, both within the consortium group and between the group
and Norse, as shown in the Table below.
9.2
Essentially, at this point, each Council is being asked to approve the
award. Once all councils have done this, the legal contracts can be
completed by the procuring authority, jointly on our behalf.
9.3
Clearly, the final legal documents need to be drafted, under advice.
The agreement between the Councils, which will set out how we will
together manage the contract, will also be completed.
9.4
Whilst the new contract will commence on 1 April 2014, it is recognised
that a multi-million pound investment is required to install and
commission the new equipment required for the additional materials
being proposed. Due to the extensive nature of the works, the MRF will
not be ready on time and that interim arrangements will be required to
be put in place. Officers are already working on the best option for this,
in terms of financial effect and service delivery and the details will be
agreed with Norse in due course.
9.5
A communication plan will also be agreed, to ensure that the public are
aware of when the new arrangements for actual collection of new
25
materials in each district and that key milestones such as award and
commencement are publicised.
Action
1.
Responsible Officer/Group
Negotiate and draw up final legal
contracts
(a) main Contract (Via Walker
Morris)
(b) JVC agreement (to be
confirmed) Complete financial
due diligence
(c) Review of documents prior
to signing
2.

Project Group (technical
waste and legal officers
from each council with
consultant support)

Project Sponsors (Nick
Baker NNDC and Andy
Jarvis South Norfolk DC)

Chief Executive/Member
Reference Group

Project Sponsors

Project Group
Mobilisation
(a) What happens on 1 April
2014
(b) Initial Service and cost (prior
to new equipment installation at
the MRF)
(c) Reject % during any interim
arrangements
(d) When and how the new
service will be delivered
(e) Formulise tipping points (in
each District) to be used from 1
April 2014
3.

Project Sponsors

Project Group
Publicity Planning

Project Sponsors
(a) Contract award

Communication
Officers
Produce Inter authority
agreement
(a) Sign off agreement
4
(b) New service start date
(d) Communication plan
(d) Leaflet and letter drop under
contract conditions
26
(e) Delivery mechanism and
costs of delivery leaflet.
10.
Conclusion
10.1
The procurement process for the contract to deliver sorting, bulking
and sale of the household recycling material collected across Norfolk
has tested the market and returned a result which provides greater
benefits for residents and the consortium authorities.
10.2 The closer ties between the Councils, which have been forged during
the procurement and evaluation process, will be further enhanced
through the operation of the new JVC. This should provide additional
benefits going forward, through closer cooperation and future sharing
of information, experience and best-practice.
10.3
The proposed contractual arrangements will deliver reduced costs to
the Council through better service and ease of use to our residents,
along with environmental benefits from increased recycling.
11.
Equality Impact Assessment (EIA)
11.1
A screening assessment has been undertaken and there are no
adverse findings.
27
Appendix 1
Subject to Contract
Tender for Mixed Dry Recyclables Processing Service
Memorandum of Understanding
1.
BACKGROUND
1.1
Norse Commercial Services Limited ("Norse"), and Breckland District Council,
Broadland District Council, Great Yarmouth Borough Council, Borough Council of
Kings Lynn & West Norfolk, North Norfolk District Council, Norwich City Council,
Norfolk County Council and South Norfolk District Council (together "Councils")
are proposing to enter into a joint venture in respect mixed dry recyclable
processing ("Joint Venture").
1.2
This memorandum of understanding sets out the proposed principal terms of the
Joint Venture following negotiations between the Councils and Norse. It is not
intended to be exhaustive, and it is not, and is not intended to be, legally binding.
2.
PRINCIPAL TERMS
2.1
The Joint Venture will be conducted through NEWCO.
2.2
Norse is to retain ownership of all the assets currently held by NEWCO on its
balance sheet.
2.3
NEWS is to be owned 51% by Norse and 49% by the Councils.
2.4
The Councils will not be required to pay any amount for the shares in NEWCO.
2.5
Each of the Councils will be entitled hold 7% of the shares in NEWCO. If any of the
Councils do not participate in the joint venture, their 7% entitlement will be taken-up
by Norse.
2.6
The Councils will not be permitted to trade the shares held by them in NEWCO; if
any of the Councils leaves the joint venture that Council will be required to transfer
its shares to Norse at nil value.
2.7
The Joint Venture will operate the assets retained by Norse and fulfil the main dry
recyclables contract ("Recyclables Contract") in favour of each of the Councils.
2.8
The Recyclables Contract will be for an initial term of 10 years, but there is an
expectation of greater permanency.
2.9
The Councils will receive a profit share equal to 50% of the operating profits of the
combined operations of NEWCO.
2.10
NEWCO is to be Teckal compliant and the flows of payments to the Councils are
not taxable.
2.11
The board of NEWCO is to consist of 4 directors appointed by Norse, and 3
directors appointed by the Councils.
2.12
Norfolk County Council is to be represented at board level from one of 4 directors
appointed by NORSEs.
2.13
Norse and the Councils will negotiate and agree a shareholders agreement in
respect of the shares held by each of them in NEWCO. It will contain the
28
shareholder protections in favour of the Councils and Norse, regulate how the
shares are held, and will set out how NEWCO is to be governed.
2.14
Norse has agreed to indemnify NEWCO and the Councils in respect of any liabilities
incurred by NEWCO or the Councils in connection with the employees at the end of
the Recyclables Contract and/or joint venture arrangements.
2.15
Norse is prepared to consult with relevant 'white collar employees', being
those that are essential to the operations of NEWCO, to see if those
employees would be willing to transfer to NEWCO.
2.16
Norse has agreed to indemnify NEWCO and the Councils in respect of any liabilities
incurred by NEWCO or the Councils in connection with the Edgefield Site.
2.17
Norse has agreed to indemnify NEWCO and the Councils in respect of any transfer
stations owned by NORSE and used by NEWCO, and the site at Costessey
2.18
The gate fee is set for 10 years and includes all management charges including any
charges relating to the properties. There are no other charges that Norse will be
imposing.
2.19
The Councils will have the opportunity, but not obligation, to support the
development of NEWCO by providing loans to NEWCO on commercial terms.
Each party hereby confirms agreement to the terms contained in this memorandum of
understanding.
Adrian Possener - Nathan Muskett
Birketts LLP
14 June 2013
29
Appendix 2
Proposed MRF Net Income Smoothing Adjustment
1.
Principles for all Income Smoothing adjustment Models
1.1
The following smoothing adjustment models have been agreed for all these models
that if:(i)
Recycling Credits end
(ii)
A Norfolk wide waste Authority is agreed
(iii)
Unitary government is introduced to Norfolk
that the above smoothing adjustment would end.
1.2
Any adjustment made is calculated in relation to the 2013 / 2014 actual costs
1.3
Contributing Authorities should not be asked to give more than 75% of their gain.
2.
Basis for calculating the Adjustments
2.1
The following list shows which costs and income streams should be compared with
the new service costs and receipts.
Payments 2013/2014 Actuals
Processing costs (inc ret gate fee)
Transfer Station Charged Elsewhere
Returned gate fee
Contribution for the Plastic sorter
Haulage costs
Disposal costs
Glass Collection Costs
Gross Current Cost of Service
Income 2013/2014 Actuals
Recycling Credits - Mixed recyclables
Recycling Credits - Glass
Profit Share
3.
Agree Smoothing Model
3.1
It has been agreed that the maximum rebate to cover losses is as illustrated below:
Model Year
Maximum Rebate
to cover Losses
1
2
3
4
5
6
7
8
9
10
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
30
Agenda Item No____10________
COMMUNITY INFRASTRUCTURE LEVY
Summary:
This report explains the Community Infrastructure Levy,
how it relates to the process of securing planning
obligations through Section 106 Agreements as part of
the planning process, and assesses if it is appropriate at
this time to introduce a levy in North Norfolk.
Options considered:
Whether to introduce or not introduce CIL in North
Norfolk.
Conclusions:
The evidence indicates that infrastructure is required,
that there is unlikely to be sufficient funding available,
and that a system which requires developer
contributions towards funding is justified. The growth
which is planned in the district can be delivered with or
without CIL. Market conditions remain uncertain and
delivery rates of development are already below
required targets. Many large scale proposals are unable
to deliver fully policy compliant development whilst
remaining commercially viable.
On balance it is considered that the introduction of CIL
at this time represents a risk to the development
strategy and it is recommended that consideration of
CIL should be suspended and reconsidered at a future
date when there are clearer signs of economic recovery.
Recommendations:
Members are asked to consider and recommend to
Council:
That consideration of the potential introduction of
CIL is suspended.
Reasons for
Recommendations:
To encourage the delivery of development in the
District.
LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW
(Papers relied on to write the report, which do not contain exempt information and which are not
published elsewhere)
Draft Consultant’s reports on Viability and Infrastructure needs.
Cabinet Member(s)
Ward(s) affected
Contact Officer:
Telephone no:
Email:
Cllr B Cabbell Manners
Cllr T Ivory
All
Mark Ashwell
01263 516325
Mark.ashwell@north-norfolk.gov.uk
31
1.
Introduction
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.
1.3 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 larger commercial developments 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, pending consideration of the
Community Infrastructure Levy, and contributions are currently negotiated in
accordance with agreed protocols and interim policy guidance on a case by case
basis.
1.4 In 2012 the Council resolved to investigate the merits of introducing the
Community Infrastructure Levy (CIL) in North Norfolk.
2.
What is CIL
2.1 The Community Infrastructure Levy (CIL) is a way for communities to benefit from
built development taking place in their area. The levy is a fixed rate charge, based on
square metres of net additional floor area payable by the owners of land that secures
planning permission. Different development types can be subject to different levy
rates, and these are set in a Charging Schedule. The landowner is liable to pay the
levy to the charging authority (North Norfolk District Council) once construction
commences or in accordance with a staged payments policy. The Council must then
use this money for infrastructure provision across the District, such as highways
improvements, open spaces or education provision. Part of the levy (15%) is given to
local Town and Parish Councils to spend on local infrastructure priorities.
2.2 Once a levy is set payment is mandatory and the Council cannot decide on an
individual case-by-case basis whether the charge should be levied, or what
contributions should be required. This means that when a developer applies for
planning permission, they will be able to calculate their financial liability up front, thus
removing uncertainties about costs.
32
2.3 The charge is levied on most types of developments of more than 100m2 of floor
area or those creating 1 or more dwellings (even if the dwelling floor area is less than
100m2). Affordable housing and charitable developments are exempt from payment.
2.4 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. Government
advice states that CIL contributions should not be set at a level that risks the delivery
of the Development Plan by making development unviable. Regulations have been
passed which allow, but do not require, a local authority to charge a CIL levy.
3.
Current Position
3.1 The Council has commissioned two evidence documents to inform the decision
on whether CIL should be introduced, firstly an Infrastructure Study to identifying
the total Infrastructure requirement arising from proposed growth in the area, likely
funding available, and the size of any funding gap, and secondly, a district wide
Development Viability Assessment to establish how the introduction of new tariffs
might impact on the financial viability of development. Both these studies are nearing
completion and the Council now needs to consider how to proceed.
4.
Summary Evidence
4.1 The Infrastructure Study concludes that there is a need for infrastructure
investment to support growth in the district. Unlike some other areas, however, there
is no single large scale infrastructure project which will be necessary to ‘unlock’
growth. There are bigger scale regionally significant projects, such as the NDR and
rail improvements, which although arguably beneficial to North Norfolk are not
essential pre-requisites to development in the district. Elsewhere in the district there
are a range of physical and social infrastructure improvements that are necessary,
and a relatively small number that are essential, if sustainable development is to be
achieved, eg primary school provision to support the expansion of Fakenham,
enhanced public open space, or upgrades to the local sewage treatment works.
There is currently a funding gap, both in relation to regional and local infrastructure
and there is a strong case for developer contributions towards filling this gap either
through Section 106, CIL, or a combination of both mechanisms.
4.2 The viability of development is very variable across the district. If CIL were to be
introduced it could only be justified in relation to residential, retail and some specialist
commercial developments such as hotels. Other types of development are not
sufficiently viable to allow for the introduction of CIL tariffs. However, based on
adopted planning policy requirements (particularly the 45% affordable housing target
and Code for Sustainable Homes requirements) residential viability is marginal
across some parts of the district, and it is only in the higher value areas of the district
that residential development shows sufficient viability to support the introduction of
meaningful tariffs. Elsewhere only modest tariffs could be supported and in some
areas any tariff is likely to put development at risk. This conclusion goes to the heart
of the question – would the introduction, or lack of, CIL tariffs threaten the delivery of
the adopted development strategy?
33
4.3 This requires consideration of a number of factors:




5.
What is the development strategy for the district? What are the key
constituent parts of the strategy in relation to housing and jobs growth and
matching physical, social, economic and environmental infrastructure?
To what extent is the delivery of this strategy dependent upon infrastructure
provision?
What mechanisms, and funding, are likely to be available to deliver this
infrastructure? What is the preferred overall approach to dealing with
developer obligations – fixed rate non-negotiable tariffs via CIL, negotiated
Section 106 obligations, or a combination of both?
What are the current market conditions? Will development viability allow for
tariffs to be collected without compromising delivery of development?
What are the choices?
5.1 The key components of the development strategy for the district are housing
growth (8,000 dwellings including a high proportion of affordable dwellings), jobs
growth (4,000 net additional jobs), provision of social and physical infrastructure to
support growth, and environmental protection.
5.2 There is no single large scale, or significant infrastructure requirements in the
district that must be addressed to deliver growth. That is not to say that there is no
requirement for infrastructure investment and that at a local level there is not a need
for infrastructure. However, growth in the District is not contingent on major
infrastructure projects as is the case elsewhere (eg Northern Distributor Road). There
is nevertheless a long list of locally significant infrastructure deficiencies which will
need to be addressed to deliver sustainable growth. Many of these are identified in
the adopted Core Strategy and the Council has sought to address these needs
through the Site Allocations Development Plan. For example, the mixed use
development sites in the larger towns are intended to address identified needs for
housing, jobs and address local deficiencies in public open space and other
community facilities. In large part these schemes will be developer funded through
the planning process and the Council may choose to secure this infrastructure via the
Section 106 or the CIL mechanism. The relative merits of the two approaches are
outlined below.
Comparison of Section 106 and CIL.
Section 106
Community Infrastructure Levy
Payments are negotiable on a
Payments are non-negotiable and fixed at a set
case by case basis but must
level and are only waived in very exceptional
comply with legal tests
circumstances. Some developments are likely to
(necessary to make the
be unviable even with tariffs set at low levels.
development proposal
Lack of viability on a particular site is not in itself
acceptable, proportionate and
a reason for granting exceptional circumstances
directly related to the
relief. Setting the tariff level is subject to viability
development proposed). This
testing but this does not need to show that all
means that there is substantial
sites are viable. The test applied is - would the
flexibility as the Council retains
tariff prejudice the delivery of the development
the ability to waive contributions
strategy as a whole rather than the viability of
on grounds of development
specific sites.
viability on a case by case basis.
34
Section 106 contributions are
rarely justified in relation to small
scale developments as it is
difficult to demonstrate that legal
tests are met but unlike CIL can
be secured even where no new
floor space is proposed. Eg wind
farm developments or change of
use of land.
Monies collected must be spent
for the specific purposes for
which they were collected and
usually within a prescribed period
and with a payback clause. The
developer, the Council, and local
communities have the certainty
that the specific impacts of
development will be mitigated
locally.
The commissioning of works
required by 106 is primarily
undertaken directly by the
developer as part of the
development process.
The regulations do not allow the
pooling of contributions from
more than five separate
developments to a single item of
infrastructure. This is only likely
to be an issue in relation to ‘big
ticket’ items of infrastructure
where pooled contributions would
be necessary to secure sufficient
funding. For example, a new
school. The government is
currently consulting on allowing
the pooling of contributions until
April 2015.
Can be used to secure Affordable
Housing contributions.
CIL payments have ‘first call’ on the uplift in
value and if set at the wrong level (too high) are
likely to compromise the delivery of negotiated
106 contributions including affordable housing.
CIL is payable on most development over a
defined size (100sqm of net floor space) and all
new housing other than affordable dwellings.
Where no building works are proposed (eg.
change of use of land) no tariff is payable.
Monies collected can be spent on any
infrastructure and anywhere in the district, or in
some circumstances beyond the district, with the
Council accounting for this expenditure through
investment programmes, monitoring and regular
reporting.
A reasonable proportion (15-25%) of CIL is
passed directly to parish and town councils to be
spent as they wish on local infrastructure.
The Council may need to take on the role of
project commissioning and managing.
Contributions from multiple schemes can be
pooled together towards a single item of
infrastructure.
Cannot currently be used as a way of collecting
contributions for affordable housing.
5.3 CIL is both attractive and risky. On the one hand CIL tariffs create certainty, they
would be payable across a broader spectrum of development than the 106 process
and there is significantly more flexibility in the spending of receipts. Because CIL
tariffs would apply to a broader spectrum of development than the current 106
process they also have the potential to generate a larger funding pot for
infrastructure. However, because tariffs, once set, are non-negotiable and must be
paid they will almost inevitably impact on delivery of marginal schemes particularly if
35
set at too high a level. Currently significant proportions of new development in the
district make little or no contribution via the planning obligations process and for
these schemes any tariff would represent a new cost. The expectation is that CIL
tariffs would primarily be funded via an equivalent reduction in the price that
developers pay for land but the developer is nevertheless expected to make a
competitive return to ensure that development takes place and a scheme should
generate a land value sufficient to persuade a land owner to sell the land. If these
conditions are not met, and the burdens imposed via either CIL, or 106, are too great,
there is a significant risk to the development strategy as development will not be
delivered.
5.4 The district wide Viability Assessment indicates that scheme viability varies
substantially across the district and for different types of development. Hotels, retail,
and housing developments in the higher value parts of the district could support the
payment of some tariff but elsewhere, primarily as a result of affordable housing and
other policy requirements, tariffs would render some development unviable (See
Appendix A). Importantly in terms of determining if CIL should be introduced a
significant proportion of the required growth in the district is proposed in the lower
value areas and on larger sites which will require significant site specific
infrastructure if they are to be developed.
5.5 Whilst potential tariff receipts might be low, particularly in the next few years as
most of the development that will be built is already consented and would not be CIL
liable, they could still yield a reasonable infrastructure fund some of which could be
targeted to local priorities which have little prospect of being funded under the
Section 106 process (because they are not sufficiently related to a specific
development proposal and consequently would not comply with statutory 106 tests).
Furthermore 15% of CIL would go to Parishes to fund local priorities and contribute
towards the localism agenda.
5.6 CIL is not essential in North Norfolk to facilitate growth. Most of the Infrastructure
which is required is relatively small scale and site specific, and subject to economic
considerations there is a reasonable prospect that the Council can deliver this
infrastructure via the Section 106 process.
5.7 Development is not currently being built at the required rates to deliver the
development strategy both in relation to housing completions or job creation. The
primary reasons for this are economic conditions, developer confidence, and scheme
viability rather than a lack of opportunity.
6.
Implications and Risks
6.1
It is important that the Council strikes the right balance between the delivery
of the planned development on the one hand and ensuring that this
development is sustainable and supported by parallel investment in
supporting infrastructure on the other. Because the required infrastructure
investment is relatively modest and growth in the district is not dependent
upon major infrastructure upgrades the risk of unsustainable development if
CIL is not introduced is modest.
6.2
In current economic conditions the introduction of CIL particularly in the lower
value areas of the district runs the risk of delaying or preventing development.
Alternatively, because CIL would have the ‘first call’ on the up lift in land
value, it is likely that lack of scheme viability will result in further pressure to
36
reduce the costs of other negotiated planning requirements, including the
delivery of affordable housing which is a key priority for the Council.
7.
Financial Implications and Risks
7.1
In difficult economic conditions there is a risk that it will be difficult to deliver
the necessary infrastructure to support growth. This risk is equally applicable if
the Council resolves to introduce CIL or not. For development to take place it
must be financially viable. The introduction of CIL represents a risk to
development viability.
8.
Sustainability
8.1 Sustainable development remains a core consideration when considering
development proposals. How the Council determines to deliver sustainability through
the exercise of it’s planning powers is a matter for local determination. The Council
may resolve to continue to secure planning obligations through the Section 106
process, or introduce CIL.
9.
Equality and Diversity
10.1
There are no equality and diversity implications in the proposal.
10.
Section 17 Crime and Disorder considerations
11.1
There are no section 17 implications.
37
Agenda Item No_____11_______
HOUSING INCENTIVES
Summary:
This report outlines the slowdown in housing delivery as
a result of the recession and recommends temporary
measures related to evidence on affordable housing
components of planning applications and additionally
the introduction of an incentive scheme for a trial period
to incentivise housing delivery in the district.
Options considered:
Alternative figures for the affordable housing thresholds
could be considered but these would not be based on
the viability evidence.
Conclusions:
Work undertaken in the context of the Community
Infrastructure Levy (CIL) on development viability has
suggested that the Core Strategy policy site size
threshold and affordable housing percentage
requirements are not viable for many locations across
the district particularly when combined with other policy
requirements. This evidence can be taken into account
as a material consideration in the determination of
individual planning applications. As a result, it is
suggested that for a temporary period the Council
indicates that the CIL viability evidence will be regarded
as sufficiently material to justify the higher site size
thresholds and lower percentage requirements outlined
in this report and that such proposals need not be
subject to site specific viability assessment.
Furthermore, the evidence in relation to below target
housing completions in the district justifies the
introduction of measures to further incentivise housing
development.
Overall, these measures represent a reasonable and
proportionate response to the current down turn in the
housing market. If adopted they should encourage
development in North Norfolk whilst ensuring that the
quality of developments remain acceptable.
Recommendations:
Members are asked to consider and RECOMMEND
to Council:
1.
That the provisions of the National Planning
Policy Framework, slow housing delivery
rates, and the CIL housing viability evidence
are sufficiently material to justify the revised
affordable housing site size thresholds and
percentage requirements outlined in part 4 of
38
2.
3.
Reasons for
Recommendations:
this report in the determination of individual
residential planning applications.
That the incentive scheme set out in part 4 is
approved
That the measures outlined in the report are
widely advertised within communities and the
development industry.
To encourage higher levels of house building in the
District and help address the identified shortfall in new
house completions.
LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW
(Papers relied on to write the report, which do not contain exempt information and which are not
published elsewhere)
Consultant’s report on Viability
Cabinet Member(s)
Ward(s) affected
Contact Officer:
Telephone no:
Email:
Cllr B Cabbell Manners
Cllr T Ivory
All
Mark Ashwell
01263 516325
Mark.ashwell@north-norfolk.gov.uk
1.
Introduction
1.1
This report presents a range of temporary measures which are designed to
act as incentives to the development industry to deliver an increased supply
of housing completions in the district. They are intended to address the
delivery of development already planned in the adopted Core Strategy and
Site Allocations Plans and are a response to falling rates of house building in
the district.
2.
Background
2.1
As a result of the economic recession, Central Government have introduced a
range of measures to kick start the economy and, in particular, to boost
housing growth. The New Homes Bonus incentivises local authorities to
promote housing development in their areas by provision of 6 years Council
Tax receipts. Recent announcements that areas with Neighbourhood Plans
are to receive 25% of any Community Infrastructure Levy also encourage
local areas to receive additional housing development. The Government have
also made a number of changes to the planning system to promote growth,
including the National Planning Policy Framework, changes to permitted
development rights (including proposed permitted changes from offices to
dwellings), renegotiating Section 106 agreements, and requiring an
evidenced Five Year Supply of housing land without which sustainable
development should be approved. Notwithstanding these changes the
emphasis remains on a ‘plan led’ system, if plans are up-to-date, providing for
the delivery of a minimum quantum of development over a specified period of
time.
39
2.2
Reflecting economic conditions, dwelling completions in the district have been
low since 2008. However, housing permissions have not declined to the same
extent and a number of large scale allocations now have permission or
consents are imminent. Developers are building on sites at Cromer, Hoveton,
and at Blakeney. Nevertheless, the housing trajectory does not anticipate any
significant improvement in dwelling completion numbers until 2014/15 and
beyond and this improvement is dependent upon progress on the larger
allocated development sites.
2.3
The supply of new housing in the district derives from a number of sources. In
terms of overall contribution, the housing allocations included within the Site
Allocations Development Plan represent approximately two thirds of supply
over the next few years but there are other not insignificant sources including
building conversions, re-use of empty homes, ‘exceptions’ developments and
a continuing supply of mainly small scale windfall sites. Currently, around
50% of house completions arise from the conversion of existing buildings and
the removal of holiday use conditions. Dwellings arising from conversions are
expected to increase further as a result of the recent changes to national
policy which allow for a residential use in a wider set of circumstances.
Development arising from Neighbourhood Plan initiatives seems unlikely to
deliver significant housing (none in the short term) although it remains to be
seen if the recent CIL announcements will incentivise local communities to
accommodate additional housing and other development.
2.4
Whilst the five year land supply statement identifies a healthy supply of land
which is available and suitable for development and there is an increasing
supply of planning permissions there is a concern that slow delivery rates
might undermine the Council’s growth agenda and mean that local needs and
demand for housing will not be addressed. The Council has a target to deliver
400 new houses each year but last year only 248 new dwellings were
provided and around half of these were the conversion of existing buildings
rather than new build properties. On larger sites owned by a single developer
it is expected that build out rates are likely to be approximately 25 dwellings
per annum per site. On such sites quick delivery would be regarded as 30
dwellings per year for conventional ‘estate’ type development and if two
developers were active on the same site this might increase to 40 units per
annum on the larger proposals. Once a development has started the larger
house builders tend to wish to build out as quickly as the local market/cash
flow will allow. Slower rates than above tend to have negative impacts on
cash flow whilst faster rates can, in some circumstances, depress values.
2.5
Hence, whilst incentives to build quickly once a start has been made might
have some impact, and should not be discounted from further consideration,
unless they are applied very widely it seems unlikely that they would deliver
substantial numbers of additional dwellings in the short term. The small
number of regional house builders who are active in the district have indicated
that it is unlikely that current market conditions will allow for much quicker
delivery on individual sites once a start has been made. It may therefore be
better to focus efforts on incentives to secure planning permission and start
development earlier, on the basis that the best way to increase overall
numbers is to have multiple sites across the district being developed at the
same time.
40
2.6
There is a perception that, in a difficult economic climate, development plan
policies have served to either discourage the making of planning applications
or the commencement of development on some sites. The extent to which
slower delivery rates can be attributed to planning policy rather than
economic conditions is debatable but the fact remains that build rates have
slumped to historically low levels in the last few years and the Council is now
approximately two years behind the target for dwelling completions in the
adopted Core Strategy. The work undertaken on development viability
associated with the possible introduction of the Community Infrastructure
Levy (See appendix A) suggests that the threshold/percentage for affordable
housing contributions set in the Core Strategy is no longer at a viable rate for
large parts of the district.
3.
Policy Context
3.1
The National Planning Policy Framework (paragraphs 47-50) states that local
planning authorities should boost significantly the supply of housing through a
supply of deliverable sites and notes that affordable housing policies should
be sufficiently flexible to take account of changing market conditions over
time. In relation to determining applications the NPPF states that planning
applications must be determined in accordance with the development plan,
unless material considerations indicate otherwise. The Core Strategy policies
remain the policy framework for the district. However, the recent evidence on
development viability collated for the introduction of CIL may be regarded as
a material consideration in relation to residential development. Paragraph 173
of the NPPF notes that sites “should not be subject to such a scale of
obligations and policy burdens that their ability to be developed viably is
threatened. To ensure viability, the costs of any requirement likely to be
applied to development, such as requirements for affordable housing,
standards, infrastructure contributions or other requirements should, when
taking account of the normal cost of development and mitigation, provide
competitive returns to a willing land owner and willing developer to enable the
development to be deliverable.”
3.2
The desirable flexibility in the application of affordable housing requirements
is currently achieved via a complex process of viability testing of individual
development proposals but this viability test is not currently reflected in other
policy requirements.
3.3
Given economic conditions, slow housing completion rates, and the
provisions of the National Planning Policy Framework consideration should
be given to measures which the Council may introduce to increase the
delivery of housing in the district.
4.
Proposed Temporary Measures
4.1
Two types of measures are proposed, a temporary relaxation of affordable
housing requirements on small schemes in villages and the countryside
(measure 1) designed to encourage the submission of planning applications,
and, a set of incentives to encourage quicker development of housing
proposals (measures 2,3 and 4).These would be available on all residential
development proposals submitted prior to the 1st of Sept 2014 (subject to
annual review) where the applicant is prepared to accept a one year
implementation condition on the applicable planning permission and in
41
relation to the incentive proposals, commit to continuous delivery of
development once a start has been made. These measures would include:
1. Raising the site size threshold above which affordable housing
contributions are required in villages from the current two dwellings and
above, to ten and above (Core Strategy policy H02).
2. Reducing the headline affordable housing target from 45% to lower
figure(s) in parts of the district based on current development viability
evidence. The revised targets are derived from the district wide viability
assessment undertaken in association with the possible introduction of
the CIL rather than site specific viability assessment as is currently the
case. To avoid excessive complexity two target percentages are
suggested. Even within these broad zones (Appendix B) there will be
substantial variation in specific site viability and it would remain the case
that proposals for schemes delivering lower than the revised targets
would need to be justified by open book viability assessment.
Suggested revised Affordable Housing Targets.
Wells and coastal west (area north of A148 and west of
Sheringham
45% (no
change)
All other areas
20%
3. Relaxation of Level 3 Sustainable Homes construction standards if
specified quantities of development are delivered quickly.
4. Removal of on-site energy generation requirements if specified quantities
of development are delivered quickly.
The following table outlines these potential measures together with a short
justification.
Ref
1
Measure
Raising the site
size threshold
above which
affordable housing
obligations would
apply in
villages/countryside
to schemes of ten
and above.
Discussion/Justification
Core Strategy Policy H02 currently requires that in villages
proposals for two or more dwellings (new build and conversions)
50% of the units are affordable, or in some circumstances an
equivalent financial contribution is made. For each house built the
applicant is expected to provide an affordable dwelling or a
financial contribution in-lieu of on-site provision.
In towns the required standard is currently 45% affordable housing
on schemes of ten or more units or sites over 0.33 hectares.
Despite this policy being adopted in 2008 there are only a handful
of examples where it has contributed towards affordable housing
(offers to pay a financial contribution but no actual units provided)
and there is some evidence, albeit anecdotal, that the requirement
has served to discourage the submission of planning applications.
If adopted this measure would allow smaller sites of up to nine
dwellings in all policy compliant locations across the district to be
built/converted without the need to contribute to affordable
housing.
42
2
Lower the
proportion of
affordable housing
required on large
qualifying sites in
towns.
Policy requires that 45% of dwellings built on sites of over ten units
are affordable unless it is not viable to provide. Many of the larger
allocations have, or are currently the subject of, planning
applications which include affordable housing. Each site is subject
to individual viability testing to establish what represents a viable
proportion of affordable housing. Agreed proportions of affordable
housing on recently approved large schemes are:
Railway Triangle, Cromer – 32% currently under construction
Roughton Road, Cromer – 23% offered pending viability appraisal.
H01 Holt – 45% Outline permission only with final proportion of
affordable units subject to viability testing.
HOV1 Hoveton – 45% currently under construction
ST01 Stalham – 45% agreed but development yet to commence
W01 Wells- 45% agreed but development yet to commence
Blakeney -50% currently under construction
Northrepps - 50% Outline application only.
The evidence would appear to suggest that the current approach
has been successful in securing high proportions of affordable
housing within planning permissions. As yet, however, few of these
schemes are under construction. The work undertaken on
development viability associated with CIL concludes that there are
parts of the District where finished development values are
sufficiently high to deliver viable schemes with 45% affordable
housing (eg. Wells and Blakeney). This is a comparatively high
value part of the district including large areas of AONB where high
house prices mean that affordable requirements are high and the
evidence suggests that many housing schemes can deliver a high
proportion of affordable housing and other obligations whilst
remaining viable. Elsewhere, whilst each individual site will be
different and some could deliver affordable percentages of 30%,
others will remain unviable at this figure. A lower overall target in
these parts of the district of 20% would improve scheme viability
further and act as a significant incentive to undertake
development.
3
Relaxation of Level
3 Sustainable
Homes
construction
standards if
specified quantities
of development are
delivered quickly.
The Code for Sustainable Homes incorporates six levels of
sustainable construction standards, each level being progressively
more difficult, and more expensive, to achieve. Adopted Policy
EN6 requires Code Level 3 and this is being achieved on many
schemes. Government guidance published in 2010 suggested this
has added approximately £3,000 of cost to a typical semi-detached
property. Most RSLs require Code 3(or similar) as part of their
scheme standards.
Policy EN6 requires that the standard is increased to Code Level 4
during 2013. Estimated cost of level 4 compliance in 2010 was
slightly over £8,000 per semi-detached dwelling.
4
Removal of on-site
energy generation
requirements if
Removal of code and renewable energy (see below) policy
requirements can significantly improve scheme viability.
Core Strategy Policy EN6 requires that all residential schemes of
more than 10 dwellings include renewable energy technology
sufficient to provide between 10% and 20% of predicted energy
43
specified quantities
of development are
delivered quickly.
5.
needs. This requirement is proposed to increase to 20-30% during
2013. Currently this is being achieved via the use of solar water
heating systems, solar panels and ground or air source heat
exchangers. Costs can be in the region of £5,000 per plot.
How the scheme would work - Delivery Conditions and Enforcement.
5.1 The purpose of the scheme is to deliver planned development quicker than would
otherwise be the case. To achieve this a mechanism, which is enforceable, will be
required to secure commencement and construction of development. Access to the
scheme will therefore be limited to those proposals which can be delivered quickly
and therefore only proposals the subject of full or reserved matters planning
applications determined after the scheme implementation date will be considered.
5.2 Planning applications taking part in the scheme would be subject to standard
scheme conditions/obligations to include:






Planning permissions benefiting from scheme incentives would be subject
to a condition requiring commencement of development within 12 months
of the date of full permission being granted. If not commenced within this
time the planning permission would lapse and a further application would
be required. Such a condition would only secure commencement of
development, which might only comprise nominal works, and would not
guarantee completion of development.
Requests to take part in the scheme must be made upon registration of
the relevant planning application. Incentives requested should be clearly
outlined in the documentation supporting the application.
Incentives will only be made available once for each site and will not
normally be renewed in relation to subsequent applications by the same
developer on the same site.
Applications must include a detailed schedule of works and associated
timetable for completion together with confirmation that phase 1 works,
comprising completion of an agreed percentage of the approved
dwellings, will be completed by an agreed date. (eg. 25 completed
dwellings within 18 months from the date of planning permission). For
larger scale schemes (10 units and above) the developer will need to give
a Section 106 obligation to ensure that the works included within the
schedule will be completed by the applicable date and in the event of this
date not being complied with the remaining units would be constructed in
full accordance with code, energy generation and the proportion of
affordable housing on the remaining development being increased to 30%
(or alternative agreed viable proportion).
Developers will be required to provide written notice of commencement of
development and secure written confirmation from the Council that
scheme requirements in terms of completions have been met.
The Council will reserve absolute discretion to either agree, or not agree,
to scheme participation having regard to all applicable material
considerations at the time of decision i.e. local delivery rates and local
market conditions.
44
6
Implications and Risks
6.2 Notwithstanding that housing completions are at an historically low level, it is the
case that a number of sites allocated for development are coming forward, either
with planning permissions or with developers engaged in pre-application
discussions with officers. There is a risk the measures proposed in this report
may create delay to development whilst those with permissions, or draft
proposals, seek to renegotiate proposals to take part in the incentives scheme.
6.3 It is also the case that development proposals, even those on allocated
development sites, remain locally controversial and result in significant local
objection. The adoption of the proposed measures may be seen by objectors as
an inappropriate course of action, resulting in possible legal challenge to
decisions. In this regard the Council needs to be clear that it is striking the right
balance between speed of housing delivery and compliance with its wider policy
objectives.
6.4 The main risk associated with the introduction of these measures is that some
development may take place which could have otherwise provided higher levels
of affordable housing. This could be partly mitigated if development proceeds
which would not have otherwise occurred as this in itself will deliver a greater
quantum of affordable housing.
6.5 The measures are regarded as a proportionate response to current economic
conditions and the need to encourage quicker delivery of housing development in
the district, which is both a national and local priority. It is clear that, in the case of
villages, current policies have not been effective in delivering housing, and in
particular affordable housing. On larger proposals the Council has been relatively
successful in securing optimal proportions of affordable housing within planning
permissions. However, the evidence provided by the work undertaken for the CIL
development viability study clearly shows that current affordable housing
thresholds are above viability levels for large parts of the district and completion
rates remain very low.
7
Financial Implications and Risks
The delivery of housing in the district is important on a number of fronts, it will
provide much needed accommodation, is a significant element of economic and
job creating activity and will increase homes bonus payments.
8
Sustainability
The reduction in the requirement for Code for Sustainable Homes standards and
on-site renewable energy provision represent a sustainability impact, but this
needs to be balanced against the social and economic benefits of increased
housing delivery.
9
Equality and Diversity
There are no equality and diversity implications in the proposal.
10 Section 17 Crime and Disorder considerations
There are no section 17 implications.
45
46
APPENDIX A - District Wide Viability Assessment
Summary Findings
North Norfolk’s current affordable housing targets are shown in the following table. You will recall that as part of our work on the Community
Infrastructure Levy we agreed with the stakeholders that market units were generally larger than the affordable units (in terms of floor space
within an overall development) so I have shown the affordable target as both units and as floor space. This is important because viability
assessments calculate costs and values in relation to square metres of development rather than number of units. As can be seen 55% market
units equates to 61% of the total floor space.
Core Strategy Policy Requirement
Principle and secondary settlements - over 0.3ha or ten units
Market Unit
Intermediate unit
Units
Floor space
55.00%
61.60%
9.00%
7.68%
Affordable Rent
0.00%
Social Rent
36.00%
30.72%
Serviced villages and rural areas - over 0.3ha
Market Unit
50.00%
56.76%
Intermediate unit
10.00%
8.65%
Affordable Rent
0.00%
Social Rent
40.00%
34.59%
1
47
If we model this using our residual valuation methodology and assume that the affordable housing units are provided as social rent as required
in your adopted policy it produces the results below. These also assume a developer contribution of £5,000 per unit for planning obligations, on
market and affordable units, on all sites. In addition we have assumed CfSH Level 4 on all sites and assumed this costs 6% of BCIS Costs – so
£48/m2 or about £4,320 per unit. This is to ensure that we test viability of development against your adopted planning policy requirements.
The headline conclusion is that other than in the high value areas of the district such as Wells and Blakeney development which complies with
all currently adopted policy requirements is unlikely to be viable. This does not, however, reflect what you are achieving through some
development management decisions. There are really three areas where this can be wrong – the costs can be too high, the values too low, or
more probably there are specific circumstances which apply to individual sites.
In Table 1 the key figure is the ‘Residual Value’ which represents the amount per hectare by which the site value, once developed, exceeds the
viability threshold. This represents the sum per hectare which is available to buy the land. I have coloured coded these using a traffic light
system as follows:
a.
b.
c.
Green Viable (G) – where the Residual Value exceeds the Existing Use Value plus the appropriate uplift to provide a
competitive return for the landowner.
Amber Marginal (A) – where the Residual Value exceeds the Existing Use Value, but not the Existing Use Value plus
appropriate uplift to provide a competitive return for the landowner. These sites should not be considered as viable as it is
unlikely that the land would be made available to a developer at this level.
Red
Non-viable (R) – where the Residual Value does not exceed the Existing Use Value.
For the purposes of this work we need to build in some assumptions about what residual value will be sufficient to incentivise the owner to sell
the site for development. We have taken the Existing Use Value and added a premium of 20% and for greenfield sites added a further
£250,000 per hectare.
Example: Site 1 in the table is a greenfield site in Cromer, it has an existing use as agricultural land which we have valued at around 25,000
per hectare (£10,000 per acre), once all the typical costs have been taken into account the site will need to generate a value of around
2
48
£280,000 per hectare (the viability threshold). The model concludes that it could deliver slightly higher values than this (a further £40,068) but
this is most unlikely to be sufficient to purchase the site so the scheme is classed as Amber.
TABLE 1 - Current Affordable Housing Policy 45%/50% with Social Rent
Alternative
Use Value
Viability Threshold
Residual
Value
£/ha
£/ha
£/ha
Site 1
Cromer
25,000
280,000
40,068
A
Site 2
Cromer
250,000
300,000
-1,009,722
R
Site 3
Holt
25,000
280,000
413,455
G
Site 4
Fakenham
25,000
280,000
-120,789
R
Site 5
North Walsham
250,000
300,000
158,269
R
Site 6
Wells-next-the-sea
25,000
280,000
944,661
G
Site 7
Sherringham
25,000
280,000
246,617
A
Site 8
Hoveton
25,000
280,000
99,549
A
Site 9
Aldborough
250,000
300,000
113,369
R
Site 10
Catfield
500,000
600,000
-262,836
R
Site 11
Blakeney
25,000
280,000
460,783
G
Site 12
Happisburgh
50,000
310,000
33,748
R
Site 13
Rural West
250,000
550,000
-1,523,507
R
Site 14
Rural West
250,000
550,000
-151,473
R
Site 15
Rural East
250,000
550,000
-1,879,524
R
Site 16
Rural East
250,000
550,000
-483,416
R
TABLE 1 – Development viability based on adopted Core Strategy Policy.
3
49
Following this initial work we have undertaken some further local testing of sales values which were said by some consultees to be slightly high
in our initial study. Due to the very low numbers of new build sales in the last few years we have extended our work to include nearly new sales
and made an appropriate adjustment to the results.
We have re-run the model using these revised sales values but have used the affordable rent (rather than social rent) model for 80% of the
affordable units to reflect current practice. We have continued to assume code compliance and £5,000 contribution per dwelling for planning
obligations.
Although the affordable rent produces better values this is off set by the general reduction in value following the local market testing and the
overall position is not much improved.
We then ran the model on the basis of reducing affordable housing targets. The results are presented in Table 2 below.
4
50
TABLE 2 - Residual Values with differing affordable targets. 80% Affordable Rent, 20% Intermediate
Alternative Use
Value
Viability
Threshold
Residual Value
50%
40%
30%
20%
10%
0%
Site 1
Cromer
25,000
280,000
-20,933
97,177
204,963
308,857
407,764
501,845
Site 2
Cromer
250,000
300,000
-1,135,327
-887,757
-652,402
-429,185
-223,726
-28,418
Site 3
Holt
25,000
280,000
345,220
479,592
607,320
728,481
843,857
953,606
Site 4
Fakenham
25,000
280,000
-175,674
-68,126
32,542
123,794
211,274
294,446
Site 5
North
Walsham
250,000
300,000
73,816
237,888
394,547
532,737
671,526
803,546
Site 6
Wells-nextthe-sea
25,000
280,000
833,968
1,051,904
1,259,060
1,455,572
1,642,701
1,820,701
Site 7
Sherringham
25,000
280,000
180,333
310,922
430,937
547,567
652,448
757,103
Site 8
Hoveton
25,000
280,000
57,358
141,011
218,974
294,177
365,793
433,915
Site 9
Aldborough
250,000
300,000
114,095
273,679
421,230
563,716
699,404
828,473
Site 10
Catfield
500,000
600,000
-261,942
-92,326
68,924
221,854
367,493
506,027
Site 11
Blakeney
25,000
280,000
461,566
636,173
806,309
967,692
1,110,844
1,255,655
Site 12
Happisburgh
50,000
310,000
34,434
169,814
298,515
416,475
531,584
628,808
Site 13
Rural West
250,000
550,000
-1,522,672
-1,356,962
-1,199,626
-1,050,401
-910,186
-777,334
Site 14
Rural West
250,000
550,000
-757,638
-622,474
-493,989
-372,115
-258,104
-151,473
Site 15
Rural East
250,000
550,000
-1,878,492
-1,670,252
-1,472,289
-1,287,188
-1,111,461
-944,305
Site 16
Rural East
250,000
550,000
-483,210
-440,904
-400,687
-362,542
-326,216
-291,663
5
51
We can clearly see the expected relationship with viability and the declining affordable target. The bottom four sites are barn conversions and
the model assumes these are delivering affordable housing. As would be expected more sites become viable as the affordable target is
reduced.
I have set out the additional profit for each of the variables above in the following table.
TABLE 3 - Additional Profit for differing affordable targets - £/m2
50%
40%
30%
20%
10%
0%
Site 1
Cromer
-142
-50
18
71
113
146
Site 2
Cromer
-392
-263
-170
-101
-47
-4
Site 3
Holt
156
262
337
394
438
473
Site 4
Fakenham
-258
-151
-79
-24
22
58
Site 5
North Walsham
-57
33
99
146
184
215
Site 6
Wells-next-the-sea
557
636
692
735
768
794
Site 7
Sherringham
-4
90
155
206
244
275
Site 8
Hoveton
-187
-76
3
65
112
151
Site 9
Aldborough
-72
41
120
180
228
265
Site 10
Catfield
-337
-219
-135
-72
-23
16
Site 11
Blakeney
212
297
360
406
442
471
Site 12
Happisburgh
-103
-13
51
98
136
163
Site 13
Rural West
-1,130
-887
-712
-582
-481
-400
Site 14
Rural West
-1,366
-1,047
-820
-649
-516
-410
Site 15
Rural East
-1,069
-833
-664
-538
-441
-363
Site 16
Rural East
-2,475
-2,032
-1,715
-1,478
-1,293
-1,146
6
52
Conclusion
In conclusion our study suggests there are several distinct markets being Cromer
town, the north coast and the rest. Based on our work (which is based on local
prices) there is currently some scope to introduce CIL tariffs in the high value west of
the district but elsewhere it would be necessary to reduce affordable housing
requirements to around 30% to set modest tariff levels of say £40/m2
TABLE 4 - Possible CIL Tariffs
Cromer
Affordable
CIL
0%
£0/m2
40%
£80/m2
Barn Conversions
0%
£0/m2
Other
30%
£40/m2
Brownfield
Wells/ Sherringham
The Rest
The
Cromer
Boundary could be
drawn tight to the
urban area
Similarly, if the Council wished to consider measures to incentivise development,
which I understand you may be considering, a comparable reduction in affordable
housing targets (30% or lower) would be necessary to render developments viable in
a wider set of local circumstances.
As a final step I have taken a revised 30% affordable target and have made some
further adjustments to the model.
1. I have reduced the build costs of the barn conversions from £1176/m2 to
£882/m2.
2. I have reduced the CfSH cost from 6% to 4%.
3. I have reduced the selling fees to 2.5% on the sites of less than 20 units.
4. I have assumed no affordable housing from the barn conversions.
5. I have reduced the infrastructure costs for the barns to 10%.
6. I have reduced the developer contribution to £2,500 per unit.
These produce very much better results, and illustrates the impacts of the sorts of
further measures (item 2,4 and 6) which the Council could consider.
7
53
Table 5 - 30% Affordable Target, reduced Code, and reduced Planning
Obligations
Alternative
Use Value
Viability
Threshold
Residual
Value
£/ha
£/ha
£/ha
Site 1
Cromer
25,000
280,000
310,785
Site 2
Cromer
250,000
300,000
-335,259
Site 3
Holt
25,000
280,000
683,699
Site 4
Fakenham
25,000
280,000
142,968
Site 5
North Walsham
250,000
300,000
521,841
Site 6
Wells-next-the-sea
25,000
280,000
1,357,594
Site 7
Sherringham
25,000
280,000
529,579
Site 8
Hoveton
25,000
280,000
285,261
Site 9
Aldborough
250,000
300,000
545,540
Site 10
Catfield
500,000
600,000
267,471
Site 11
Blakeney
25,000
280,000
911,649
Site 12
Happisburgh
50,000
310,000
441,013
Site 13
Rural West
250,000
550,000
528,388
Site 14
Rural West
250,000
550,000
669,501
Site 15
Rural East
250,000
550,000
687,190
Site 16
Rural East
250,000
550,000
75,589
8
54
Appendix B
55