Funding Infrastructure Provision through value capture : Examining

Funding Infrastructure Provision through
value capture :
Examining the implementation of the UK
Community Infrastructure Levy (CIL)
Brian S Peel
Postgraduate Researcher
School of APL Newcastle University
11th September 2014
• Value Capture and Viability Assessments
– History of Value Capture Policy in UK
– Emergency of CIL as a Policy
– Undertaking Viability Assessments
– Investigation of Policy Implementation Process
using focus on CIL & Viability Assessments
• Role of Planning and Role of Planners
– Emerging Discourses – Value Capture & Viability
– Initial Findings from Research
History of value capture policy in UK
• National Taxation (1947 – 1985)
Development Charge 1947 (100%)
Betterment Levy 1967 (40%)
Development Gains Tax 1973 (30%)
Development Land Tax 1976 (80% and 60%)
• Planning Gain – site by site negotiation (1983
– s57 of Town and Country Planning Act 1983
– s106 of Town and Country Planning Act 1990
– Planning Obligations from 1991
• Community Infrastructure Levy (2010 – onwards)
Emergence of the CIL Policy
Barker Report – Delivery of Development
Demise of Planning Gain Supplement
Planning Act 2008 – Retention by Coalition
Community Infrastructure Levy 2010 - 2014
– CIL is a type of Impact Fee
• Objectives of CIL & Criticisms of S106
– Transparency, Certainty and Efficiency
Implementation of CIL
• Viability Assessment is at the heart of CIL
• “They will need to draw on the infrastructure
planning evidence that underpins the
development strategy for their area. Charging
authorities should use that evidence to strike an
appropriate balance between the desirability of
funding infrastructure from the levy and the
potential impact upon the economic viability of
development across their area” (DCLG, 2014).
Viability Assessments (1)
Three Key Elements in Guidance
– (1) Return to Landowner as incentive to sell land (Threshold Land Value)
– (2) Return to Developers to undertake development (Profit Level)
– (3) Assessment of Cumulative Impact of Policy Burden to fund Value Capture
as well as other policy standards (eg code for sustainable homes) (Policy Costs)
Two Types of Viability Assessment
– Plan Making – Area Wide Appraisal for Viability of Development Plan
– Development Management – Site by Site negotiation of s106 agreements
CIL Viability Assessment = Area Wide Appraisal (Two elements)
– (1) Residual Appraisal (used on hypothetical site appraisals)
– Gross Development Value LESS Development Costs + Profit Level + Policy Costs
= Residual Land value
– (2) Threshold Land Value
– “the value at which a typically willing landowner is likely to release land for
development “ (Harman Report 2012)
Viability Assessments (2)
Compare Threshold Land value with Residual Land Value
HCA Guidance (2011)
Harman Guidance (2012)
RICS Guidance (2012)
DCLG NPPG (2014)
Inconsistency/Conflicting views
– Use of Evidence
of one
– Basis of Policy Assumptions
(3 way
trade off)
Viability Assessment (3)
• National Planning Policy Guidance 2014 sets out
• Four key principles for understanding Viability in
– Evidence based judgement (share evidence &
– Understand past performance (realistic
understanding of operation of the market, values and
costs and past performance and delivery of
– Collaboration (with landowners, developers etc)
– Consistent Approach (comprehensive understanding
of viability issues)
Research Questions
• How is knowledge generated and validated to
support planning decisions in relation to the
delivery of infrastructure as funded by value
capture mechanisms?
• Can policy implementation be improved by
planners having a better understanding of the
decision making of developers and operation
of the land and property markets?
Policy Implementation: CIL and
Viability Assessments as focus
• Messy nature of policy implementation in the real
world and analysis of behaviours of actors
• The concept of Viability, is problematic and
contested and not possible to be imposed as a
top down solution
• Viability involves struggles over meanings and
interpretations of evidence
• Socially, historically and culturally situated and
places emphasis on collaboration and the
exchange of knowledge and on communication
Research Methodology
• Interpretive Policy Analysis to uncover meanings
• As contested interpretations and meanings
involves power struggles
• Foucauldian Based Discourse Analysis –
Rationality and Power - Relationships, Practices,
Actions and Events
• Predetermined Framework of analysis from policy
documentation - Hajer (Argumentative Discourse
• Discursive Struggle of Discourses – identified and
analysed for impact on policy implementation
Changing Role of Planning
• Two Discourses emerge from Policy
Documents - Reflect changing Role of Planning
• 1) Reduced Public Finance to fund
infrastructure to support growth hence need
to pursue Value Capture
• 2) Emphasis on Delivery of Development to
support growth (by Private Sector) and
therefore a focus on Viability of development
Data Collection & Analysis
• Policy Documents
(National & Case Studies)
• Semi-structured
interviews (Key Actors
different levels and roles
in LPA and others involved
in CIL process)
• Notes of key meetings
and communications
• Policy Communities and
their roles
• Key Events in the process
• Key arenas or sites of
• Key meanings and
practices employed in the
• What types of knowledge
employed in decision
making process
Initial Research Findings (1)
• Reconstruction of the CIL rate setting process
• Planners role in the process – relationships with
other actors, professionals, use of consultants
• Planners understanding of rate setting process as
a calculation rather than an as need to
understand the development process?
• History of Policy Implementation (s106 and
affordable housing) by the LPA
• Characteristics of the Development Plan and
nature of the supply of sites and Viability
Initial Research Findings (2)
• Role of Guidance in Viability Assessments
• Technical Calculation v Political Judgement
• Challenge of understanding motivations and
business models of Developers and Landowners
• Challenge of understanding different appraisal
models and techniques
• Importance of consultation and collaboration
• Importance of evidence and interpretation
• Implications on Planners skills, culture and values
Thank you
Any Questions
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