Community Infrastructure Levy

Transcription

1 Community Infrastructure Levy RTPI Young Planners November 2018 Gilian Macinnes

2 Today.. s106 Town and Country Planning Act, s278 Highways Act & CIL Community Infrastructure Levy (CIL) the basics Setting CIL CIL Implementation & Bureaucracy watch out CIL Review and BUDGET Response to supporting housing delivery through developer contributions possible changes. Exercise/discussion

3 Delivering Growth with Infrastructure

4 Why is CIL needed? How do you fund infrastructure S106 limitations S278 highways Capital budgets LEP Central Government funding pots Community Infrastructure Levy Requirement for match funding?

5 Spending CIL Infrastructure to support the development of its area. Can be applied outside the admin area of the Charging Authority Can be passed to another party to fund infrastructure

6 S106 tests and restrictions If the development is capable of being charged CIL, the S106 obligation must meet these legal tests: NECESSARY to make the development acceptable in planning terms DIRECTLY RELATED to the development FAIRLY AND REASONABLY related in kind and scale to the development These are also the policy tests in the NPPF Pooling restrictions no more than 5 obligations

7 Further Limitation on using s106 pooling Obligations or s278 agreements may not constitute a reason for granting PP.. to the extent that the obligation provides funding or provision of the relevant infrastructure. i.e - infrastructure on Reg. 123 list, or where there isn t a 123 list any infrastructure The obligation may not constitute a reason for granting pp to the extent that it provides for the funding or provision of infrastructure (project/type) and five or more planning obligations for the infrastructure- (type/project) - have been entered into on are after 6 th April 2010 *Budget 2018*- Response to supporting housing delivery through developer contributions- limitation to be removed- needs new regulation

8 S278 Highways Act 1980 (as amended) Agreement between the developer and the relevant Highway Authority to undertake works to the highway. No pooling restrictions

9 What is a Community Infrastructure Levy (CIL)? A mechanism for developer contributions To contribute towards infrastructure needed to support the development of the area A charge per square metre of floorspace Not mandatory

10 What is CIL for? To help pay for infrastructure needed to support new development But not to remedy existing deficiencies unless the new scheme will make it worse Councils must spend the income on infrastructure but can decide what (and that can change over time)

11 Charging CIL some basics per square metre on net additional (internal) floorspace Rates can vary by geographic area, use, or scale ( or a combination) Due when the development starts It is index linked The landowner is responsible for paying it The local planning authority is the charging authority (& sets the CIL)

12 What/who pays CIL? Development which creates net additional floor space, where the gross internal area of new build exceeds 100 square metres (except all size of new house or flat pay)

13 What doesn t Pay CIL Buildings people don t normally go into Less than 100 sq m ( unless whole house- which does pay) Where the development meets relief criteria e.g. affordable housing, self/custom build Vacant building brought back into use Where the charge is less than 50 Mezzanines less than 200 sq M unless they are part of a wider PP The other time no payment is made is where the rate set is Zero.

14 What are the absolute basic requirements of setting a CIL? To set a CIL you need to: 1. demonstrate that you need funding for infrastructure to support your development (a funding gap)- this proves you need a CIL; and 2. evidence that the amount you are going to charge CIL at is not so high as it will threaten the delivery of the growth strategy for the area.

15 Does the need for infrastructure determine the CIL rate? No You have to prove that you have a funding gap that means you need a CIL but the rate is dependent on the development viability in the area.

16 CIL rates- Determined by deliverability Usually -the viability assessment PPG A charging authority s proposed rate or rates should be reasonable, given the available evidence, Avoid setting rates at the margins of viability. It would be appropriate to ensure that a buffer or margin is included, so that the levy rate is able to support development when economic circumstances adjust. In rate setting -there is room for pragmatism.

17 What is the best mechanism? CIL Strategic infrastructure schemes? But in some places need for mitigation (pooling limitation) S106 site specific and mitigation projects directly related and capable of being named (Aberdeen case avoid broader pooling for strategic development) *Budget 2018*- Response to supporting housing delivery through developer contributions- removing pooling limitation enable wider spread use of s106 but not strategic projects S278- need to try and identify what you would use s278 for?

18 Aberdeen City and Shire Strategic Development Planning Authority (Appellant) v Elsick Development Company Limited (Respondent) (Scotland)..The planning authority seeks to achieve this investment by adopting a policy in its development plan which in substance requires developers to enter into planning obligations with it to make financial contributions to the pooled fund to be spent on the infrastructure, including interventions at places where a particular development has only a trivial impact. Is such a policy within the existing powers of the planning authority under current planning legislation?..

19 The Supreme courts finding - a planning obligation, which is to contribute funding, to be a material consideration in the decision to grant planning permission, there must be more than a trivial connection between the development and the intervention or interventions which the proposed contribution will fund. The planning obligation which Elsick entered into could not be a relevant consideration in the grant of the planning permission. In my view, it was not within the power of the planning authority to require a developer to enter into such an obligation which would be irrelevant to its application for permission as a precondition of the grant of that permission.

20 Regulation 123 list Regulation 123 of the Community Infrastructure Levy (CIL) Regulations 2010 (as amended) indicates that a charging authority can published on its website a list of infrastructure projects or types of infrastructure that it intends will be, or may be, wholly or partly funded by CIL (other than CIL to which regulation 59E or 59F applies) *Budget 2018*- Response to supporting housing delivery through developer contributions- Reg. 123 Will be DELETED

21 Reg No s106 or s278 Infrastructure listed in reg. 123 list can no longer be secured through s106 planning obligations or through s 278 of the Highways Act (unless as part of the HE network). The intention is to ensure that there is no duplication in the use of both CIL and s106 from the same application for development for the same infrastructure project. If you list any infrastructure on the 123 list you cannot ask for any s106 or s278 from any project even those that are zero rated being project specific is generally good. You can spend CIL on things that are not on the list. *Budget 2018*- Response to supporting housing delivery through developer contributions- Reg. 123 Will be DELETED

22 So, if a project is not on the list can it receive CIL funding? YES it can get CIL funding It is possible for the Charging Authority to make a decision to fund something not on the 123 list provided it is for infrastructure to support growth in the District. It is very difficult know what funding opportunities may arise and it may be a valuable use of CIL money to match fund an infrastructure project opportunity that contributes to supporting growth.

23 Calculating CIL liability- Reg40 CIL = where A = the deemed net area chargeable at rate R, calculated in accordance with paragraph (7); Ip = the index figure for the year in which planning permission was granted; and Ic = the index figure for the year in which the charging schedule containing rate R took effect.

24 Calculating CIL Paragraph 7 A = G = the gross internal area of the chargeable development; GR = the gross internal area of the part of the chargeable development chargeable at rate R; KR = the aggregate of the gross internal areas of the following (i) retained parts of in-use buildings, and (ii) for other relevant buildings, retained parts where the intended use following completion of the chargeable development is a use that is able to be carried on lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development; E = the aggregate of the following (i) the gross internal areas of parts of in-use buildings that are to be demolished before completion of the chargeable development, and (ii) for the second and subsequent phases of a phased planning permission, the value Ex (as determined under paragraph (8)), unless Ex is negative

25 Demolition In use building contains a part that has been in lawful use for a continuous period of 6 months within the period of three years ending on the day planning permission first permits Net off in-use floorspace against new floorspace. If the floorspace has already been demolished before submitting a commencement notice: no netting off = more CIL CIL forms say in use building Design and access statement says it has been vacant for years?

26 Statutory Reliefs Minor development under 100 sqm unless dwelling/s- reg. 42 Residential annexes or extensions reg. 42A, B & C Charity relief- reg. 43 Social housing Relief reg. 49 Self build housing reg. 54A, B, C & D

27 Payment by instalments? Most LPAs introduce instalments: Payment by instalments significantly assists with the cashflow and viability of schemes particularly on large schemes. Instalments is very similar to the s106 triggers approach -It allows the developer to receive money from selling part of the scheme in advance of paying the next tranche of CIL. Instalment polices do not affect the overall amount of CIL collected from a scheme. [note: instalments policy can be changed with notice]

28 Notices Liability notice Commencement notice (Reg. 67) no later than the day before chargeable development is to be commenced ( doesn t apply where CIL is not payable as less than 100 sqm ( non dwelling development, exempt residential ext., or zero); must identify liability notice

29 CIL Bureaucracy PD notice of chargeable development Land owner assumes liability Council sends out liability notice setting out payment required developer/owner submits a commencement notice saying when the development is going to start at least 1 day before commencement Council issues a demand notice and issue a receipt for all payments If claiming relief it needs to be in good time as starting without a response relief cannot be given If a material operation takes place lose relief, instalments and get surcharged

30 Implementation issues CIL is a tax it has tax type legislation half the regulations are on enforcement, surcharges and imprisonment! Existing in use floorspace can be deducted- so if they have demolished no deduction Amended schemes likely to be liable (even s 73 may need additional payments) If claiming relief (eg social housing relief), claim lapses if applicant start before: they have served a commencement notice on the Council; or they have received written notice from the Council of its decision on your claim The time within which the Council must respond on relief applications: "as soon as reasonably practicable after receiving a valid claim"

31 Important points- Notification of commencement must be notified at least 1 day before actual commencement Failure to notify of commencement will result in the loss of reliefs and ability to phase all liability will be due immediately- Most reliefs or exemption will need to be applied for and agreed prior to commencement PINS appeals- The appellant concedes that he inadvertently omitted to submit his commencement notice, but clearly feels he should not be penalised for what he describes a as a stupid oversight. *Budget 2018*- Response to supporting housing delivery through developer contributions-propose less punitive penalty

32 Commencement notice- Material operation Submit a commencement notice before you do anything If a material operation has be undertaken trouble- no reliefs, surcharges etc Demolition is commencement *Budget 2018*- Response to supporting housing delivery through developer contributions- disproportionate impact of penalties proposal making changes to the Penalties any penalty will be set at a proportional level and will not result in the whole liability being paid immediately

33 Instalments & disqualifying event Ability to pay by instalments lost if start made without issuing a commencement notice Payment is required in full if no one has assumed liability Where a person is liable, payment in full because of a disqualifying event ( after 7 days if notified of a disqualifying event or immediately if not)

34 Disqualifying events- exampleself build housing Change that means it is not self build housing Failure to comply with the requirements (54C) certifying it is self build by submitting form Letting out of the whole building or dwelling ( e.g. Air BNB) Sale of self build house or communal development If a disqualifying event takes place collecting authority must be notified in 14 days

35 S73 a retrospective or part retrospective Regularising unauthorised development Retrospective planning permission granted is treated as commenced on the day pp granted- Charging authority issue a demand notice with deemed commencement date

36 Reg. 40 retrospective applications Relevant building = a building that was situated on the relevant land on the day planning permission first permits the chargeable development. If the PP is granted after the previous building was demolished the previous structure/s cannot be taken into account. Therefore, it is not possible to net off relief for buildings that were demolished under a previous consent

37 Retrospective applications Self build relief not available Floorspace of original building not deducted as it was demolished prior to the relevant ( retrospective) planning permission..on the day before the retrospective application, the dwelling, or any part of the dwelling, did not have a use that could be carried out lawfully, since the dwelling had not be built in accordance with approved plans; hence the requirement for the retrospective consent for its erection. Therefore, the dwelling as a whole or in part, does not qualify for deductible floorspace

38 Implementation of different planning permission (reg. 74B) Scheme commenced under Planning Permission A, a different permission B and a notice served that A will cease and B will commence needs to be received by CA. CA credits the CIL paid under Planning Permission A For this to be valid the request must be made before development B is commenced & proof of payment given Credit can only be given provided the building permitted by A are not completed and are not buildings that are taken into account to reduce the amount paid under reg. 40 request needs to be made within 3 years of granting A to keep demolition reduction for A when calculating B. This does not apply to reg. 73 own provisions

39 Abatement S 73 applications request CIL payment under original scheme is credit against new or revised liability notice for the new scheme. (Reg. 74A) Commencement notice needs to be served 1 day before commencing the new planning permission

40 CIL and Development Management Decisions and changes at the Development Management can result in changes to CIL liabilities. Section 96A of the Town and County Planning Act 1990 (by section 190(2) of the Planning Act 2008) non-material amendments (NMA) Section 73 credit from original application CIL payment towards new s 73 liability Section 73a retrospective development a world of trouble! E.g. No self build relief can be given as relief was not applied for before commencement- CIL Regulation 7(5) provides that the date of commencement in relation to retrospective planning applications is the date of grant of the permission and so, logically, no commencement notice can be given.

41 Surcharge- include: 50 payable per person if no one has assumed liablity and development starts General Consent (PD) development failure to submit notice of chargeable development lower of 20% or 2500 Failure to submit a commencement notice lower of20% or 2500 Disqualifying events- failure to notify in 14 days 20% or 2500 Late payment- not paid within 30 days, 6 months, 12 months the greater of 200 or 5% (at each stage)

42 Danger CIL Bureaucracy Make sure you complete all the forms and submit them at the right time and in the right order Submit your commencement form Applying for relief - Make sure you have a response from the Council Do not change your development and carry on building Don t start demolition or any part of the development without having submitted a commencement notice - you lose everything These things will cost a fortune this is a tax it is not flexible *Budget 2018*- Response to supporting housing delivery through developer contributions- disproportionate impact of penalties proposal making changes to the Penalties any penalty will be set at a proportional level and will not result in the whole liability being paid immediately

43 Q & A

44 Application of CIL Reg. 59 (1)A charging authority must apply CIL to funding the provision, improvement, replacement, operation or maintenance of infrastructure to support the development of its area. (3)A charging authority may apply CIL to funding the provision, improvement, replacement, operation or maintenance of infrastructure outside its area where to do so would support the development of its area

45 CIL and Neighbourhood Planning

46 Application of CIL by Parishes 59C. A local council must use CIL receipts passed to it in accordance with regulation 59A or 59B to support the development of the local council s area, or any part of that area, by funding (a) the provision, improvement, replacement, operation or maintenance of infrastructure; or (b) anything else that is concerned with addressing the demands that development places on an area.

47 Q & A

48 CIL Review Panel

49 CIL Review- RECOMMENDATION replace the Community Infrastructure Levy with a hybrid system of a broad and low level Local Infrastructure Tariff (LIT) and Section 106 for larger developments. But CIL -will survive

50 2017 Budget & NPPF & draft guidance 2018 Budget Proposed Strategic Infrastructure Levy (SIT)- modified proposal Removal of s106 pooling limitation for all- benefits CIL collects from all development and required for strategic sites

51 NPPF & Guidance & Budget 2018 changes Focus on viability and costing infrastructure at plan making stage Increase transparency Remove reg. 123 list - replace with Infrastructure Funding Statement (regulation change required) Publish Local Plan, CIL and application viability Proportionate approach/streamlining setting: Reduced consultation -(regulation change required)

52 Draft Guidance & Budget 2018 Change index publicly accessible index- consultation on Residential- House Price Index Using local- level Data on an annual basis Non-residential- consumer prices index Adding complexity 2018 Budget - Rejected Differentiation by land value uplift

53 THE BUDGET Response to supporting housing delivery through developer contributions Remove s106 pooling limitation for all Remove reg. 123 list Require Infrastructure Funding statements Retain exemptions Change to commencement penalty not payment in full No existing land use differentiation but guidance encouragement Strategic Infrastructure Tariff- encourage groups of authorities to use existing powers by pooling CIL & combined authority powers to introduce a tariff through Combined authority orders (like the mayoral CIL) S106 monitoring fee Technical clarifications

54 Q & A

55 Exercise

56 Q & A

57 Contact me Website- gmacinnes.co.uk