www pasgovuk The Direct Financial Implications of Planning Introduction 10 Long term Strategic Planning Carefully calculated needs assessments Business Cases Options appraisal Building political consensus ID: 1028267
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1. Date: 12th October 2013www. pas.gov.ukThe Direct Financial Implications of Planning
2. Introduction
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4. Long term Strategic PlanningCarefully calculated needs assessmentsBusiness CasesOptions appraisalBuilding political consensusDelivery routesWorking with private providers2. Opportunism&
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8. The amount of Business Rates payable by shops, offices, warehouses, etc is currently calculated as follows: Rateable Value of the property x NNDR MultiplierRV is set by the Valuation Office based on the individual characteristics of the property. The current rateable values were set in 2010, with the next valuation in 2017 and every 5 years thereafter, and;The NNDR multiplier for 2013/14 is 0.471 (0.462 for small businesses)
9. Business Rates – how they’re calculatedTotal Rateable value of property is £100k0.471NNDR MULTIPLIERPayable Business Rates = £47.1k
10. Business Rates – How much do local authorities keep?
11. Business Rates collected+Business Rates – Why promote growth?Before…NNDR Funding levelLocal share levelAllocated to local authority
12. Business Rates collected+Business Rates – Why promote growth?Now…NNDR Funding levelLocal share levelAllocated to local authority+
13. THE COMMUNITY INFRASTRUCTURE LEVY
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15. Local Plan
16. How to Model the Financial Benefits of Planning & Growth
17. Community Infrastructure Levy (CIL)Net additional floor space in square metresCIL RateSet by the Council; Charging Schedule will determine rates by usePayable CIL
18. 3 key points to remember:CIL is a one-off payment, payable by the developer at the beginning of a development (following planning permission).Replacement floor space & affordable housing do not pay CIL.Collected CIL must be spent on infrastructure in the Regulation 123 list. Community Infrastructure Levy
19. Example3,000 sqm of new retail floorspaceX £100 per sqm (your CIL rate for retail)= £300,000 CIL!Development & CIL Community Infrastructure Levy
20. New Homes Bonus (NHB)Number of homesPrivate:£1,4442013/14 National Average Band D Council Tax RateAffordable:£1,794+ £350 supplement6
21. 3 key points to remember:New Homes Bonus payable from Central Government to a Council is calculated based on net increases to the Council Tax base;New Homes Bonus is an un-ringfenced funding stream;NHB is paid for six consecutive years. New Homes Bonus
22. Examplea) 100 units of market housing x £1444 x 6 (years)b) 100 units of affordable housing x £1794 x 6 (years) (a) + (b) = £1.73m Total NHBDevelopment & NHB New Homes Bonus
23. 50%40% Business Rates Retention (NNDR)Payable Business Rates (RV*0.471)Proportion to Central GovernmentProportion to Upper Tier authority
24. 3 key points to remember:Different uses get different Rateable Values (RV). RVs are set by the Valuation Office Agency, and are reviewed every 5 years.Business Rates are an un-ringfenced, on-going funding stream, and are payable annually; Housing does not pay business rates. Business Rates Retention
25. Example1) £100,000 x 0.471 = £47,100 Payable Business Rates2) £47,100 – 50% = £23,550 “Local Share”3a) £23,550 x 40% = £9,420 Paid to upper tier3b) £23,550 x 60% = £14,130 Retained by Local AuthorityDevelopment & NNDR Business Rates Retention
26. CILNHBNNDR Financial benefits over time
27. When should a ‘local finance consideration’ be taken into account as a material planning consideration?Whether or not a ‘local finance consideration’ is material to a particular decision will depend on whether it could help to make the development acceptable in planning terms.
28. Example 1City in South West UKL Master Plan Delivery Programming
29. Income from Growth – by type2013-182019-2024 Whole Council£108,000,000£101,500,000 CIL £4,000,000£3,000,000 NNDR £37,000,000£62,000,000 NHB £23,000,000£12,000,000 CT £42,00,000£23,000,000 S106 £2,000,000£1,500,000
30. Example 2Local Authority in Outer London Growth Area 1:Strategic Infrastructure Investment
31. Income from Growth – by type2013-142015-20242025-20342035-2044 Whole Borough £13,239,915 £137,087,736 £128,665,536 £137,613,160 CIL £4,042,752 £48,145,998 £38,146,752 £34,412,028 NNDR £1,946,535 £15,659,223 £47,859,440 £61,969,274 NHB £2,033,934 £33,587,776 £27,805,634 £30,903,917 CT £2,614,925 £17,461,796 £9,947,610 £7,835,241 S106 £2,601,769 £22,232,944 £4,906,100 £2,492,700
32. Income from Growth – by type
33. Income from Growth – by type
34. Example 3Local Authority in Outer London Growth Area 2Medium Term Financial Planning
35. CIL & New Homes Bonus TOTAL (to 2031) £345,444,768 CIL £186,954,357 NHB £158,490,411 Area4 9%Area3Area2Area7Area6Area5Area1
36. Business Rates Retention & Council Tax ANNUAL TOTAL (mature development position) 38,836,788 NNDR £12,972,700 Council Tax £25,864,089 Area4Area3Area2Area5Area7Area6Area1Area8
37. A significant proportion of collected Council Tax will be used for payment of increased cost of services.When Council Tax and NNDR income streams are separated, a single large shopping centre shown to provide 97 per cent of all NNDR retained income.Business Rates Retention & Council Tax
38. Example 4Local Authority in outer London Growth Area 3Informing Public Sector Interventions
39. INTRODUCTION & OVERVIEW … What more can be done to develop the Town CentreWell-articulated regeneration agenda, with high-profile projects ongoing in the Town CentreInvestment in the public realm to enhance safety and remodel the urban fabricStill issues with the Town Centre – mainly due to office market
40. Working hypothesis on how to address the challengeAcquire blocks that are past their sell-by-date and largely empty, securing outline planning consent and disposing directly to market Marketing site opportunities outside the Council’s direct ownership, selecting a development partner to design a scheme, secure planning consent and undertake back-to-back CPO.Offering incentives (such as business rate relief within state aid restrictions) to owners and developers to re-develop or refurbish outdated accommodation.
41. Scope of the briefWhere should the Council intervene in the office property market to accelerate the turnaround in offer?What will be the most effective intervention?When and how should the Council intervene?
42. Site-specific assessments Detailed assessment of ROI from any site-specific interventions, including the cashable impact on wider public financing and regenerationSite residual valuations public finance sources, such as NHB, CIL, Business Rate Retention, etc? implementation planningWhere, when and how is Council intervention likely to have the biggest impact? The Approach
43. Site SelectionProbability of developmentHistory of planning applicationsCost of interventionDelivery/site constraints and issues, such as land ownership, existing lease arrangements, etc.Impacts - blight effect on town centrePotential to have windfall benefits from adjacent development, i.e. gateway sitePotential regeneration impactFinancial return on investment from intervention SITE FOR INTERVENTION FINDINGS
44. FINDINGS STRATEGIC SITE OPPORTUNITIES
45. Site Purchase Residual Valuation (Working Results) All Scenario #1SchemeRLV (£ million)CPO costs (£)Site 1£13,886,468£6,550,865Site 2£5,470,159£1,679,172Site 3£11,809,142£19,128,526Site 4£21,842,095£1,084,097Site 5£27,436,949£2,274,437Site 6£1,508,628£1,285,900Site 7£13,206,476£29,834,933Site 8£10,686,177£18,735,474
46. SITE 2SCENARIO TESTINGSite characteristicsDirectly in front of regeneration site, adjacent to new developmentCurrent use can easily be re-locatedDevelopment partner interest OpportunitiesScenario 1: Office 98% Office, 2% Assembly9,205 sqm officeScenario 2: Mixed-use90% Residential, 10% Retail141 Homes; 1,097 sqm retail
47. SCENARIO TESTING Finance Cumulative Totals YEAR 5YEAR 10YEAR 20YEAR 35NNDR 1,571,085 3,840,452 8,835,037 16,706,044 NHB - - - - COUNCIL TAX - - - - CIL 1,122,600 1,122,600 1,122,600 1,122,600 TOTAL 2,693,685 4,963,052 9,957,637 17,828,644 SITE 2 : Scenario 1: 98% Offices, 2% Assembly & Leisure YEAR 5YEAR 10YEAR 20YEAR 35NNDR 133,069 325,281 748,316 1,414,979 NHB 770,600 1,321,029 1,321,029 1,321,029 COUNCIL TAX 493,500 1,198,500 2,608,500 4,723,500 CIL 131,640 131,640 131,640 131,640 TOTAL 1,528,809 2,976,450 4,809,485 7,591,148 SITE 2: Scenario 2: 90% Residential, 10% Retail
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