Mike Kiely Director of Planning LB Croydon Chair Planning Officers Society S106 Origins The history of various compensation and betterment laws is not a happy one as generally they have not been successful The main milestones have been ID: 809954
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Slide1
S106, Developer Contributions & Delivering Infrastructure
Mike Kiely
Director of Planning LB Croydon
Chair Planning Officers Society
Slide2S106 Origins
The history of various compensation and betterment laws is not a happy one, as generally they have not been successful. The main milestones have been:
The
Uthwatt
Committee into compensation and betterment (1942)
The 1947 Planning Act, introduced a development charge to capture planning gain – abolished by the 1954 Town and Country Planning Act
Compulsory Purchase Act 1965 introduces compulsory purchase provisions
Town and Country Planning Act 1971 – introduced S52 agreements (now S106 of 1990 Act)
Community Land Act 1975 allowed for the taking into public control of development land
Development Land Tax Act 1976 attempted to tax development value from land
Slide3S106 Rules
Statutory
tests (
Reg
122 of 2010 CIL
Regs
as amended):
Necessary to make the development acceptable in planning terms
Directly related to the development
Fairly and reasonably related in scale and kind to the development
What
they can do:
Mitigating harm (eg highway works or education & health contributions)
Compensating for loss (eg public open space and play equipment)
Properly controlling the development (eg securing social housing element or
provision
of a new bridge within the development
)
Relationship with CIL:
Regulation 123 List of infrastructure items
Pooling restrictions (post March 2015 from
2010 )
Slide4Setting formulae
Works well when
there
is a close relationship between development generally and the need for additional infrastructure
Having formulae makes the negotiation process much easier
You must demonstrate two things:
There is no existing capacity that can serve the development
The development creates the need for that infrastructure
HUDU model in London
The benefits of publishing your approach
Slide5Negotiation tips
Start negotiations as early as possible
Frontloading
contributions reduces the potential S106 pot
Viability: the
three most important things to remember:
It’s an opinion and not a fact – despite what RICS will have you think
It’s dynamic – the numbers will change over time
Impacts still have to be mitigated – its not a get-out-of-jail-free
card
Slide6Getting it drafted & signed
Negotiate the heads of agreement in pre-application stage
Draft the agreement in the application stage so it’s ready to sign once a decision is
taken
Use the Planning Bar
proforma for the main body and publish your
obligation proforma on your website
Be firm with your lawyers and if necessary get the applicant to do the same – they can waste a lot of time arguing about marginal issues
Developers
can “take their foot off the metal” once a scheme has been to planning committee
Having a resolution “That, if by [X date] the legal agreement has not been completed, the Director of Planning is delegated authority to refuse planning permission” will focus their
attention,
provided you stick to it!
Slide7Collecting the cash
You
MUST monitor
your S106 agreements so that you know what you are owed and when
Monitoring also enables you to manage the number of pooled contributions when CIL is in place
Since putting this in place in
Croydon
we have recovered circa £3.5M that was owed to us
A simple set of proforma letters will often work without the need to get heavy with solicitors, especially when interest and indexation is attached to the agreement.
Slide8Spending the money
Bizarrely, this seems to be the hardest bit
It is a whole Council task
Set up a body (Infrastructure Finance Group) that can act as the place where these discussions take place and ensure conformity with the S106 agreement
and
legislation
It’s about delivering your Council’s strategic capital priorities and the Infrastructure Delivery Plan that supports your Local Plan
Also involves engagement with third parties who have responsibility for delivering infrastructure
Slide9Review & monitoring
Authority’s Monitoring Report
You must report collection and spending of CIL
Reporting (voluntarily) collection and spending of S106 is a very good discipline
Whilst increased development values may enable you to increase your CIL rates, being able to negotiate a greater affordable housing contribution may be a better
policy option
What are your plans for S106 post March 2015?
Slide10S106 & CIL
CIL was introduced as a solution to S106 with provisions in the legislation that sought to “put a spanner in the works” of S106 (ie the limits on pooling)
CIL and S106 are good at different things:
CIL is an efficient up-front pooling
mechanism – brings
in more money to an LPA because nearly everyone pays something, rather than just a few paying; as little as 7% of developments have S106 …
… however, CIL does have a high set-up cost that can make it uneconomic for many small local planning authorities to implement.
S106 can be a good, flexible tool to deal with specific issues that are related to the actual development, rather than development generally …
… however, S106 does have high transaction costs (eg legal fees and negotiation time) that render it uneconomic for small developments.
Slide11The challenges
Infrastructure that is necessary because of development generally
Infrastructure that is necessary because the need for it is caused by a particular development or group of developments
Mitigation or compensation that is necessary to enable a development to proceed
Securing affordable housing to meet the housing needs of an area
INFRASTRUCTURE
OTHER (NON-INFRASTRUCTURE) MITIGATION
Slide12How might we fix it?
POS
believes that any solution should have the following characteristics:
The intention for CIL to be funded via the land value rather than through development finance should be clearly stated by government and become a clear feature of the CIL setting process and Development Management viability assessments
There should be a basic national levy rate that can be easily adopted
Alternative levy rates should follow the current CIL setting process
Flexibility between levy and agreements should be a standard feature of the system subject always to the levy amount being the minimum payable in any
circumstances
A new combined system needs a new name to give it a fresh start
Slide13What would it look like?
Development Management Agreement
Development Management Levy
Infrastructure that is necessary because of development generally
Infrastructure that is necessary because the need for it is caused by a particular development or group of developments
Mitigation or compensation that is necessary to enable a development to proceed
Securing affordable housing to meet the housing needs of an area
INFRASTRUCTURE
OTHER (NON-INFRASTRUCTURE) MITIGATION
Slide14Options for levy LPAs
For non-major development, a compulsory levy would apply for infrastructure. An agreement could apply to:
Mitigation or compensation that is directly necessary to enable a development to proceed
Securing affordable housing
For major development, the levy would apply plus an agreement to secure:
Infrastructure that is necessary because the need for it is caused by a particular development or group of developments
Mitigation or compensation that is directly necessary to enable a development to proceed
Securing affordable
housing
Plus
if the LPA considered it appropriate adjustment could be made in response to viability issues between the levy and the agreement, subject always to the levy sum being the minimum payable
.
Slide15Options for non-levy LPAs
For
non-major development, neither the levy nor an agreement would apply for infrastructure. An agreement could apply to:
Mitigation or compensation that is directly necessary to enable a development to proceed
Securing affordable housing
For major developments, an agreement to
secure:
Infrastructure that is necessary because the need for it is caused by a particular development or group of developments
Mitigation or compensation that is directly necessary to enable a development to proceed
Securing affordable housing
Slide16Questions